On October 24 and 25 the largest gathering of fiscal sponsors came to Philadelphia to discuss best practices and grow the sub-sector of nonprofits that practice this unique model delivering impact at scale.

First, what are fiscal sponsors?

Fiscal sponsorship is simply the act of one nonprofit organization with 501c3 status letting another individual or organization operate under their 501c3 status so they don’t have to get their own. Sometimes this is done as a favor, but many more organizations are doing this at a professional level, where the fiscal sponsor creates a contract to provide back-office services and charges a fee. (For more details, click here.)

Takeaways from the conference:

1. Fiscal sponsorship is growing nationally.

There were over 180 attendees from 19 states, D.C. and Puerto Rico representing 74 organizations large and small that practice one of the many forms of fiscal sponsorship. This was the largest single gathering of fiscal sponsorship organizations in the country.

Shree Karmacharya and Tamika Washington of TOF’s #finance and #accounting team moderated a panel last week at The National Network of Fiscal Sponsors gathering discussing financial efficiencies and best practices around fiscally sponsored projects. pic.twitter.com/hGbjvDRNZm

— The Ocean Foundation (@oceanfdn) October 28, 2019

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Fiscal sponsorship as a professional practice is growing and becoming more mainstream — as more and more individuals know the option exists to be fiscally sponsored and plug into an existing infrastructure, instead of building an entire nonprofit from the ground up, they are choosing fiscal sponsorship so they can focus on program delivery and not administrative operations.

2. Funders and fiscal sponsors need to create deeper partnerships.

Not all funders fully understand and accept fiscal sponsors and the programs that use fiscal sponsor as fundable. Luckily in Philadelphia, we have a strong portfolio of fiscal sponsors and funders are used to working with them. But still locally and nationally fiscal sponsors are not well understood or trusted by many funders.

Excited to kick off Day 2 of the National Network of Fiscal Sponsors National Gathering 2019! Starting the day with a Funders Panel talking about how funders view fiscal sponsorship. #fiscalsponsorship #nonprofits @FiscalSponsors pic.twitter.com/bnPWIbXhGT

— PanoramaTeam (@panoramateam) October 25, 2019

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Great presentation by @UACoalition’s @TivoniDevor on their Seed Stage funding for new initiatives. Perfect example of @FiscalSponsors enabling grassroots impact. @arabellaadvisor @ #NNFS

— Seth Earn (@sethearn) October 25, 2019

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At the gathering we had a funder panel, and we were able to have an honest conversation about it. There are some common assumptions about fiscal sponsors and the program they sponsor, especially around the fees that fiscal sponsors charge for the services they provide, and the thinking that fiscally sponsored programs are not “real” organizations. More work needs to be done to get fiscal sponsors and funders in a room together.

3. Fiscal sponsors need to move toward uniformity.

Currently there are no formal laws or IRS regulations for a nonprofit to become a fiscal sponsor, and because of this there is very little uniformity between fiscal sponsors when it comes to the services they provide, the fees they charge, or how they contract with the organizations that they fiscally sponsor.

The National Network of Fiscal Sponsors, the host of the national gathering, does a lot of work to build towards a common set of best practices, but every once in a while a relationship between a fiscal sponsor and their sponsored program goes bad and the practice looks bad even though each fiscal sponsor is unique.