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Fiscal Sponsorship Doing it Right

Fiscal Sponsorship Doing it Right. Greg Colvin Adler & Colvin San Francisco, California. What is Fiscal Sponsorship?.

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Fiscal Sponsorship Doing it Right

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  1. Fiscal SponsorshipDoing it Right Greg Colvin Adler & Colvin San Francisco, California Copyright 2010, Adler & Colvin

  2. What is Fiscal Sponsorship? • An arrangement between a 501(c)(3) public charity and a project in which, typically, the charity receives and expends funds to advance the project while retaining discretion and control over the funds. Copyright 2010, Adler & Colvin

  3. Not Fiscal Agency • Fiscal Agency – Wrong Term charity is not agent to receive project $ • Fiscal Sponsorship – Preferred Term charity directs, controls project $ Copyright 2010, Adler & Colvin

  4. Two Main Ways to Do It Right • Direct Project Model (A) * Independent Contractor is Model B • Pre-Approved Grant Model (C) Copyright 2010, Adler & Colvin

  5. Copyright 2010, Adler & Colvin

  6. Copyright 2010, Adler & Colvin

  7. Direct Project, Model A • Project belongs to sponsor • Project is not a separate legal entity • Project personnel are employees / volunteers • Contributions belong to sponsor Copyright 2010, Adler & Colvin

  8. Direct Project, Model A • Sponsor is liable for everything • Sponsor reports revenue and expenses • Sponsor OWNS project • Project may have advisory committee Copyright 2010, Adler & Colvin

  9. Legal Steps • Project director or advisory committee establishes a contract with sponsor. • Sponsor’s board has already approved a sponsorship program or approves now. • Fundraising done in name of sponsor. • Sponsor receives grants, donations into project fund account, pays costs directly. Copyright 2010, Adler & Colvin

  10. Pre-Approved Grant, Model C • Project belongs to grantee • Project is in a separate legal entity • Project personnel work for grantee • Charitable contributions go to sponsor first Copyright 2010, Adler & Colvin

  11. Pre-Approved Grant, Model C • Grantee is liable for project • Sponsor reports contributions in and grants out • Grantee reports grant in and expenses out • Sponsor retains “variance power” (discretion and control) over funds Copyright 2010, Adler & Colvin

  12. Pre-Approved Grant – 7 Steps • Written grant proposal from project • Sponsor evaluation of proposal • Sponsor Board approval • Written grant agreement • Proper solicitation of funds • Proper accounting for funds • Reports from grantee to sponsor Copyright 2010, Adler & Colvin

  13. Copyright 2010, Adler & Colvin

  14. How Could Anything Go Wrong? Copyright 2010, Adler & Colvin

  15. Problems Common to Both Models • Sponsor is “absent,” or “We are just using their 501(c)(3)” • No written agreement • Confusion with DAF or other programs • Sponsor mischaracterizes relationship • Donor confusion about recipient Copyright 2010, Adler & Colvin

  16. Direct Project Problems • Sponsor fails to plan for liability • No pre-nuptial agreement • Dealing with the break-up • Ownership of intellectual property • Project spends more than it has • Organizing an advisory committee • Treatment of employees Copyright 2010, Adler & Colvin

  17. Pre-Approved Grant Problems • Failure to pre-approve the grant relationship • Grantee fails to report income • Ownership of intellectual property • Grantee fails to report back to sponsor • Sponsor pays grantee’s bills directly • Lack of professional grants management Copyright 2010, Adler & Colvin

  18. Resources • Fiscal Sponsorship: 6 Ways To Do It Right, 2005 edition • www.fiscalsponsorship.com • www.fiscalsponsordirectory.org • National Network of Fiscal Sponsors: www.tides.org/community/networks-partners/nnfs/ Copyright 2010, Adler & Colvin

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