Fiscal Sponsorship: An Overview

th32An overlooked concept in the world of non-profit organization financial management that does not appear to have hit its full stride yet is that of fiscal sponsorship. In a prolonged and challenging economic downturn, it may be a good time to look at it more closely. Prompted by the increase in the number of non-profit organizations seeking IRS tax exempt status (e.g., following the widespread devastation of Hurricanes Sandy and Katrina), fiscal sponsorship refers to the use of existing, established organizations to achieve similar or overlapping missions thGTJ6SAFIrather than forming new organizations. Essentially, a ‘fiscal sponsor’ is a non-profit, tax exempt entity that acts as a financial sponsor for a project, committee or another organization that may not yet have received its tax exempt status with the IRS. In recent years, fiscal sponsorship has become more widely known in areas of human services, environmental causes and artistic endeavors.

Perhaps ideal for start-up organizations or those that want to accomplish time-limited charitable projects, the fiscal sponsorship of a larger, established organization can thCAP8GAXGprovide often costly administrative “overhead” functions such as office space, payroll, employee benefits, fundraising, publicity, legal counsel and training assistance. Some project developers may simply want to test their ideas out in their fields of interest before taking on the task of applying for tax exempt status with the IRS. There are many kinds of sponsorships; however, chief among them is grant-seeking sponsorship largely because foundations and government agencies [always] fund organizations and disallow making grants to individuals. In effect, the fiscal sponsor organization may receive grants and donations and even engage in other fundraising activities on behalf of the project, manage those funds according to their intended uses as well as document the progress of the project. Choosing a thL5AMP8X8fiscal sponsor largely depends on the nature or purpose of the project or committee and how consistent it may be with the mission of the larger organization. In addition, choosing a fiscal sponsor also needs to take into account the reputation of the larger organization in the community, its own financial health as well as its relationship with its funding sources. In other words, how attractive will the proposed sponsor organization be to potential funding sources for the project in subsequent grant requests? Aside from the local community, many national organizations have sprung up expressly for the purpose of providing fiscal th467N86XNsponsorships; for example, Tides in San Francisco, and many directories are available online. Moreover, the opportunities for a social cause or project to attract more attention and increased funding is somewhat greater in a fiscal sponsorship through the “cross promotional” benefits of an association with the larger, established organization. According to Gregory Colvin – a leading tax law expert in fiscal sponsorship – additional models of sponsorship include direct project sponsorship, independent contractor support, group exemption and technical assistance. For more detailed information about each of these models of fiscal sponsorship, please see Mr. Colvin’s book, Fiscal Sponsorship: Six Ways To Do It Right (Study Center Press, 2006).

Like many management decisions, entering into a fiscal sponsorship relationship is not a casual decision and does not come without some potential pitfalls for both the non-profit and the proposed project. A fiscal sponsorship arrangement needs to be thERW0I7W9formalized in a written contractual agreement or memorandum of understanding between both parties, typically specifying who will be responsible to do what and when. A memorandum of understanding – which, it is recommended, be reviewed by a tax attorney first –  clearly addresses the terms and conditions of the project management, including the scope of the project, timeframes and deadlines, employment issues if necessary and the authority of the th821KA897 project, to name a few. Perhaps one of the biggest concerns for an established non-profit organization is that it will assume all of the legal liabilities, tax requirements and regulatory compliance of the project in a fiscal sponsorship agreement. Conversely, on the side of the project or committee seeking fiscal sponsorship, there may be a perceived lack of independence in the project when it is administratively managed by others. Additionally, that established non-profit thHD9NNX8Borganization is not going to give away their administrative time for nothing. The sponsoring organization can and most likely will charge administrative fees, which in itself need not be a bust for the project because the administration fees can be built directly and transparently into the budgets of grant requests.

Clearly, the choice of a social cause or project to seek fiscal sponsorship from a larger, established non-profit organization is a highly individualized and case-specific one. While some organizations and projects may view this kind of relationship as cumbersome or intrusive, others may thrive on it or choose to continue indefinitely in a sponsorship mode. Still other projects may receive enough valuable insight and guidance to launch their own non-profit organizations.

References:

Colvin, G. (January, 2013). Brushes With the Law. Fiscal Sponsorship.com. Retrieved on February 5, 2014, from http://fiscalsponsorship.com/.

Colvin, Gregory (2006). Fiscal Sponsorship: Six Ways To Do It Right. San Francisco: Study Center Press.

Guide to Fiscal Sponsorship. Foundation Center.org. Retrieved on February 5, 2014, from http://foundationcenter.org/getstarted/tutorials/fiscal/conclusion.html.

Fiscal Sponsors. Council of Nonprofits.org. Retrieved on February 5, 2014, from http://www.councilofnonprofits.org/resources/resources-topic/fundraising/fiscal-sponsors.

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To Facebook Or Not To Facebook, That Is The Question: The Role of Social Media in Fundraising

thCAZ7PAN7Yes, I know that I am using Facebook as a verb in the title. It’s at that level. The social medias have made an often incomprehensible imprint on our culture as a people such that it is difficult to remember what we did before their genesis. According to Huffington Post Tech blogger, Brian Honigman, Facebook’s active monthly users now total nearly 850 million people as well as 250 million photos are uploaded everyday (source: Jeff Bullas). That’s a lot of people with a lot of pictures! One more fun fact: As of 2012, 210,000 years of music have been played on Facebook (source: Gizmodo). Now that is very compelling about its size and scope!

Along with the proliferation of social media sites on the world wide web (Facebook, Twitter, LinkedIn, Instagram, Pintrest, Google+, YouTube, etc.), thCAEL4EITso too have there been a plethora of writings, lectures and webinars (ad nauseam) on their fundraising uses by and potential impact on the non-profit community. In addition to the social media giants like Facebook and Twitter, the advent of sites like Google+ and YouTube have made it easier than ever to promote non-profit organizations with photos and video of events and activities. Social media is a wonderful invention and can be an excellent accompaniment to a non-profit organization’s marketing or development plan but it plays a very prescribed role in the activity of fundraising.

A discussion about the role of social media in non-profits needs to be prefaced by a key concept. A non-profit organization’s website is the foundation of its on-line presence. th12In other words, the organization’s website is like its on-line “home-base” of operation, including a place at which visitors and supporters are able to make secure on-line donations. The website serves as a reflection of the organization’s mission in the community and communicates it’s values and philosophies to all who visit it. Sounds beautiful, right? But perhaps the single biggest problem for organizations and their websites is maintaining them. The organization’s website needs to be as current and timely as possible at all times. There is nothing worse than going to a non-profit’s website, clicking on the ‘News’ tab and finding that the latest news is from 2010. Thud! Did nothing happen since then? When potential donors – both seasoned and newcomers – feel that they are not being actively engaged in the current events of the organization by visiting the website, they may move on to other organizations that do. Typically, the management of a non-profit’s website may be a task of the development director or department; however, smaller organizations that do not have the luxury of a development staff are encouraged to select a point person within the organization to perform maintenance and update tasks on the web site on a routine basis.

The value in non-profits utilizing the power of social media to raise funds is not in all the thCA7Z6QPLmillions they will rake in simply from being on Facebook or Twitter. Rather, the value of social media in non-profit is to bring donors to the organization’s website. That is where the real “business” of the organization happens and why it is so important that it is functional and current. The real “job” of social media like Facebook or Twitter in a non-profit organization is to generate interest in the organization and the mission, prompting the potential donor to think, “I’d really like to get involved there” or “I’d like to contribute” and subsequently leading them back to the website where they can make a contribution or volunteer. Social media can be used to inform or teach lay visitors about the mission of the organization, often in creative ways. I saw one organization place a quiz about homelessness on their Facebook page in order that visitors can test their own knowledge of the social problem. Social media can be used to highlight the organization’s partnerships with businesses and other organizations in addition to thanking them publicly. Moreover, the social medias are fun and they can and should be used to create excitement or anticipation about the organization’s activities or events – and again, take donors back to the website when they have “bought” the idea on Facebook or Twitter. If an organization holds an annual fundraising golf tournament; for example, Facebook and Twitter thCA3QZEQCare very good social media to not only raise awareness of the event but also to increase the excitement and anticipation for it with strategically timed posts and tweets – and with the added result of possibly bringing more people on board!

Similar to the organization’s website, a non-profit’s social media sites need to be just as well maintained. Once a social media page or account has been established, it does a non-profit little good if it just lies out there in cyberspace. It looks like nothing happens at the organization and in some ways that can be fatal. I have followed several local non-profits on Twitter; for example, but quite honestly, I’ve lost interest in them because they never put any tweets out. They are not telling us anything about their organizations and thereby letting their presence be known by not communicating often enough. Finally, a non-profit organization’s social media is likely going to be as effective as the organization itself. thCAJFZ195The bottom line is that there needs to be substance behind the posts or tweets. In other words, when an organization is merely taking up (cyber) space just for the sake of being there and there is no real “meat” in the posts or tweets, it tends to come through. If a non-profit organization is struggling – for whatever reasons – it may be best to focus all of the organization’s resources and energy on resolving those issues before moving forward with a social media marketing plan.

Reference

The Huffington Post; Tech Blog by Brian Honigman; “100 Fascinating Social Media Statistics and Figures From 2012”, November 29, 2012. Retrieved from:

http://www.huffingtonpost.com/brian-honigman/100-fascinating-social-me_b_2185281.html

An Overview: Planned Giving

th3There is a phrase in fundraising circles that says it could more aptly be called “friend-raising” and that could not be more true than in the case of planned giving. At a time when any source of non-profit revenue – grants, contracted services or even entrepreneurship – can be tenuous at best, the concept of planned giving makes even more sense. Most development professionals would concur, the most stable and steadfast source of revenue in a non-profit organization is not the corporations, businesses or foundations – it is individual donors.

thCAK7Z4LOIn today’s economy it behooves charitable non-profit organizations – whether they are small and local or large and nationwide – to develop some kind of planned giving program. According to David C. Hall of the University of Arkansas in an article published in The Non-Profit Times (May, 2013), if you are not asking your donors for planned gifts, someone else is. The literature in the field abounds with ideas about converting annual fund donors into planned givers. In another article, Andrea Wasserman, president of Social Profit Ventures in Washington D.C., makes the analogy of a “donor funnel”, along which a donor moves from being an annual giver to making planned gifts. According to Wasserman, one of our goals in development is to bring donors into the organization at the point of annual giving and move them along the funnel toward major gifts. Do not allow donors to get stuck at the annual giving level; identify and cultivate donors for larger and planned gifts (The Non-Profit Times, August 20, 2013). Moreover, according to Mr. Hall, organizations that utilize planned giving strategies can earn 50 to 100 percent more than those who do not and a typical planned gift is 200 to 300 times the gift of a donor’s largest annual gift. Additionally, donors who make gifts in their wills typically increase their annual support (The Non-Profit Times, May 29, 2013).

th5Moving beyond the traditional bequeathed gift provided by a donor’s will, there are now many ways in which a potential donor can make a planned gift to an organization that a creative financial advisor can discuss. By definition, planned gifts typically are not part of the donor’s discretionary income and are major gifts made possible by estate and tax planning strategies to maximize their gifts to charitable organizations. For example, potential donors can use appreciated life insurance, a retirement plan, real estate, stock – and even art work to make major gifts. According to Planned Giving.Com, the three types of planned gifts include: 1) gifts that use appreciated assets in lieu of cash, 2) gifts that return income or other financial benefits to the donor such as Charitable Gift Annuities, and 3) gifts payable upon the donors death. According to Mr. Hall, many potential donors are willing if not eager to make a planned gift but they simply do not know how (The Non-Profit Times, May 29, 2013).

As well, planned giving programs require just what its name says – planning. thCAVJ5Q8RA bit more involved than organizing a Saturday morning bake sale outside of the WalMart, planned giving requires the strategic cultivation of long-term relationships with donors. One might start by looking at their donor and mail lists and identifying who gives regularly or every time a request is made and who attends all of the events and activities of the organization. In other words, identify who  the organization’s most loyal followers are. These are the folks we need to work toward moving along the funnel. Usually, it is not the first-time $50 donation that we seek for planned giving. Also, planned giving programs demand appropriate stewardship, typically in the form of a committee that may include staff as well as the Board of Directors. Moreover, a planned giving program needs to be well represented by a Board of Directors, not only in their stewardship but by their participation in it as well. If a Board of Directors is not invested in the thCAQAEGB5organization at that level, why should I be? Finally, Mr. Hall also suggests that communication with planned givers needs to be high and in an uncomplicated, objective manner. Keep the message coming, keep it simple and help donors to identify their interests (The Non-Profit Times, July 9, 2013). Major gift donors are an elite club of donors who like to feel that they are “in the loop” with the organization and have access to executives and directors. Development staff can help planned gift donors feel “included” in the organization by sending them timely progress updates, newsletters and handwritten notes when appropriate. When a donor makes a major gift through a planned giving program, many development professionals say that our work is just beginning as we strive to nurture those existing relationships and cultivate new ones. It really is about “friend-raising”.th6

References