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The Responsibility of a Fiscal Sponsor

March 4, 2011

Small arts organizations are beholden to fiscal sponsors. They can't apply for grants unless they're a non-profit entity themselves (which isn't worth doing when you're first starting out) or affiliated to an organization with 501c3 status that can process tax-deductible donations on behalf of the fledgling sponsee.

What are the responsibilities of theses fiscal sponsors to their charges? From my own experiences as the head of a small media arts organization (a weekly public radio series and multimedia project devoted to the art of singing, VoiceBox) and from talking to other people who run burgeoning arts organizations, it sounds like fiscal sponsors generally are a necessary burden.

They skim between 5-15% of their sponsees' earned income and what do their charges get in return? Very little it seems.

I think fiscal sponsors should be obliged to work harder for their clients. They should:

1) Maintain open and transparent financial reporting that can be accessed at the touch of a button by all of the projects that fall under their wing.

2) Offer all kinds of useful add-on services such as free mailing list and e-communication services and free Zipcar memberships.

3) Cover the costs associated with the receipt of payments online for their clients. e.g. through PayPal.

4) Offer useful workshops in a range of subjects such as writing grant applications, developing email campaigns, networking etc.

5) Communicate regularly with their sponsees and make themselves available in person or via the phone or skype for conferences on an as-needed basis.

In effect, fiscal sponsors should act as an inspiration and model for how non-profits should be run slickly. I don't think that this is the case in general, however. Most fiscal sponsors seem ill-equipped to nurture the smaller organizations in their charge.


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