Expanding Fiscal Sponsorship: Partnership Projects and the New Fiscal Sponsorship Model

(January 25, 2016) After more than 7 years running the Land Conservation and Advocacy Trust, I’ve been able to spot some trends in non-profit and social entreprenuerism. I have also seen what folks need and want when pursuing their own philanthropic passions. One of the most sought-after services that LCAT has provided has been fiscal sponsorship.  I haven’t done any marketing of the services, our technology offerings are pitiful and my administrative capabilities are severely limited by time.  And yet, during 2015 alone, servicing only 7 active fiscally sponsored organizations, LCAT has collected donations valued between $200,000 and $400,000 for sponsored projects (depending on how they are valued).

As a result, I have been thinking about expanding the fiscal sponsorship offering horizontally (that is, into philanthropic areas other than the environment) and vertically (that is, providing more comprehensive services to fiscally sponsored groups).

At first, my concept was to just better-provide the services already offered. Give sponsored organizations better access to their financial information (through an online portal) and better tools for their online donations (e.g., a better user-interface for online donations).

When I thought more about it, however, that merely provides something that they can already get elsewhere.  I then thought more deeply about how the next generation of social entrepreneurs will be interacting with each other and with the world. The evidence of the trends for this future were fairly obvious. Individual action, local grassroots groundswells, short term efforts, crowdsourcing and social media play a central role in that future. Government  and IRS compliance, administration and the other “details” are not high on the Gen X and Gen Y list of priorities.  In fact, the details are more often viewed as (and indeed can be) impediments to action.

When someone wants to “do good” now, they raise money online with a crowdfunding site, deal with volunteers, when they get more serious, they may need to set up a merchant account to collect online donations outside of the crowdfunding site, they may think about getting 501(c)(3) status or becoming fiscally sponsored, they need to set up bookkeeping and donor management systems and maybe talk to a lawyer and set up a web page.  If they need full time staff, the burden increases exponentially.

The concept has evolved, so as to include all of these “details.”  Currently, there are non-profit fiscal sponsors that provide some of the traditional “comprehensive fiscal sponsorship” services (IRS compliance, administration and bookkeeping) and some that provide a combination of these fiscal sponsorship services and online giving.

None, to my knowledge, however, provide the complete package.  That package, in my mind, includes comprehensive fiscal sponsorship services (see e.g., Tides.org and tsne.org), crowdfunding and campaigns (see e.g.,crowdrise.com or indeigogo.com), donor services and donor administration (see e.g.,  idonate.com and donoraction.com) and finally, a social enterprise incubator (see e.g., nextmileproject.org and beespacenyc.org).

Moreover, but for the fiscal sponsorship providers who need to be tax exempt, the other services are being provided by for-profit ventures hoping to cash in on the non-profit needs (see, most notably crowdrise:  http://techcrunch.com/2014/04/21/fred-wilson-leads-23m-funding-for-crowdrise-a-charity-water-for-everyone/).

The unique proposition, and the reason that Mission.Earth has been conceived, therefore, is to (1) bundle all of the services; and (2) do it as a mission-based non-profit.

Steve Meltzer