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Nonprofit Fiscal Sponsorship: How To Get Funded Without Your Own 501(c)3

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Getting funded as a new nonprofit can be tough. 

After all, most foundations won’t award grants to brand new organizations, and you can’t fundraise without an official 501(c)3 status granted by the IRS. 

Gaining that status isn’t always particularly easy—and it’s not always inexpensive, either.

So what can you do?

Fiscal sponsorship is what we call it when an established, IRS-recognized nonprofit takes financial responsibility for another, smaller organization. 

Fiscal sponsorship is a good option for new nonprofits. In this photo, we see a flat lay of a hand holding a cell phone with the calculator app open; a pile of receipts, and various writing utensils against a wooden desk.

The details can vary; some fiscal sponsors simply manage donations to the sponsored organization, while others handle a variety of backend administrative tasks—all the way down to supply ordering! 

Fiscal sponsors often charge an administrative fee to serve in this capacity. This is standard, as sponsors must use their own staff and resources to support the operations of the sponsored organization. 

Does this mean a portion of the donations made to your organization won’t actually be received by your organization? Yes—but it also means you’ll be able to accept tax-deductible donations right away and begin building a track record of success as you work toward gaining your own 501(c)3 status.

So How Do I Find a Fiscal Sponsor?

Fiscal sponsorship is a solid option for new nonprofits, in particular—but finding an organization to take you on might seem like a tall order!

Here’s how to find a fiscal sponsor for your new nonprofit.

1. Outline your mission and program(s). And then outline it again!

We can’t stress this enough: it’s really important to have a very clear idea of what services you’ll provide, who you’ll serve, and how you’ll operate before entering into a fiscal sponsorship. Once you’re officially sponsored, you’ll no longer be the sole decision-maker on a variety of different fronts—and you may find it difficult to amend your agreement to your liking down the line. 

Keep your programs and objectives simple, at the start. Remember that your goal is to build a track record of success, gather feedback on what your community needs and wants, and begin to fundraise successfully. Anything that pulls your attention away from those things is likely something better left for later! 

2. Pound the pavement! Look locally first.

Your local community is the best place to start when it comes to finding a fiscal sponsor. They will better understand your needs and the needs of the people you’ll serve, and they’ll be more invested in your efforts than an organization further removed. 

Check with your local community foundations. Many have capacity-building programs, as well, to help incubate ideas and new organizations. 

Larger, established nonprofits in your community can also offer great support and guidance through fiscal sponsorship. Look for organizations that share your mission, vision, or general issue area, or who serve a similar population.

3. Go national.

There are a variety of organizations across the United States that specialize in providing fiscal sponsorships to small nonprofits. We’ve already mentioned the Tides Foundation; there’s also the Center for Transformative Action, the Clare Rose Center for Creative Youth Development, and many others to be found in the membership directory of the National Network of Fiscal Sponsors

You can also browse the Fiscal Sponsor Directory for more information.

Fiscal Sponsorship Can Help You Get Your Nonprofit off the Ground

New nonprofits face lots of challenges—how to structure programs, find volunteers, attract participants, and build their name in the community. 

Perhaps most challenging, though, comes as no surprise: it can be really, really difficult for a new nonprofit to raise money.

But getting your new organization up, running, and funded is absolutely doable—and fiscal sponsorship might be a great way to get started.

Join NPO Centric’s membership programs for more on fiscal sponsorship and other must-read resources for nonprofit leaders! >>