The Evolution of Fiscal Sponsorship

from Nonprofit Law Blog:

Fiscal Sponsorship is Maturing as a Field

As the field has matured, donors, foundations, and other grantmakers have become increasingly confident in making gifts to projects through responsible fiscal sponsors. In fact, a gift to a strong fiscal sponsor … may provide greater comfort to a funder than a gift to an independent charity without a comparable administrative infrastructure and professional team of financial and human resources experts focused on compliance. Among the best practices adopted by such fiscal sponsors:

  • The fiscal sponsor fulfills all legal, tax and regulatory requirements of philanthropic and charitable nonprofit organizations and complies with the letter and the spirit of all laws.
  • The fiscal sponsor manages all funds, assets and other resources under its control with a high degree of responsibility, integrity, transparency and accountability.
  • The fiscal sponsor manages all administrative duties and responsibilities professionally and with a high degree of integrity and accountability.
  • The fiscal sponsor’s board of directors governs ethically, avoiding conflicts of interest in conducting the affairs of the organization and in carrying out its legal, fiduciary and policy making responsibilities. This active and engaged board of directors serves as the ultimate governing body of all fiscally sponsored projects.
  • The fiscal sponsor expects project leaders to adhere to clearly stated standards of ethical conduct, organizational policies and operational procedures.

[eJP note] For more, including a list of questions funders should ask their grantees who use fiscal sponsors, be sure to read the complete post.