Frequently Asked Questions

Fiscal sponsorship is a practice that has evolved as an effective and efficient means of starting new charitable initiatives, delivering public services, and seeding social movements. In a typical fiscal sponsorship relationship, a nonprofit organization confers its 501(c)(3) tax-exempt status to groups that are engaged in activities that serve the host’s mission, typically for a fee. Donations to the social venture are directed to the fiscal sponsor and are restricted by the fiscal sponsor to support activities of the social venture, and fiscal sponsor organizations are responsible for assuring the activities of social ventures fulfill their charitable purpose.

Fiscal sponsor organizations like Tides provide a legal framework for social ventures, enable the movement of resources from funders and donors to social ventures, activities, ideas, and organizations that share the fiscal sponsor’s mission, and enable organizations to grow and scale while focusing on their mission.

Fiscal sponsorship can offer a valuable alternative to starting a nonprofit. Organizations fiscally sponsored by Tides Center are able to access our resources and efficiency, our decades of experience, our network of funders and changemakers, and comprehensive services, including human resources, grants management, finance and accounting, legal and compliance, and more. Tides is the leading fiscal sponsor for social change initiatives in the United States. We have a long history of providing high quality services and support to the nonprofit community and have sponsored over 1400 social ventures throughout our history. Tides Center is committed to the missions of its social ventures, and all Tides Center social ventures share a vision of shared prosperity and social justice.

Tides is comprised of five separate legal entities – Tides Network, Tides Center, Tides Foundation, Tides Two Rivers Fund and Tides Inc. Tides Network is the parent organization employing the majority of Tides staff and providing service to our various partners. Tides Two Rivers Fund and Tides Inc. operate our two Tides Converge centers in San Francisco and New York.

Tides Foundation serves as a grantmaking organization primarily through the management of close to 400 donor advised funds. Unlike other foundations, Tides Foundation does not have an endowment, and all grants are made on the recommendation of donor clients. The Foundation does not take unsolicited grant requests. Tides Center primarily offers fiscal sponsorship and nonprofit acceleration services. No preference is given to Tides Center social ventures by the Tides Foundation.

Related FAQs

• What is fiscal sponsorship?
• What is a 501(c)(3) nonprofit organization?
• What are the different Tides entities and affiliates?

A well-run nonprofit can expect to spend between 20-30% of annual revenue on administrative and overhead expenses. For the comprehensive suite of back-office services, legal framework, and capacity-building support that Tides Center provides, typical social ventures pay only nine percent (9%) of their annual revenue. Being fiscally sponsored is extremely cost effective and saving money is critical for organizations that are just emerging, testing new approaches to difficult social problems, run entirely by volunteers, or working in issue areas where funding is scarce. Fiscal sponsorship is an efficient, economic way to reduce the cost of running an organization and still maintain the integrity of the organization’s purpose.

The term 501(c) refers to a subsection of the United States Internal Revenue Code that lists the types of nonprofit organizations exempt from certain federal taxes. Section 501(c)(3) is one of the tax law provisions granting exemption from the federal income tax to nonprofit organizations that exist for religious, charitable, scientific, literary, or educational purposes, among others. See the IRS’s website for more information on the designation of charitable organizations. Tides Center, the organization providing fiscal sponsorship in the Tides family of organizations, has been a designated 501(c)(3) nonprofit organization since our incorporation in 1996.

There are three major eligibility requirements to become a social venture at Tides: mission alignment, confirmed funding and budget, and legal fit.

Mission alignment

All social ventures fiscally sponsored by Tides must be aligned with Tides Vision, Mission and Approach.

Confirmed funding and budget

To start your social venture at Tides, you must have an expected annual budget of at least $250,000 with confirmed support and formal grant commitments for 100% of your budget for the first year at Tides. You also need at least one full time employee who will be employed through Tides. Your organization will typically be charged a 9% fee on all revenues to support the services that help you scale your impact. Other fees might apply depending on the source of the grant support or other non-standard services.

Your social venture should plan to be with Tides for at least two years.

Legal fit

Tides Center’s Board of Directors has full governing authority, and full legal and fiduciary responsibility, for all social ventures, employees, and activities of Tides Center. To uphold Tides Center’s legal nonprofit status, to ensure all social ventures follow the IRS regulations, and to maintain compliance with the law, Tides Center’s staff monitors and maintains social venture finances, human resources, payroll, leases, contracts, and insurance.

Social ventures must have a U.S. base of operations.

Related FAQs

• What are the eligibility requirements to open a fund at Tides?
• What is the process to become fiscally sponsored by Tides?
• How long does it take to get set up as a fiscally sponsored social venture?

Tides partners with individuals, groups, and funders to implement programs that accelerate positive social change. We define positive social change in terms of programs and activities that create and promote a world of shared prosperity and social justice, founded on equality and human rights, quality education, a sustainable environment, and healthy individuals and communities. While there are many avenues to affect positive social change, Tides social ventures work mainly in civic engagement, community development, economic opportunity, education and training, environmental sustainability, health services/healthcare reform, housing and homelessness, human rights, human and social services, international development, social justice, sustainable food and agriculture, violence prevention, and youth development and organizing. Learn more about our vision, mission, and approach.

While Tides is committed to partnering with social ventures of all sizes and has a history of supporting small organizations in the start-up phase, to balance capacity and opportunity Tides annually revises a target mix of potential social ventures based on annual budget. There are several other fiscal sponsors with lower minimums. Learn more at the National Network of Fiscal Sponsors.

STEP 1: Determine if social venture meets eligibility criteria, including mission alignment, confirmed funding and legal framework.

STEP 2: Make your initial approach to Tides via the Partner With Us form. This form is reviewed internally by Tides staff within 2 to 3 weeks.

STEP 3: Have an initial call with Tides staff to discuss your mission, program activities, needs, and timeline.

STEP 4: Tides staff invite those eligible candidates who fit our current criteria to submit an application. Application is by invitation only.

STEP 5: If application is approved by Tides staff and Board of Directors, social venture is onboarded and is active once initial funding is received by Tides.

It generally takes at least 6-10 weeks to get set up as a fiscally sponsored social venture at Tides, but could potentially take longer depending on complexity.

While these activities can be done simultaneously, before submitting the Partner With Us form to Tides, you must have funding confirmed as well as a clear fundraising plan to sustain your charitable efforts. If you are invited to submit a full application, Tides can work with you to communicate to donors that you are in the process of obtaining fiscal sponsorship. In most cases, this is sufficient for you to continue raising funds.

Tides does not provide funding to fiscally sponsored social ventures. Organizations accepted as Tides social ventures are responsible for developing and executing their own fundraising plans. Tides manages confirmed grants and grant reporting. In addition, as part of Tides’ capacity-building program, staff can attend workshops and online trainings on fundraising topics; and, through Tides’ partnership with the Foundation Center, all staff have access to and training on the Foundation Center’s Online Directory to research grantmakers and their grants.

While many people are in the beginning stages of developing their organization, the application should paint as complete a picture as possible. Even if you have not figured out all the answers, we are interested in knowing your best thinking to date. We are interested in learning how your proposed activity connects to Tides’ mission, what your fundraising strategy is, how much confirmed funding you have, how far along your social venture is and who is behind it.

Tides manages all incoming and outgoing funds for each social venture and processes all financial transactions on behalf of our social ventures. Tides provides a financial orientation that covers budgeting, coding expenses, monitoring expenses, the Tides chart of accounts, and reading and utilizing the monthly financial statements prepared by Tides. Invoices are paid via check or ACH on a weekly basis and expedited payments are available for an extra charge. Social ventures are able to access their funds via purchase cards, direct invoicing, and petty cash accounts. Social ventures are responsible for coding transactions, submitting original receipts, honoring our timelines, and monitoring their own cash flow.

The social venture director is responsible for overall programmatic operations; all fundraising and the financial sustainability of the social venture; and, the supervision of all social venture employees and volunteers. The social venture director of each social venture must:

-Maintain an effective working relationship with Tides
-Ensure social venture staff are trained to follow all Tides processes and procedures
-Manage social venture finances in accordance with Tides cash management policies
-Authorize all financial transactions in accordance with funding guidelines and Tides policies
-Direct allocations of financial and human resources to successfully carry out the social venture’s mission and activities within Tides and funding guidelines
-Ensure social venture compliance with applicable employment laws, rules and regulations
-Communicate to social venture staff, volunteers, and participants the goals, policies, and procedures of the social venture and Tides
-Provide social venture employees clear direction, set appropriate work standards, and ensure a fair and healthy work environment
-Follow all Tides procedures associated with the obligation and expenditure of funds; develop, submit to Tides, and manage the annual budget and regularly review the social venture’s fiscal status with Tides staff
-Assure timely and accurate delivery of all requisite information for employee benefit elections and Supplemental Personnel Policies, the hiring and terminating of employees, and any other employee status changes
-Resolve any excess expenditure, unallowable cost, personnel, or other risk management issues of the social venture in a timely manner
-Review staff job performance and address any employee performance issues in consultation with Tides
-Prepare grant proposals consistent with Tides policies and ensure compliance with all grant agreements
-Inform Tides of any new program activities in order to assure timely budgeting and assessment of potential risks
-Develop internal systems to effectively collaborate with Tides and track activities as required
-Maintain clear communication with the social venture’s advisory board, consult with the advisory board when appropriate, and keep Tides informed of all current advisory board members’ names, contact information, and term-ending dates
-Annually complete and sign Tides’ Conflict of Interest Disclosure form and arrange for each social venture advisory board member to sign Conflict of Interest Disclosure forms as well

The majority of fiscally sponsored social venture activities are covered by our mandatory insurance package which includes general liability insurance, property coverage, and commercial auto liability. Social ventures should reserve a minimum of $2,500 of gross annual revenue to cover general liability insurance for the first year of operating as the baseline of insurance cost for running your program. Each social ventures is evaluated annually for increased liability exposure and fees may be adjusted accordingly. Insurance costs are not included in the standard fee charged for Tides’ fiscal sponsorship services.

Tides encourages social ventures to engage in forms of lobbying and political activities permissible under our 501(c)(3) designation. We are obliged to track all such activities, as the IRS places a cap on total lobbying expenditures. Social ventures may always engage in non-partisan research and get-out-the-vote efforts. IRS regulations for 501(c)(3) nonprofit organizations such as Tides preclude social ventures from engaging in direct or implied support or opposition of any candidate or party.

Social ventures fiscally sponsored by Tides are required to offer all full-time staff Tides’ comprehensive health and dental benefits package; part-time staff may also be eligible. There is a selection of HMO and individual provider plans to choose from. Coverage for spouses, children, and domestic partners is also available at the discretion of each individual social venture.

Tides provides a comprehensive suite of back-office services to all social ventures and at this time we are not able to allow groups to choose from among our offerings. If you require additional services we would be glad to provide a tailored set of solutions to meet your impact goals.

For the comprehensive suite of acceleration services that Tides provides, including financial management, legal framework, and capacity-building support, social ventures pay only nine percent (9%) of their annual revenue.

A well-run independent nonprofit can expect to spend between 20-30% of annual revenue on administrative and overhead expenses. Tides Center fees are in line with other fiscal sponsors practicing similar models of fiscal sponsorship.

After the first year of activity, social ventures that exceed $1 million in operational activity can qualify for a reduced fee for revenue that exceeds $1 million.

The fee for all funding from government sources is fifteen percent (15%). The fee is higher for this type of funding because government grants entail significantly more auditing and reporting services.

Finally, social ventures need to be involved in the Tides Risk and Insurance program and reserve a minimum of two thousand five hundred dollars ($2,500) of gross annual revenue per year for operating liability. Social ventures are evaluated annually for increased exposure and fees may be adjusted.