We were honored to be invited to facilitate a panel of awesome entrepreneurs at last month’s SOCAP14 conference held around the corner from us at Fort Mason Center in San Francisco. Our session was titled “Not Your Mother’s Nonprofit: Leveraging Fiscal Sponsorship in an Impact-Focused World” and featured four project leaders who talked about the benefits leveraging fiscal sponsorship to support their nonprofit work. We’ll recap what our entrepreneurs had to say in our second “Not Your Mother’s Nonprofit” post, but first we wanted to share our introduction about about the many different kinds of projects that are exploring fiscal sponsorship:
Different Ways that Entrepreneurs Leverage Fiscal Sponsorship
“The Placeholder” – Undecided about which model to choose or unsure where your early support may come from? Choosing fiscal sponsorship can allow you to leverage early donations or “angel” funding from family and friends (or yourself) while ensuring tax deductibility. It can also allow you to test interest from foundation funders for early stage proof-of-concept or pilot project work.
“The Kickstarter” – Want to be a 501c3 but have funding opportunities now that can’t wait for 2+ years? This is the traditional use of fiscal sponsorship as a temporary 501c3 structure prior to IRS approval. Can be a follow-on model to a Placeholder if the choice of structure is 501c3.
“The Backbone” – Have no desire to ever run board meetings, oversee admin/finance/HR, go through financial audits, and file state and local tax returns? Many projects are choosing fiscal sponsorship as a long-term cost-effective solution that allows them to exclusively focus on raising funds and building out their programs and team.
“The Asset Protector” – Want to make sure that other corporations without a double bottom line don’t get their hands on your intellectual property down the road? Do your R & D work in tandem via a sponsored project without having to run a separate side-by-side nonprofit with complex compliance rules. You may even be able to leverage pro bono resources like legal help with patents and licensing.
“CSR in a Box” – Want to run a for-profit business and start donating a percent of your proceeds to fund related nonprofit work down the road without creating a separate foundation or fund now? Set up a fiscally-sponsored project and your for-profit company can make tax-exempt donations to the project. When you’re ready, those tax-exempt donations can be used to fund related charitable activities.
“Switzerland” – Need a neutral place to house a coalition, network, or collective impact project that involves a variety of stakeholders? A fiscal sponsor can serve as a home for coalition or network staff and avoid perceived favoritism or control by any one organization while also not competing for funding with any specific stakeholder.
These are just a few of the types of projects that are fueling our growing project portfolio at TCI. Let us know if you can think of others ways that both for-profit and nonprofit entrepreneurs could benefit from fiscal sponsorship!