How To Become a Fiscally Sponsored Project (as opposed to a 501c3)


It’s important to note that for you to run a nonprofit writing center, you don’t need to become your own 501c3. The first center at 826 Valencia was actually started as a fiscally sponsored project of another nonprofit called Youth Speaks.

Fiscal sponsorship is a relatively easy and sort of wonderful way to get started. Fiscal sponsors can be life-savers and the best of mentors.

Typically, these organizations — fiscal sponsors — have a broad arts or education mission. They exist to support local arts groups. So within their own mission, they are permitted to take nascent, or even mature, arts organizations under their wing. Acting as a fiscal sponsor means they are willing to take on related, smaller, agencies and act as a financial support.

The best part of all this is that once you are one of their projects, you can solicit and accept tax-deductible donations. These donations are made to the sponsoring organization, typically a nonprofit, which handles the accounting for you. A sponsoring nonprofit typically takes 5 to 15 percent for their fiscal sponsorship, and the rest of the donation can go to your project.

It’s a very simple and very efficient system that makes starting a nonprofit much easier. You can always apply for your own 501c3 status at a later date — or even while you are operating under the wing of your fiscal sponsor — but this is a great way to get going very quickly.

Here’s a step-by-step:

1. Look for local organizations that act as fiscal sponsors. A simple web search should do the trick. If not, ask around the local nonprofit community.

2. Let’s say you find a potential sponsor called Arts in the City. You will meet with them to discuss what their requirements are for fiscal sponsorship. If the mission of your project aligns with the mission of their nonprofit, then you might have a fit.

3. You will write a proposal and complete other paperwork they might require.

4. If they accept you as a fiscally sponsored project, you can begin accepting donations immediately. These donations will be made to Arts in the City, using their 501c3 status. Arts in the City will take a percentage of that donation and send the rest onto your project. They will also keep accounting records of all donations made through their sponsorship.

This is a very efficient and speedy way to begin your work. And because you are working under the guidance of an established nonprofit, and because they are helping you with the accounting, it makes getting started much easier. You learn from this larger nonprofit and can leave some of the financial matters to them as you grow and work on your programming.

So don’t forget these words: Fiscal Sponsorship.