Tip of the Week: Consider Fiscal Sponsorship
This week’s post comes from Sharon Smith, author of The Young Activist’s Guide to Building a Green Movement and Changing the World
In my years working with Earth Island Institute’s Brower Youth Awards, I met dozens of young people that had founded their own organizations for sustainability and social change. Many of those entrepreneurs had even founded a group before they were old enough to vote!
Starting your own 501(c)(3) is a substantial undertaking; you will need to file formal paperwork, apply for federal and state tax exemptions, create corporate bylaws, set up a board of directors, and obtain any necessary licenses and permits. This approach is right for some projects, particularly those that are growing and around for the long haul.
However, another option is especially well suited to new projects, where the focus needs to be on the work vs. the cost and administrative challenges of incorporating as your own entity: fiscal sponsorship. A fiscal sponsor is a nonprofit that assumes the legal and financial responsibility for others, essentially providing you an umbrella underneath which you can operate and take donations.
Earth Island Institute is one of these—a fiscal sponsor that has helped birth and support more than one hundred projects since its inception as a nonprofit – but it’s important to note that any nonprofit can be your fiscal sponsor, so alignment with your mission is a crucial consideration.
Groups that specialize in fiscal sponsorship offer specific benefits—these might include website hosting and maintenance, accounting and payroll services, and office space. Joining a fiscal sponsor with a strong track record also helps you gain credibility in the public’s eye. Perhaps the most valuable benefit besides allowing you to focus on the programmatic tasks is access to experienced staff members who have worked with a number of new organizations and can help advise you in all aspects of growing your group.
Fiscal sponsors generally charge a fee for their services, which usually ranges from about 7 to 15 percent of incoming funds. Determine what services and support you need from a sponsor, and then see which sponsors offer that suite of services for a reasonable fee.
To find a great fit, peruse the Fiscal Sponsor Directory
, a resource designed to connect community projects with the appropriate fiscal sponsor. You can also reach out to local groups working in a similar field to your focus and ask them to sponsor you. Happy hunting!