Is fiscal sponsorship on the rise? Until now, the evidence has been anecdotal. Now, the Fiscal Sponsor Directory has confirmation: We compared how many projects our profiled sponsors said they were serving in 2018 with their current numbers and found 54 had experienced growth, some modest but others dramatic — with projects doubling, tripling and more during the five years.
Allied Arts Foundation, a venerable nonprofit in Seattle offering fiscal sponsorship for 40 years, had 24 projects in 2018 and today has 60. The 31-year-old Jewish Creativity International in New York was serving 25 projects in 2018 and now has 75. Social Impact Fund in Los Angeles, with 11 projects four years after launching its fiscal sponsorship program, has 30. The National Performance Workshop in New Orleans, a fiscal sponsor for 21 years, saw its numbers grow from 29 to 50. Social Good Fund in Oakland, Calif., had 200 projects in 2018, and today has 725, up 263%.
“We were built to decrease the typical obstacles and remove the barriers that people often face when looking for a fiscal sponsor,” says Oliver Hack, Director of Fiscal Sponsorship for the 11-year-old Social Good Fund. “We start with a yes for any group with a charitable purpose in line with our mission, vision and values. One of our biggest challenges is that there are so few fiscal sponsors that practice the way we do.”
Staff there has expanded from four to 22 since Hack was hired six years ago. But the organization, largely because of its success, had to stop taking fiscal sponsorship applications last year. It currently has about 500 Model A’s nationwide and 225 Model C’s, a quarter of them outside the United States.
“We’ve been overwhelmed by the demand, a crisis that’s the same for many of us,” Hack says. “In the last few years, people began moving to meet the needs of the pandemic and racial reckoning, placing tremendous pressure on our field.”
Rise mirrors bump-up in sponsors
The Directory currently profiles 382 fiscal sponsors. The 54 that reported growth represent only a modest number of the overall list. Still, this sampling of sponsors is broad-based and their results so impressive, we believe they’re the tip of the proverbial iceberg. We assume a significant percentage of the sponsors in the Directory are experiencing similar increases.
Since its founding in 2008, the Directory has tracked its profiled fiscal sponsors in the Facts and Stats pages, updated annually: highlights of their eligibility requirements, the kinds of projects they accept, fees, services, models offered, total projects, and the number of sponsors on the site.
The Directory’s expansion helps to confirm our field’s change: In 2018, it listed 276 sponsors and today there are 382 — a 38% jump in five years. Their total projects showed a comparable increase of 34%, from 14,296 projects in 2018 to 19,131 as of May this year.
“It’s heartening to see such dramatic growth, especially during the COVID pandemic,” says Greg Colvin, co-author with Stephanie Petit of Fiscal Sponsorship: 6 Ways To Do It Right, 3rd edition, after seeing the 2018-2023 Directory stats. “So much nonprofit service and communication with each other had to be remote, yet fiscal sponsorship showed the flexibility to adapt and even expand the good work we could do.”
Small fiscal sponsors — about a third of those on the Directory host one to five projects — are doing well, too. Chappy & Friends in Chicago, which supports animal welfare programs “whether they be companion, farm, wild or even Serengeti,” says it grew from three projects at its founding in 2017 to 14 today. The Oregon Wildlife Foundation in Portland began sponsoring projects in 2016, had two in 2018 and now has eight. And HASER Inc. in San Juan, Puerto Rico, began offering fiscal sponsorship to social and ecological resiliency projects right after the 2017 Hurricanes Irma and Maria struck the island. Its projects grew from three in 2018 to 10 today.
Although the Directory has the largest national database of practicing fiscal sponsors, many sponsors choose not to join. But we know their numbers also are going up. Using Google Alerts, we’ve maintained a list of them for years: The list rose from about 400 in 2021 to 535 last year, and today it’s 600. Combining that list with the Directory’s sponsors puts the known number of fiscal sponsors nationwide at almost 1,000, nine times those surveyed in the first field scan in 2006.
How many projects those 600 agencies sponsor, while unknown, is likely significant, with an educated guess conservatively putting the number of fiscally sponsored programs in the U.S at 40,000.
Other unknowns hamper accurate accounting of the field. The Directory’s annual update asks its listed sponsors to check their profiles and send us changes, big and small, so we can keep the Directory current and useful. Though many report changes throughout the year, only about 20% reply to the annual request. Still, the uptick we saw in projects after this February’s update gave us an opportunity to validate the merely anecdotal. They’re literally all over the map.
Growing out, numbers rise
Shava Lawson has been with Seattle Parks Foundation for 11 years. About five years ago, as more and more projects came onboard, her title shifted from finance director to director of fiscal services.
“We had 15 projects when my job title changed,” she says. “Now there are 90, most of them modified Model A’s but also some modified C’s. To compensate, we’ve grown out the staff — our finance team was just me before. Now we have four finance staff, and four fiscal sponsorship staff — we’ve updated our billing system, onboarding process and how we steward our fiscal sponsorships.”
While that’s helped somewhat, it’s a struggle to keep up, Lawson says.
“The numbers are still increasing, I think because we’ve improved our fiscal sponsorship program to better meet community needs. We’ve become the go-to organization for Seattle, where people want to preserve whatever green space they can as the city grows.” — Shava Lawson, Seattle Parks Foundation
She says the challenges are ongoing, especially the struggle between complying with fiscal sponsorship’s legal requirements and how the Park Foundation supports its projects. “As we grow, we’re trying to address how might we decrease rather than increase that tension.”
Upticks range broadly
While Seattle Parks Foundation serves a local population only, East Coast-based Jewish Creativity International’s projects, all Model C’s, are worldwide, with most in the United States. The reasons its projects have tripled from 25 to 75 in five years are both internal and external, according to President Bob Goldfarb.
“Fifteen years ago we had only three projects,” Goldfarb says. “The big jump is due to word-of-mouth referrals based on our track record, our strategy of focusing on personal service and our familiarity with creative people’s particular needs. Actors, for example, expect to be paid, in cash, after every performance, and we can make that happen. There’s also been a huge shift in the arts from for-profit to nonprofit, and that affects fiscal sponsorship as more donors come forward to support new projects.”
Having more projects hasn’t been a burden, he says. Jewish Creativity International, founded in 1992, began providing fiscal sponsorship three years later. It still favors personal service over automation, though it has changed to a more efficient financial system as incoming projects became larger, “several now in six figures annually,” Goldfarb says. “That’s new for us and a measure of our success, I think. It makes us more credible as a partner.”
Seeding a news desert
The Directory sponsors with 5-year increases host a range of projects. About a quarter prioritize community and economic development projects, another quarter are primarily arts-related, and yet another quarter comprise two growing categories — environmental/ecological sustainability and social justice and equity. The remainder are a mix of those that will accept almost all categories, like Social Good Fund, and those with a specialized interest.
The Institute for Nonprofit News in Los Angeles, established in 2009, strengthens and supports independent nonprofit news organizations, and projects must be INN members to qualify for fiscal sponsorship. In five years, its projects, all Model C’s, doubled from 10 to 20.
“When I started here in 2018, we only had 130 members,” says Chip Potts, director of finance. “Now there are more than 400, and that could rise to 600 by 2025. Since our sponsored projects come from among those members, they’re growing, too. Several more are coming onboard right now.” INN fiscally sponsors those converting to or spinning off as nonprofits, as well as startups uncertain of how long they’ll need sponsorship.
INN’s overall expansion is a reaction to the news industry’s dramatic contraction in recent years.
“Our members range from reporting with hyper-local, statewide and national newsrooms, to content-specific reporting — the prison system, health or energy, for example. The projects we fiscally sponsor tend to operate in smaller geographic areas, focus on nonbiased investigative reporting, and stay with us short-term, some only six months.”
Taking on short-term projects is key to helping build a network of nonprofit newsrooms across the country, says Potts, who oversees not only INN’s fiscal sponsorship program but the entire organization’s finances.
More projects: Is there a downside?
Greg Colvin was impressed by the rising numbers in our comparison data, but he also had perceptive concerns about what it might mean for the field.
“I do wonder about maintaining optimum levels of charitable supervision and those critical IRS requirements — discretion and control — when a sponsor’s projects expand rapidly,” he says. “Do sponsors have a sense of their ideal capacity? Are there inactive projects that need to be wound down or revitalized? Do the sponsor and its projects know enough about each other to maintain mutual trust in a risky environment?”
He also wonders if new projects tend to have shorter life spans than previously and if they’re more likely to be aiming, from the start, at becoming their own 501(c)(3)s. “And, by the way, has the IRS seen increased applications for charitable tax-exemption? Are people with new ideas choosing nonprofit fiscal sponsorship rather than launching as owners of for-profit businesses?”
Colvin’s queries are thoughtful, but he’s never questioned the viability of fiscal sponsorship, especially today. “As we said in the Postscript to the 2019 edition of 6 Ways, ‘Many hands have worked to make fiscal sponsorship a reality, not just a legal concept. … This innovation in law and practice couldn’t have come at a better time.’ ”
Photo top: Black Box, a project of Jewish Creativity International, is an Israel-based independent theater group of female artists committed to social change and promoting gender equality. Photo courtesy Jewish Creativity International