Fiscal Sponsor Directory Survey Highlights

• Since this Directory was launched Nov. 19, 2008, only 8 sponsors have dropped out, most because they decided to stop being a fiscal sponsor, and 35 have been added, many of them recent converts to the concept.
• The 176 fiscal sponsors in this directory have completed a 10-question survey asking about their experience, eligibility requirements, fee structure, services and philosophy — enough information that prospective projects can get a feel for which sponsors might make a good fit for them.
• This is the largest database of essential information about individual fiscal sponsors; it includes the major players and some sponsors with only a few projects.
• These fiscal sponsors operate in 32 states, Washington, D.C., and Ontario, Canada. California has the most, 60, more than a third of the total.
• Community foundations comprise 18% of the fiscal sponsors.
• Third Sector New England is the most experienced fiscal sponsor in the directory — since 1959 — and sponsors 36 projects now.
• Congressional District Programs Inc. is the largest with 1,000, more than 10% of the total.

Before the 1950s, only 152,000 501(c)(3)s were operating in the United States. The pace picked up in the 1970s and ’80s, adding roughly 190,000 new nonprofits in each decade. But numbers of brand-new nonprofits almost doubled — to 372,000 — in the 1990s. By the end of 2009, there were more than 1.5 million in the nation.

On a much smaller scale, starting in the late 1960s and 1970s, when community programs began to soar as the free-services-for-all concept took hold in California and spread throughout the nation, fiscal sponsorship has followed that trajectory.

New fiscal sponsors jumped in the 1990s. That’s when 43 of the sponsors in this directory — more than double the number of startups in each of the previous two decades — took on their first project. The pace of new fiscal sponsors has accelerated, with 80 or 46% forming since 2000, a percentage that has been rising as the Directory continues to add fiscal sponsors.

The field of fiscal sponsorship is growing, and it is helping the nonprofit sector to grow. However, fiscal sponsorship’s main impact continues to be qualitative, and its solid business strategies set a high standard for nonprofit management.

The role of the fiscal sponsor also has taken off. Though the numbers of fiscal sponsors and the projects they host are minuscule compared with the vastness of the nonprofit sector, fiscal sponsors area factor in improving the quality of nonprofit management, a trend widely acknowledged as awareness of fiscal sponsorship’s benefits spreads.

These 176 fiscal sponsors are home to 9,652 projects, which an educated estimate suggests these sponsors manage charitable funding of up to $1 billion. One-third of the agencies sponsor 1 to 5 projects, less than 15% sponsor 51 to 100 projects. The 11 largest combined sponsor 4,166 projects, 43% of the projects represented in this directory.

A hidden efficiency for board development is suggested by the projects-to-sponsor ratio, which is 55 to 1. This means almost 10,000 community organizations in the country didn’t need a board of directors, because projects come under their sponsor’s board of directors; they don’t need a board of their own to operate. This takes a huge burden off the pool of volunteer professionals in communities across the country. A truism of community service is that many board members wear multiple nonprofit hats. If each of the 10,000 projects had to have its own board of directors, 30,000 to 100,000 civic-minded people in communities across the country would have to stretch themselves ever thinner.

Fiscal sponsorship puts all these projects under each of their sponsors’ existing boards of directors, taking pressure off the pool of primarily volunteer professionals who make up board memberships.

ELIGIBILITY: Aligned mission and geography

Fiscal sponsorship must be largely a labor of love, because 161 or 91% of the sponsors in this directory say “aligned mission/values” is chief among their eligibility criteria. The second most-cited eligibility criterion is “geographic,” with just under half of the sponsors requiring their projects to operate nearby, in the same metropolitan area, county, state or region.

PROJECTS: Arts is tops

There is some specialization among fiscal sponsors, in terms of their projects’ service categories, but, not surprisingly, it’s primarily arts organizations that specialize, although of 20 service choices on the survey, only five sponsors said they accept projects in all categories. More than a third will sponsor projects in at least a dozen service categories.

Arts and culture, hands-down, is the most popular project category, with 128 — 73% — of the sponsors willing to take them on. And of these, film and video projects are a major subcategory.

Education is the next largest category of service with 97, followed closely by children, youth and families at 96, with youth development, 92, a snug third.

FEES: Most charge 5%-10%

About 30% of fiscal sponsors charge fees of 5% or less of a project’s revenues, and nearly half charge 6% to 10%. Only 16 charge more than 10%, in most cases to handle government-funded projects, which can require adhering to higher federal audit standards. Some sponsors have sliding-scale fees, depending on a project’s revenues; others will negotiate the fee. What accounts, in many cases, for the disparity in fees are the services the sponsors provide.

SERVICES: Spectrum of assistance

The responsibility for a project that a sponsor assumes in most instances is complete in the eyes of the IRS. Thus sponsors must take care of their projects as they would themselves. Due diligence is time-consuming. Time is money.

Bookkeeping/accounting and bill paying are the primary services sponsors provide their projects – more than two-thirds do one or the other and most provide both.

Surprisingly, only a third of the sponsors handle their projects’ payroll. About half provide organizational development, and tax reporting is offered by 86, also about half of the sponsors.

This suggests that the majority of fiscal sponsors do not practice the project-is-us degree of ownership described in Fiscal Sponsorship: 6 Ways to Do It Right — the Model A direct project — that involves the highest level of responsibility a fiscal sponsor assumes for a project.

The larger, more experienced sponsors, according to survey results, tend to provide a spectrum of financial services — all of the above plus they usually handle insurance and auditing. Such an array of administrative support could meet the requirements of every model. This indicates why the experienced sponsors’ fees are higher — more services, more staff time required.

DO IT RIGHT: 6 Ways

The most significant publication in the field is attorney Gregory Colvin’s Fiscal Sponsorship: 6 Ways to Do It Right, first published in 1993 with an expanded and updated edition in 2005. Colvin also periodically makes major points on new developments in fiscal sponsorship on his Website fiscalsponsorship.com.

Colvin’s book has had great impact on fiscal sponsorship. It changed the nomenclature of the field. As all semanticists know, language is culture, and Fiscal Sponsorship: 6 Way to Do It Right – by changing the term for this process from “fiscal agent” to “fiscal sponsor” – has helped the culture of fiscal sponsorship evolve. The term “fiscal sponsor” has caught on, forcing a change in behavior from the days decades ago of “fiscal agency,” when the relationship was often considered a trap for the unwary funder.

Among the 90, or more than half of participating fiscal sponsors that had read Colvin’s book – a percentage that has grown steadily as more sponsors have joined the directory –more than one-third practice primarily Model C, the preapproved grant relationship.

The second most popular scenario, Model A, the direct project, is practiced by 75 sponsors.

DATA UPDATES

These highlights from the survey data on participating fiscal sponsors were updated in mid-June 2010. As additional fiscal sponsors participate, or as sponsors correct and add to existing entries, the data in these highlights will reflect the changes.

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• SERVICE CATEGORY Arts and culture Children, youth and families Disaster relief Drug Treatment Economic development Education Environment / Sustainable Growth Faith based / religious Festivals and Events Health/nutrition Housing International development Mental health People or communities of Color or minorities Political advocacy / social justice Social services Transportation Women Youth development Other: