FISCAL SPONSORSHIP

What is Fiscal Sponsorship?

In summary, fiscal sponsorship is a less-costly, faster, and more efficient alternative to launching your charitable activity than creating a nonprofit 501(c)(3) corporation. A fiscal sponsorship arrangement can give you time to evaluate if your idea works, and it can also provide confidence to potential funders who are often reluctant to provide support to a new nonprofit with no prior history or financials.

 

A fiscal sponsor can be any established 501(c)(3) that agrees to accept the financial responsibility for your project. But there is an advantage to being with an organization that is dedicated to fiscal sponsorship, and that has many projects in its portfolio.

Such organizations can provide economies of scale when it comes to securing things such as insurance. They can provide valuable guidance about governance, help with the filing of reports, and keeping records.

 

A fiscal sponsor can become an efficient and cost-effective back office support system for a new project while allowing it to focus on its mission and programs.

 

How do I apply for fiscal sponsorship?

First, we encourage you to check other fiscal sponsors and compare them. Not all fiscal sponsors are the same, and not all projects are in alignment with the sponsor's mission and goals. When you are ready, complete our inquiry form and we will get in contact with you within 5 business days of receipt. Upon review of the inquiry form, we will contact you to schedule an exploratory call to discuss your project in detail to learn more about your needs.

 

If you prefer, you can send an inquiry email to info@ipgrp.org to request more information, or call (323) 424-0423 and one of our representatives will return your call. You can also schedule a consultation by clicking here.

 

After we apply for fiscal sponsorship, how long does the review/approval process take?

Depending on the time it takes to receive all pertinent information from you regarding your project and time to review/approve your application, it typically takes 24-48 hours. Once your application is approved, we present you with a proposal for review and upon acceptance, we provide you with a service agreement for your signature.

 

How are donations received by the fiscal sponsor, what is the process?

We accept multiple forms of donation payments (checks, credit cards, cash, wire/ACH funds, and stock).  When donors pay by check, they are made payable to “Impact Philanthropy Group" with the name of your project noted on the check (preferably in the note/memo section) so that it is clear that funds are restricted for your project. Donors can mail the checks directly to IPG or you can collect and forward it to us (please do not endorse or make any markings on the checks received before submitting to us. You are welcome to make a copy of the check for your records). 

All donations are the possession of IPG and are restricted for the use of the Project noted.  Once we receive the donated funds, we deposit to your Project's unique sub-account held at our financial institution.  You are provided 24/7 viewing access to your account for full transparency.  In order for funds to be dispersed, you are required to complete a "grant recommendation request" with other supporting documents.  To pay vendors, we must receive an invoice and the vendor's W9.

 

As a fiscally sponsored project, does this mean we are a nonprofit organization?

Receiving fiscal sponsorship from IPG does not make your project a “nonprofit organization.” However, it does make your Project eligible to receive donations and grants that are tax-deductible due to the fiscal sponsorship relationship with IPG. The only entity legally recognized by the IRS under a fiscal sponsorship is the sponsoring nonprofit 501c3 organization, in this case, IPG.

 

How much does fiscal sponsorship cost?

Fees vary depending on the scope of work, length of sponsorship, services provided, and other factors. All projects incur a one-time minimum $2,500 start-up fee. Depending on the urgency to start your project, the one-time start-up fee may increase. Our monthly retainer fee for all projects start at $2,500 per month - with the exception of government grant-funded projects. Government grant-funded projects vary and is based on what is allowable for administrative expenses per the grant requirements. However, the fee (percentage) for a government grant-funded project must be equivalent or equal to a minimum of $3,500 per month.  This amount may increase depending on the complexity of the project. Occasionally, we provide fiscal sponsorship on a percentage-basis (e.g., for a one-time fundraising event or campaign like a benefit concert, marathon, etc.). In this instance, we charge a fee between 5% - 15% of funds raised.  For government-funded projects in which a matching grant is required or additional non-government grants are awarded to the project, we charge an Additional Grant Management fee of 10% (or the maximum amount allowable for administrative purposes by the grantor). 

 

How are Fiscal Sponsorship fees paid to IPG?

Fees assessed are deducted automatically on a monthly basis from the Project's bank account by IPG. These fees are to help share sponsorship costs among all the projects and to subsidize IPG’s direct costs of administering your Project’s sponsorship. For government-funded project that receive additional awards, we deduct the total Additional Grant Management fee - regardless of the length of funding - from the first installment of funds received.  For percentage-based Projects, we subtract the percentage upon receipt of funds.

 

How often does IPG disburse grants?

As donors earmark funds to IPG for your project, the contributions are placed in the Foundation’s restricted fund for your project. IPG will generally consolidate the contributions in its project-specific restricted fund and award lump-sum grants once per month, generally on or about the 1st of each month. At our discretion, IPG may elect to maintain a positive balance in the restricted fund for the Project, and in most cases, will require the project to maintain a balance that covers 3-months of service fees in the account at all times (this amount does not include donations received and earmarked for specific purposes).

 

Why does IPG require that I submit information regarding my Project activities?

Your Project needs to submit information to IPG about its activities because we have assumed liabilities to the IRS about the charitable nature of your activities. IPG has to maintain records that document its oversight ensuring that your Project is furthering the IPG's charitable mission and purpose. The only way IPG can maintain those records is if you keep us informed and up-to-date with your activities.

 

What reports or materials do I have to send to IPG and how often?

The Project must provide IPG with advance copies of all fundraising solicitations and budgets for pre-approval. The project must also prepare reports for funders and the cost of any reports or other compliance measures required by funding sources of the Project. The Project should always send copies of any major work products or widely disseminated materials to IPG.  Remember, in many instances, you may be required to receive IPG’s pre-approval before distributing these materials to third parties.

 

What are some of the standard materials IPG requires from Projects?

•Strategic plan for the Project

•Budget for the Project

•Copies of any fundraising solicitations, including all grant requests and reports to funders

•Brochures, Action Alerts, and other flyers

•Any legal documents pertaining to the Project, its vendors, contractors, consultants, etc.

 

Does a fiscal sponsorship term out?

Not with IPG. We will typically review and amend the terms of our service agreement on a case-by-case basis within six (6) months of an initial agreement or as-needed. This provides an opportunity to modify the agreement, if necessary, to accommodate your Project’s growth or if your Project is going into a brief hiatus (dormant status).

 

Some fiscal sponsors state that I receive "immediate tax exemption status." Is that true?

This can be confusing. Under a fiscal sponsorship agreement, the work that your Project performs is to further the fiscal sponsor's charitable mission. When accepted as a fiscally-sponsored project, IPG sets up a special restricted fund for the support of your Project, and donors may make tax-deductible contributions to IPG in order to support your project. Your Project does not receive "tax exemption status," however, donors can make a gift to IPG to support your project which in turn, provides tax deduction benefits to the donor.

 

Please keep in mind that since your Project is functioning under the charitable status of IPG, we maintain all control of funds and its record-keeping. We maintain this control because we must be able to justify your Project’s actions as furthering our own charitable purposes.

 

Is my project a part of IPG?

Yes, under fiscal sponsorship, you are a project of IPG. However, you are not an agent or legal representative of IPG. The Project owns its own work products and equipment. The Project's staff and volunteers do not work for IPG, but are employed by IPG. Project correspondence should not be on IPG letterhead unless the correspondence is sent directly from us. Collectively, all the Projects to which IPG makes grants comprise a significant part of the Foundation’s overall program. In that sense, your project is part of the overall IPG organization.

 

How do I express the fiscal sponsorship relationship to funders and others?

Your project is an independent entity, conducting business under the fiscal sponsorship of IPG with separated assets. We provide you with a “tax letter” upon the on-boarding process that explains the fiscal relationship. We also provide you with a copy of our IRS Determination Letter (or Affirmation Letter), W9, and any other information required for those that inquire about your status.

 

Do you only sponsor local (Los Angeles) or regional (California) projects?

No. While it is great to have projects located in our headquarter city of Los Angeles, we serve and support projects located throughout the country and internationally.

 

Do I need to form a Board as a fiscally-sponsored Project?

No. Since IPG is the legal entity, our Board is the governs over our work. You are encouraged, however, to create an Advisory Board to help with your fundraising, capacity building, and awareness of your Program to the general public and stakeholders alike.