copyright 2010, adler & colvin 1 fiscal sponsorship doing it right greg colvin adler &...

Copyright 2010, Adler & ColvinCopyright 2010, Adler & Colvin 11

Fiscal SponsorshipFiscal SponsorshipDoing it RightDoing it Right

Greg ColvinGreg Colvin

Adler & ColvinAdler & Colvin

San Francisco, CaliforniaSan Francisco, California


What is Fiscal Sponsorship?What is Fiscal Sponsorship?

An arrangement between a 501(c)(3) An arrangement between a 501(c)(3) public charity and a project in which, public charity and a project in which, typically, the charity receives and expends typically, the charity receives and expends funds to advance the project while funds to advance the project while retaining discretion and control over the retaining discretion and control over the funds.funds.


Not Fiscal AgencyNot Fiscal Agency

Fiscal Agency – Wrong TermFiscal Agency – Wrong Term

charity is charity is notnot agent to receive project agent to receive project $$

Fiscal Sponsorship – Preferred TermFiscal Sponsorship – Preferred Term

charity directs, controls project $charity directs, controls project $


Two Main Ways to Do It RightTwo Main Ways to Do It Right

Direct Project Model (A)Direct Project Model (A)

* Independent Contractor is Model B* Independent Contractor is Model B

Pre-Approved Grant Model (C)Pre-Approved Grant Model (C)


Direct Project, Model ADirect Project, Model A

1.1. Project belongs to sponsorProject belongs to sponsor

2.2. Project is not a separate legal entityProject is not a separate legal entity

3.3. Project personnel are employees / Project personnel are employees / volunteersvolunteers

4.4. Contributions belong to sponsorContributions belong to sponsor


Direct Project, Model ADirect Project, Model A

5.5. Sponsor is liable for everythingSponsor is liable for everything

6.6. Sponsor reports revenue and expensesSponsor reports revenue and expenses

7.7. Sponsor OWNS projectSponsor OWNS project

8.8. Project may have advisory committeeProject may have advisory committee


Legal StepsLegal Steps

Project director or advisory committee Project director or advisory committee establishes a contract with sponsor.establishes a contract with sponsor.

Sponsor’s board has already approved a Sponsor’s board has already approved a sponsorship program or approves now.sponsorship program or approves now.

Fundraising done in name of sponsor.Fundraising done in name of sponsor.Sponsor receives grants, donations into Sponsor receives grants, donations into

project fund account, pays costs directly.project fund account, pays costs directly.


Pre-Approved Grant, Model CPre-Approved Grant, Model C

1.1. Project belongs to granteeProject belongs to grantee

2.2. Project is in a separate legal entityProject is in a separate legal entity

3.3. Project personnel work for granteeProject personnel work for grantee

4.4. Charitable contributions go to sponsor Charitable contributions go to sponsor firstfirst


Pre-Approved Grant, Model CPre-Approved Grant, Model C

5.5. Grantee is liable for projectGrantee is liable for project

6.6. Sponsor reports contributions in and Sponsor reports contributions in and grants outgrants out

7.7. Grantee reports grant in and expenses Grantee reports grant in and expenses outout

8.8. Sponsor retains “variance power” Sponsor retains “variance power” (discretion and control) over funds(discretion and control) over funds


Pre-Approved Grant – 7 StepsPre-Approved Grant – 7 Steps

1.1. Written grant proposal from projectWritten grant proposal from project

2.2. Sponsor evaluation of proposalSponsor evaluation of proposal

3.3. Sponsor Board approvalSponsor Board approval

4.4. Written grant agreementWritten grant agreement

5.5. Proper solicitation of fundsProper solicitation of funds

6.6. Proper accounting for fundsProper accounting for funds

7.7. Reports from grantee to sponsorReports from grantee to sponsor


How Could Anything Go Wrong?How Could Anything Go Wrong?


Problems Common to Both ModelsProblems Common to Both Models

1.1. Sponsor is “absent,” or Sponsor is “absent,” or “ “We are just using their 501(c)(3)”We are just using their 501(c)(3)”

2.2. No written agreementNo written agreement

3.3. Confusion with DAF or other programsConfusion with DAF or other programs

4.4. Sponsor mischaracterizes relationshipSponsor mischaracterizes relationship

5.5. Donor confusion about recipientDonor confusion about recipient


Direct Project ProblemsDirect Project Problems

1.1. Sponsor fails to plan for liabilitySponsor fails to plan for liability

2.2. No pre-nuptial agreementNo pre-nuptial agreement Dealing with the break-upDealing with the break-up

3.3. Ownership of intellectual propertyOwnership of intellectual property

4.4. Project spends more than it hasProject spends more than it has

5.5. Organizing an advisory committeeOrganizing an advisory committee

6.6. Treatment of employeesTreatment of employees


Pre-Approved Grant ProblemsPre-Approved Grant Problems

1.1. Failure to pre-approve the grant Failure to pre-approve the grant relationshiprelationship

2.2. Grantee fails to report incomeGrantee fails to report income

3.3. Ownership of intellectual propertyOwnership of intellectual property

4.4. Grantee fails to report back to sponsorGrantee fails to report back to sponsor

5.5. Sponsor pays grantee’s bills directlySponsor pays grantee’s bills directly

6.6. Lack of professional grants managementLack of professional grants management


ResourcesResources

Fiscal Sponsorship: 6 Ways To Do It Fiscal Sponsorship: 6 Ways To Do It Right, Right, 2005 edition2005 edition

www.fiscalsponsorship.comwww.fiscalsponsorship.comwww.fiscalsponsordirectory.orgwww.fiscalsponsordirectory.orgNational Network of Fiscal Sponsors:National Network of Fiscal Sponsors:

www.tides.org/community/networks-partnerswww.tides.org/community/networks-partners/nnfs//nnfs/

copyright 2010, adler & colvin 1 fiscal sponsorship doing it right greg colvin adler &...

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