Most organizations start as a project that obtains fiscal sponsorship from a larger and more established nonprofit. This practice has become so commonplace that most of us become familiar with the concept of fiscal sponsorship very early in our nonprofit journey.
But pursuing or being a fiscal sponsor requires careful thought, planning, and negotiation. To help nonprofits better understand the available models, we brought in fiscal sponsorship expert Andrew Schulman to discuss three fiscal sponsorship models, share resources for finding fiscal sponsors, and provide insight into negotiating your fiscal sponsorship agreement.
* * * * * Time Stamped Highlights * * * * *
(3:47) The most common types of fiscal sponsorship
(4:40) The benefits of a startup nonprofit using a fiscal sponsor
(5:53) How organizations can separate from their fiscal sponsor
(8:44) Fiscal sponsorship Model C, which allows the sponsored entity to remain independent
(10:00) Examples of individuals that obtain fiscal sponsorship
(12:38) The types of assistance that organizations need to establish a fiscal sponsorship relationship
(14:00) Things to consider before becoming a fiscal sponsor
(17:17) How to find a fiscal sponsor
(21:40) The project side of fiscal sponsorship
(25:50) Questions that projects seeking a fiscal sponsor should ask
(27:32) How a sponsored project can be certain that it is ready to separate and become independent
(31:49) The deal making advice our guest would give to Donald Trump
The nonprofit sector is risky business. There are unique laws that apply just to us; we have our own sections of the tax code; and we also must follow employment law, building codes, licensing requirements, and more.
Of course, the press loves to go after charities gone wild and personal injury attorneys salivate at the thought of chasing an organization’s assets on the balance sheet.
This is why we asked Justine Cowan to chat with us today about mitigating and insuring against the risk that we face as nonprofit organizations, as board members, and as staff members.
Our conversation included (Time Stamps):
Justine Cowan’s Website: www.cowannonprofits.com
Episode 40: Finding Pro Bono Legal Counsel with Rachel Spears
About Successful Nonprofits Podcast Host Dolph Goldenburg
Dolph is recognized as a high performance leader in the nonprofit sector who served as a nonprofit CEO for a dozen years and a fundraiser for an additional ten years. Author of the book Successful Nonprofits Build Supercharged Boards, Goldenburg also founded a boutique consulting firm based in Atlanta.
His multi-state consulting practice provides interim executive transition, strategic planning, and organizational development services. The Goldenburg Group's clients have annual operating budgets ranging from $25,000 to over $25 million deployed in the areas of housing, education, civil rights, arts and culture, workforce development, health services, and community-based services.
Connect with Dolph:
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Atlanta area accountant Anthony Sampson joins us for today’s podcast to talk about automatic revocation of tax-exempt status. Earlier this year, I met with the board of a small nonprofit organization, and a board member indicated that they were “too small to have to file an IRS form 990 of any sort”.
My warning antenna shot up, and I suggested they were probably required to file one. Of course, I was clear that I am not a CPA or qualified to provide tax advice, so I offered to connect them with a a local accounting firm that works with a number of nonprofits.
After making the introduction, I did a little bit of research and was shocked at what I learned.
In calendar year 2015, the IRS revoked the federal tax-exempt status of more than 41,500 nonprofit organizations that failed to file a Form 990 for three consecutive years. That’s just the tip of the iceberg: the IRS has revoked the tax-exempt status of over 635,000 nonprofit organizations since implementing this rule in 2010. With only about 1.8 million nonprofits in the nation, about a third of all nonprofits have been subject to revocation.
Scanning the names and locations of those with revoked tax exempt status, the list represents a diverse group of nonprofits, including ministries, associations, fraternities, volunteer fire departments, sports clubs, social service providers, arts organizations, PTA’s, and more.
After learning these jarring statistics, I knew it was essential that accountant Anthony Sampson join us for the featured conversation.
Article of the Week: Get Intersectional
Leanne Rubenstein, Executive Director of Compassionate Atlanta, joined us for the Article of the Week by Kristin Moe: Get Intersectional: Why you can’t go it alone in Yes Magazine. This article on intersectionality applies to nearly every organization. Whether an art museum, a homeless shelter, an educational institution, or a civil rights organization, we can all get a little more intersectional.
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