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:
There is nothing scarier than a cash-flow crisis. It can undermine your organization's success and even your own confidence.
If you're facing a cash flow crisis, listen to this bonus break over a cup of coffee. In less than 15 minutes, you'll learn:
Today’s episode explores a unique path that one nonprofit took to transition from steady, incremental growth to a dramatic program expansion and impact. : buying a for profit company.
We spoke with David Shaffer, CEO of First Step Staffing. In 2015, First Step Staffing was a $2 million nonprofit organization providing employment opportunities for low-income, hard to employ people (including those who are homeless and citizens returning from incarceration). The nonprofit took a bold step by purchasing a for profit staffing firm with annual revenues of about $20 million!
One year after the purchase, First Step staffing was using the combined infrastructure to have a much larger impact on the community. They provided employment to over 2,100 of Atlanta’s homeless, and 86% of those working over 180 days were able to rent their own residence!
This unique conversation explored:
Late last week the White House released Donald Trump’s “budget blueprint” that outlines his spending priorities and cuts for the upcoming fiscal year. Knowing that this budget blueprint could have broad implications for nonprofits across the nation, we read the 62 page document, researched the agencies to be impacted, and summarized changes that nonprofits should anticipate if the budget resembles this blueprint.
The budget blue print calls for the elimination of 9 programs, and we analyze the impact their termination will have on both grant funding for nonprofits, as well as likely increased demand from consumers who used to access programs funded by these agencies.
Not being content with eliminating the 9 agencies that form the core of our nation's nonprofit infrastructure, "the cuts keep coming". For this reason, we researched every cut listed in the budget blueprint - which goes beyond just the cuts to meals on wheels we've already heard so much about. We outline the elimination of some funding sources (including some block grants that fund many organizations), as well as the sharp reduction of others.
About Successful Nonprofits Host Dolph Ward Goldenburg
A strong and productive banking relationship is as important to your nonprofit organization as its relationships with funders and community leaders.
Your bank can help smooth cash-flow with a line of credit; open doors for you to prospective major donors, partners; provide forecasting tools; serve as a business advisor; and even so much more.
This week’s Featured Conversation with Ashley Carson will help us learn how to build a strong banking relationship. Specifically, we discussed:
Atlantic Capital Bank: http://atlanticcapitalbank.com/
Ashley Carson’s Contact Information: 404-995-6214
Article of the Week Denise Spivak
Denise Spivak of CenterLink joins us again for The Article of the Week. She’s sharing a great article by Pamela Barden titled Making It “All About Me” from the NonprofitPro website. The article is about being donor focused instead of treating our donors like human ATMs. Denise and I discuss the broader implications of being more donor focused.
Making It “All About Me” by Pamela Barden:
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This episode includes a featured conversation with nationally nationally renowned HR expert Gary Wheeler.
Many people would rather be doused by a bucket of ice water than talk about HR regulations, but there’s an upcoming change to the overtime rules that will impact many nonprofit organizations. In today's episode, Gary shares information about upcoming changes to overtime rules and how they may impact nonprofits across the country.
• Virtual HR Director:
• Gary Wheeler’s Contact Information:
Article of the Week
The New Yorker magazine opinion piece titled “Philanthropic Fads” by James Surowiecki does a great job of assessing the long-term impact of the Ice Bucket Challenge.
Do you remember when the ice bucket challenge went viral back in 2014? According to the ALS Association, over 17 million people uploaded their ice bucket challenge videos. You probably recall seeing new videos appear in your facebook feed every day. From your old high school friends, your organization’s CEO, and Hollywood’s biggest stars. You may have even taken the challenge yourself.
In just a six-week period, that first challenge unexpectedly flooded the ALS Association with over $115 million in donations. At the time the organization’s annual budget was only about $20 million, so this was a huge boost.
When the challenge went viral, many nonprofit leaders found fault with it. This great article addresses many of the criticisms by describing what actually happened in the two years since the Ice Bucket Challenge went viral.
• Philanthropic Fads in The New Yorker
• ALS Ice Bucket Challenge infographic:
• Dolph’s favorite ALS Ice Bucket Challenge with Patrick Stewart:
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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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