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.


Colvin, G. (January, 2013). Brushes With the Law. Fiscal Retrieved on February 5, 2014, from

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

Guide to Fiscal Sponsorship. Foundation Retrieved on February 5, 2014, from

Fiscal Sponsors. Council of Retrieved on February 5, 2014, from


The Diary of A Mad Grant Writer

thCA70EYX1Oh, the joys of grant writing! Let’s count them! The endless deadlines, research, competition, budgeting, and the near obsession with details! Not for the faint of heart, grant writing is often a tedious and repetitive process – although, very much a mainstay in the non-profit community.

Seriously, I learned a lot about non-profit management in general just by writing and developing grant proposals for several years. I have a few insights based on my experiences that I want to share here:

  •  Mission first

Before doing anything else, ensure that the organization’s mission is aligned with the activities that the foundation funds. Read the foundation’s guidelines for giving thoroughly. For example, do not submit a grant request for a children’s after-school program to a foundation that funds wild land conservancy. The example is exaggerated and the point may seem fairly simple and obvious but it is remarkable how many organizations attempt to “stretch” their mission statements to include things that they do not. It’s called chasing money and it rarely works out in the end and it puts the organization’s credibility and integrity at risk.

  •    Follow the instructions to the letterthCAEAIR5Q

Similarly, read the foundation’s instructions for submitting proposals well – and follow them exactly. Nothing will dissuade a potential group of funders from granting the organization monies than receiving a proposal that is not in the form that they asked it to be. When the instructions say that written proposals should not exceed more than three typed pages using a font size no smaller than 10 point, accept that as a hard and fast rule. Other common instructions include: submit an original and 10 copies of the proposal, do not send additional attachment materials other than those requested, do not send photographs because they cannot be returned, and do not send proposals in fancy covers, binders, etc. As an aside, if covers or folders are typically used as well as different print colors in grant proposals, stick with classic and subdued colors like black, grey, navy blue, etc. This is not the place for electric blue and neon purple!

  •    Be compelling

thCA806AIPIn addition to using good, concise writing style, correct spelling, grammar, and punctuation (which could be a blog post by themselves!) to tell the story of the organization or project, grant requests need to be compelling. When I first began writing grants and went to lectures and training on the subject, the presenters always said in their most dramatic voices, “You must have compelling grants”! That is, the grant request needs to compel the reader to do something in response to it, like fund the organization or project that it proposes. Be compelling in a grant request by including researched local statistics, possible consequences of not funding the proposal and benefits to the whole community. In keeping with the example of a children’s after-school program, cite the number or percentage of local children affected by the absence of this program, the lack of supervision for the children after school, incidence of vandalism complaints, etc. Describe how the proposed program or project “corrects” that condition (e.g., increases adult supervision, offers homework tutoring) and how the community as a whole benefits (e.g., decreases child neglect/endangerment, fewer police calls, better school performance, etc.).

Grant making foundations are very often making decisions about which organizations to fund based solely on what they see in black and white right in front of them so make it compelling.

  •    The deadline is the deadline

Foundations impose deadlines on proposals in fairness in order that all eligible community organizations have the same amount of time from the grant announcement to the deadline date to develop their proposals and apply for grants. thCA7WX5O7Use a calendar to mark off deadlines as they become available with grant announcements. If the deadline for a proposal is May 15th by 5:00 pm, accept that as a hard and fast rule. Do not be fooled by thinking, “They like me at [Foundation]”, “They know how busy we are here” or “How big a difference can a day make?”. Trust me on this. When the deadline date and time arrives, they will lock their doors and unplug their phones! In many cases, if a deadline is missed it may be a year or longer until the organization can apply to a foundation for funds again – perhaps missing out on revenue that it needs this year.

  •    Plan, plan, plan

Keeping with the idea of the development calendar, successful organizations plan strategically for the grant-funded opportunities they seek. thCA1ASA1PIn that vein, some of the considerations that may be part of the planning process include the size of the organization, the number of grant-writing staff on board, as well as the opportunity to expand the organization. Many grant opportunities can be satisfied in two to three page requests while others can be enormously time consuming events that go on for weeks. Expansion efforts especially should not be entered into lightly or because they have a large award amount attached to them (again, chasing money). The organization needs to ask itself if it has the administrative capacity to receive a larger grant award. Will it be able to report financial outcomes adequately? Will it be able to report programmatic results as stated? More important, what are the organization’s chances of sustaining an expansion after the initial grant monies are expended? Clearly, this is an issue that goes beyond the grant writer alone and involves the entire management team as well as the Board of Directors.

  •    Do not reinvent the wheel

It is not necessary to reinvent the wheel or “start from scratch” every time that a grant request is needed – these are not Shakespearian sonnets. thCA518XYTIt is highly unlikely that the organization or its programs are changing significantly from one week or one month to the next. If they are, that is a management issue that can be taken up in another blog post! Rather, develop and maintain templates of grant requests for the organization; for example, when requesting general operating funds, as well as its individual programs and services. Update them as necessary when there are changes and be sure to keep research literature citations current.

  •    Change the scenery

Sometimes when we get so involved in a project, like putting a grant request together, we are so close to it that we cannot “see the forest for the trees”. In other words, it is writer’s block – writing in circles and not being satisfied with the results, the story of the proposal is not flowing on the pages effortlessly, and knowing that it is not hitting the mark. thCANO5GTFOne of the tricks that I learned that is quite simple and worked like a charm every time was to change the scenery. Set the proposal aside, work on other tasks for several hours or – if the time constraints of the deadline allow it – come back to it the next day. It always surprised me just how much clearer my thinking was in organizing the grant request on the written page after I had been away from it for a while!

  •    It’s a lonely job

Grant writing is often a very solitary activity. Aside from occasionally interacting with direct line staff to ensure the most up-to-date numbers served or program results are being used or meeting with the fiscal department for the accuracy of budget numbers, grant writing and putting the request together is pretty much a loner activity. Hence, someone who is inherently sociable and thrives on interaction with others may want to think twice about assuming a grant writer role in an organization.

  •    Do not be too hard on yourself

Whether a new grant writer or an accomplished, seasoned veteran, nobody gets everything that they request in a grant application 100 percent of the time. There may be several explanations for this. In many cases, foundations simply do not have the funds to support the total of the requests they receive. Additionally, foundations may inform grantees outright that if they have awarded an organization grants for three consecutive years that they will “take a break” from them so to speak in order to give funds to as many deserving organizations in the community as possible.

thCACKOI85For new grant writers who may be struggling with their technique and not receiving the funding they request, do not be discouraged! When I first began writing grants, I received my draft copies back with editorial marks that looked like someone had bled on the pages. Sometimes the best way to overcome an obstacle is to immerse yourself in it. As several of the lecturers said in those trainings and presentations that I attended way back in the beginning, “You simply need to write more grants!”.