When I began my relationship with LACF as a board member, I was excited by the Foundation’s willingness to support emerging nonprofits through fiscal sponsorships. Fiscal sponsorships – where a supporting organization like LACF will accept donations on behalf of a project or entity that does not qualify for tax-exemption on its own – are not uncommon. Some community foundations will offer it as part of their services – but not many. LACF’s fiscal sponsorship approach has focused on filling service gaps in the local nonprofit environment, emphasizing providing administrative and back-end support. As we begin 2021, our relationships with our fiscally sponsored projects will shift to include organizational effectiveness support to our community leaders building new projects.
How Do Fiscal Sponsorships Usually Work?
In a fiscal sponsorship, a supporting organization (like LACF) collects and tracks donations, provides infrastructure support and marketing assistance, and lends tax-exempt credibility to the project. Projects receiving fiscal sponsorship benefit from the ability to accept donations (a portion of which covers any required fees) while building out their own operations and seeking tax-exempt status.
To date, LACF has supported the development of several emerging nonprofits using this type of approach. Some of the organizations LACF currently fiscally sponsors include GreenTown Los Altos, MVLA Scholars, MVLA Service League of Boys, and Soil&Water Garden. They remain under the Foundation umbrella since they can achieve their missions without having to create stand-alone nonprofits. The Center for Age-Friendly Excellence (CAFE), which focuses on sustainable, healthy, active, and intergenerational communities, has expanded its services beyond the Bay Area and now may become a stand-alone nonprofit. A local nonprofit success story, WomenSV, a nonprofit focused on domestic violence in the Bay Area, originally started as a fiscally sponsored project of the Foundation.
What’s Different about LACF’s Fiscal Sponsorship Approach?
As I look at our work within our communities and how we have supported emerging community leaders to date, I believe we have an opportunity – and an obligation – to expand our fiscal sponsorship approach beyond a simple revenue stream to one that provides projects with tailored organizational effectiveness support and resources.
Moving forward, LACF plans on evolving to a model that offers deeper support to community leaders – especially women and black, indigenous, and people of color (BIPOC). We will focus our support on organizational development and scaling, strategic planning, board and staff leadership, funding, internal systems, communication, evaluation, and much more. We will also tune our evaluation process to ensure that our future fiscal sponsorship agreements align with our mission and values more closely.
Fiscal sponsorship projects should meet the following criteria as well:
- Support and test a nonprofit concept that will directly benefit the residents of the communities we serve;
- Avoid duplicating existing nonprofits already providing similar services in our area; and, most importantly,
- Address a gap in the current tapestry of services available in our communities.
What’s Next with Fiscal Sponsorships?
Clearly, LACF has exciting work ahead of us as we increase our focus on building a new organizational effectiveness framework that better supports our fiscal sponsorships. As we expand our approach, we will need to provide the same level of comprehensive wrap-around service and support provided by other nonprofit and social entrepreneur incubators. This will require us to align staff expertise and other technical assistance resources with our network of community and nonprofit advisors to support these emerging leaders in their efforts better.
I look forward to these new collaborations and sharing our progress, challenges, and accomplishments in the months ahead.
