Tech companies are being asked to change their practice of excluding fiscally sponsored projects.
Microsoft, Google, others exclude nonexempt projects
Nonprofit Quarterly last week published an “Open Letter from the Nonprofit World to Tech Giants” and, that same day, the National Network of Fiscal Sponsors sent out a membership call to arms.
In the NQ “Open letter,” staff members of two prominent fiscal sponsors took Google for Nonprofits, Amazon Smile and others to task for barring grant applications from fiscally sponsored projects despite the fact the tech giants’ donations would be tax-deductible.
Vu Le, executive director of Rainier Valley Corps, and Josh Sattely, director of legal affairs for TSNE MissionWorks, gently chided the tech biggies, asking them to change a practice that, they wrote, “speaks volumes about your values” — it locks out “effective” and “stable” organizations, “reliable stewards of our core societal values,” even as it gives corporate support to hate groups that have 501(c)(3) status.
Dozens of such groups fall into that category, according to the Chronicle of Philanthropy, which did a survey in 2016. One is the New Century Foundation, a white-nationalist organization and producer of the online publication American Renaissance.
The giants called out by Le and Satterly all require a group to have its own 501(c)(3) to get their grants and goodies.
Only a 501(c)(3) can put a donate button on its Facebook pages. Discounted or donated Microsoft products are available to nonprofits and NGOs worldwide, but they must have “recognized charitable status” to get them. Amazon customers, after choosing from a list of more than 1 million charities drawn from GuideStar, can donate 0.5% of an eligible AmazonSmile purchases to that nonprofit.
Google Grants makes one exception: “Fiscally sponsored organizations that do not have their own 501(c)(3) status and are not covered by group exemption are not eligible for the Google for Nonprofits program.”
“Fiscal Sponsorship: 6 Ways to Do It Right” contains an excellent, concise description of group exemption, named Model D by author Gregory Colvin. The words “fiscal sponsorship” appear nowhere in IRS regulations, but the IRS introduced the group exemption revenue procedure decades ago. Among the Model D criteria, a project must have a separate federal EIN.
“Initiatives led by people of color, LGBTQ, women, and people with disabilities increasingly embrace the fiscal sponsorship model as the one that allows them to best advance their missions.” — from an “Open Letter from the Nonprofit World”
The exclusion of fiscally sponsored projects from funding sources has been a topic of interest to the National Network of Fiscal Sponsors since 2013, when it first confronted Microsoft about TechSoup, its online catalog of discounted hardware and software for 501(c)(3)s only.
Last year, Network concerns surfaced about private foundations and government agencies that block fiscally sponsored projects from applying for grants. Social and Environmental Entrepreneurs’ Executive Director Jennifer Hoffman told Fiscal Sponsor Directory reporter Mark Hedin in September (“Thorny Funding Topic on Network’s Radar”) she planned to propose forming a Network task force at the 2017 NNFS conference in New Orleans that would encourage funders to reverse their application ban.
The same day Le and Sattely’s “Open letter” went public, NNFS sent members an email urging them to take collective action: Link the letter on websites and social media channels, and, using templates provided by NNFS, contact the tech companies and ask them to change their exclusionary practice.
NNFS also approached TechSoup and got it to agree to set up a dedicated email about the exclusions. Beyondc3@techsoup.org will field “stories, frustrations and words of encouragement” from those who’ve felt the sting of being locked out of potential benefits. TechSoup, which makes eligibility determinations for Microsoft and other partners, has agreed to bring those stories to partner companies and advocate for change.
NNSF has asked anyone contacting TechSoup’s special email to cc the Network. A week after the “open letter” was published, NNFS Coordinator Tamsin Elias reported that she hadn’t received anything yet.
Marjorie Beggs is the Directory manager.
Lise Stampfli, San Francisco Study Center graphic designer, created the digital illustration for this story.