Fiscal Sponsorship Doing it Right Greg Colvin Adler

What is Fiscal Sponsorship? l An arrangement between a 501(c)(3) public charity and a

Not Fiscal Agency l Fiscal Agency – Wrong Term charity is not agent to

Two Main Ways to Do It Right l Direct Project Model (A) * Independent

Direct Project, Model A 1. 2. 3. 4. Project belongs to sponsor Project is

Direct Project, Model A 5. 6. 7. 8. Sponsor is liable for everything Sponsor

Legal Steps Project director or advisory committee establishes a contract with sponsor. l Sponsor’s

Pre-Approved Grant, Model C 1. 2. 3. 4. Project belongs to grantee Project is

Pre-Approved Grant, Model C 5. 6. 7. 8. Grantee is liable for project Sponsor

Pre-Approved Grant – 7 Steps 1. 2. 3. 4. 5. 6. 7. Written grant

How Could Anything Go Wrong? Copyright 2010, Adler & Colvin 14

Problems Common to Both Models 1. Sponsor is “absent, ” or “We are just

Direct Project Problems 1. 2. Sponsor fails to plan for liability No pre-nuptial agreement

Pre-Approved Grant Problems 1. 2. 3. 4. 5. 6. Failure to pre-approve the grant

Resources Fiscal Sponsorship: 6 Ways To Do It Right, 2005 edition l www. fiscalsponsorship.

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What is Fiscal Sponsorship? l An arrangement between a 501(c)(3) public charity and a project in which, typically, the charity receives and expends funds to advance the project while retaining discretion and control over the funds. Copyright 2010, Adler & Colvin 2

Direct Project, Model A 1. 2. 3. 4. Project belongs to sponsor Project is not a separate legal entity Project personnel are employees / volunteers Contributions belong to sponsor Copyright 2010, Adler & Colvin 7

Legal Steps Project director or advisory committee establishes a contract with sponsor. l Sponsor’s board has already approved a sponsorship program or approves now. l Fundraising done in name of sponsor. l Sponsor receives grants, donations into project fund account, pays costs directly. l Copyright 2010, Adler & Colvin 9

Pre-Approved Grant, Model C 1. 2. 3. 4. Project belongs to grantee Project is in a separate legal entity Project personnel work for grantee Charitable contributions go to sponsor first Copyright 2010, Adler & Colvin 10

Pre-Approved Grant, Model C 5. 6. 7. 8. Grantee is liable for project Sponsor reports contributions in and grants out Grantee reports grant in and expenses out Sponsor retains “variance power” (discretion and control) over funds Copyright 2010, Adler & Colvin 11

Pre-Approved Grant – 7 Steps 1. 2. 3. 4. 5. 6. 7. Written grant proposal from project Sponsor evaluation of proposal Sponsor Board approval Written grant agreement Proper solicitation of funds Proper accounting for funds Reports from grantee to sponsor Copyright 2010, Adler & Colvin 12

Problems Common to Both Models 1. Sponsor is “absent, ” or “We are just using their 501(c)(3)” 2. 3. 4. 5. No written agreement Confusion with DAF or other programs Sponsor mischaracterizes relationship Donor confusion about recipient Copyright 2010, Adler & Colvin 15

Direct Project Problems 1. 2. Sponsor fails to plan for liability No pre-nuptial agreement l 3. 4. 5. 6. Dealing with the break-up Ownership of intellectual property Project spends more than it has Organizing an advisory committee Treatment of employees Copyright 2010, Adler & Colvin 16

Pre-Approved Grant Problems 1. 2. 3. 4. 5. 6. Failure to pre-approve the grant relationship Grantee fails to report income Ownership of intellectual property Grantee fails to report back to sponsor Sponsor pays grantee’s bills directly Lack of professional grants management Copyright 2010, Adler & Colvin 17

Resources Fiscal Sponsorship: 6 Ways To Do It Right, 2005 edition l www. fiscalsponsorship. com l www. fiscalsponsordirectory. org l National Network of Fiscal Sponsors: www. tides. org/community/networkspartners/nnfs/ l Copyright 2010, Adler & Colvin 18