Fiscal Sponsors = Fiscally Responsible

I know it probably sounds silly when I say that I’m passionate about fiscal sponsorship, but the truth is—I am! I care about how fiscally sponsored projects are treated and I care about how fiscal sponsors practice in the field. Mistakes made in the field affect all fiscal sponsors in very real ways, regardless if the errors are malicious or honest. As Tides’ Intake Manager, I am often one of the first people an aggrieved project comes to for solace and guidance after it realizes it’s been cheated or mistreated by their fiscal sponsor.

Tides’ work is based on trust, the basic component of a relationship between a project and it’s fiscal sponsor. Once trust is questioned it is nearly impossible to bring things back to a peaceful existence. I recently came across Gene Takagi’s Nonprofit Law Blog and his article “Fiscal Sponsorship: Six Ways to Do It Wrong” (the title being a play on Greg Colvin’s book Fiscal Sponsorship: 6 Ways To Do It Right). Gene notes six common mistakes fiscal sponsors make, such as #3: “The fiscal sponsorship arrangement is created without a written agreement. All sorts of room for misunderstandings, harsh feelings, and disputes.” I shudder to think of a fiscal sponsor and its project working together with no written agreement outlining responsibilities, fees, insurance, or intellectual property.

Truth be told, I have had people call me wondering if their fiscal sponsor has done something wrong because they have nothing in writing. Sometimes they share with me that they can’t get the fiscal sponsor to provide any financial reports, or even return a call. These cases are rare, but they do occur and they hurt the entire field of fiscal sponsorship. The nature of our work leads us to enter into both personal and professional relationship with our projects. As a fiscal sponsor, our work enables our projects to go out into the world and bring their passions to life. We enter into legally binding agreements, we vouch for each other, we trust one another, and we expect to get as much as we give.

Ultimately fiscal sponsors are responsible for the money of the projects they manage. Projects feel responsible for that money, too; they are the ones that raised it, so they expect to see that money work for them. Projects trust the fiscal sponsor will manage their money correctly. Funders want to know that a fiscal sponsor will provide the critical infrastructure, making their grants to a project less risky than a grant to a newly formed charity. Fiscal sponsors that mismanage money endanger the entire field. Fiscal sponsors understand that our work enables a greater good. This is not to say that fiscal sponsors are perfect, but fiscal sponsors can do the right thing by working with their projects to rectify and resolve contention.

The National Network of Fiscal Sponsors, of which Tides is a member, is working to finalize “best practices” for fiscal sponsors. The NNFS hopes to provide some guidance on operational questions that have been asked by emerging and existing fiscal sponsors, and it arranges events and gatherings for fiscal sponsors, by fiscal sponsors. I hope we can become part of the solution, not only in supporting better fiscal sponsorship practices but also in turning the negative assumptions about fiscal sponsorship into positive ones. Fiscal sponsors can learn how to practice our craft better by exchanging ideas and engaging in understanding the practice. There are a lot of ways to practice fiscal sponsorship. The field has much to learn, but with a positive effort and honesty we can make this field all the more reputable for the projects we serve as well as the foundations and individuals that support them.

National Network of Fiscal Sponsors meeting, October 2007