The Nonprofit Shortcut: Fiscal Sponsorship
So you want to start a nonprofit.
Maybe you want to help out your community, maybe you’d like to apply for grants and donations, maybe you don’t want to be a slave to profits and want to live free from balance sheets (bad news: you still have to worry about profits and balance sheets as a nonprofit, but that’s another article).
There’s just one problem: how the heck do you start?
But there’s an even bigger question most people aren’t asking themselves; do you even want to start a nonprofit?
You might be asking: what’s the difference between a fiscal sponsorship and nonprofit? Since this is a blog article, I can’t hear you. But I’ll answer that question anyway.
A nonprofit is a tax-exempt organization that operates for the public good rather than profit. Nonprofits get tax breaks, can offer tax benefits to donors, and often qualify for resources and opportunities not available to for-profits.
Sounds pretty great, right? But there’s no such thing as a free lunch, and there are always strings attached to being tax-exempt.
Nonprofits take time, money, and a great team to pull together. To start a nonprofit, you will first have to set up a business entity and receive an EIN. You must also assemble a Board of Directors, draft up your bylaws and articles of incorporation, and pay the $300+ fee to apply for nonprofit status with the government. Don’t believe me? Boom! Here’s the IRS website to back me up.
There is another way to receive many of the benefits of being a nonprofit, without jumping through all the hoops, and it isn’t even cheating; a fiscal sponsorship.
A fiscal sponsorship is a partnership between a nonprofit and an individual, a project, or another organization. The benefit of a fiscal sponsor is that you don’t have to jump through the same hoops to become a nonprofit. You can still apply for grants and accept donations, all through your fiscal sponsor.
More importantly, fiscal sponsors can act like mentors, so they can help guide you through fundraising or getting your project off the ground, or may even help you become a fully-fledged nonprofit.
Becoming a nonprofit is nice work if you can get it, but there truly aren’t enough people talking about how cool it is to be a fiscally sponsored project. Ok, maybe not as cool as Phoebe Bridger’s latest album, but it’s pretty neat.
Not sure which is best for you? I made a chart! (#nerd)
If you do want to start a fiscal sponsorship and you are on good terms with a nonprofit, all you have to do is ask! Any nonprofit can become a fiscal sponsor, but each organization is different and will have different sets of requirements. If you hate asking questions and want something a bit more straightforward, you can start here:
- Fractured Atlas — Fractured Atlas is an arts-based fiscal sponsorship where you can accept monthly donations or fundraise through a campaign. They automatically send out thank you letters, help you with your annual reporting, and so much more. I’ve used FA for multiple projects, and I wholly recommend them! (They didn’t even pay me to say this!)
- Community Partners — A great option if you have a broader audience than the arts, but might have a more rigorous application process.
- Fiscal Sponsor Directory — Find more fiscal sponsors through the directory!
- Community Foundations are also a great place to start if you’re looking for a fiscal sponsorship.
Do you have any experience with fiscal sponsorship or becoming a nonprofit? Chime in below, email me, or send something by messenger pigeon; I’d love to hear from you!
Originally published at http://laurarensing.wordpress.com on November 8, 2021.
