FREQUENTLY ASKED QUESTIONS
FREQUENTLY ASKED QUESTIONS
After we apply for fiscal sponsorship, how long does the review/approval process take?
The Board makes fiscal sponsorship decisions on an as-needed basis, however, depending on the time it takes for us to receive all pertinent information from you regarding your project, process from the time we receive your completed questionnaire application until a decision by our board may take 2-4 weeks.
How does the fiscal sponsorship relationship work?
The Project (client) is responsible for soliciting grants, gifts, or donor contributions to IPG Foundation that are earmarked for the Foundation’s restricted fund for your project.
How should donors make out the check?
Checks should be made payable to “Impact Philanthropy Group" with the name of your project noted on the check (memo section) so that it is clear that funds are specifically earmarked for your project’s restricted fund. You can either have donors send the checks to you and forward, or have checks mailed directly to IPG. Please do not endorse or make any markings on the checks received.
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 it 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 sponsoring nonprofit 501c3 organization.
How much does fiscal sponsorship cost?
Fees vary depending on scope of work, length of sponsorship, services provided, and other factors. All projects incur a $2,500 - $5,000 start up fee, depending on need and urgency to start project. We charge a monthly flat rate fee that starts at $2,500 per month for fee-based projects. For percentage-based projects (that are uncertain of their revenue e.g., a first-time fundraising event, for example), we charge a fee between 5% - 11% of funds raised. For government grants in which we prepare the responses to the RFP and provide management of the project, we charge a fee between 5% - 15% of funds secured, depending on grant amount and services provided post grant.
How is the Fiscal Sponsorship fees paid?
Fees assessed are deducted monthly from the project account by IPG to help share sponsorship costs among all the projects and to subsidize IPG’s direct costs of administering your project’s sponsorship. For percentage-based projects, we subtract the percentage upon receipt of funds.
How often does IPG disburse fiscal sponsorship 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 its restricted fund for the project, and in most cases, will require the project to maintain a balance the covers 3-months of service fees in the account at all times.
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 Foundation’s own charitable mission and purpose. The only way IPG can maintain those records is if you keep us informed and up-to-date of 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. Remember, in many instances, you may be required to receive IPG’s pre-approval before distributing these materials.
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?
No. We will typically review and amend the terms of the grant 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.
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 supposed to further the 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 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 umbrella” of IPG, we maintain all control and 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, the project is a part of IPG as a fiscally sponsored project. However, you are not an agent or legal representative of IPG. The project owns its own work products and equipment. Project staff 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 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, W9, and provide 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 headquarters city of Los Angeles, we serve and support projects located throughout the country and internationally.
How does my project apply for fiscal sponsorship?
First, we encourage you to check other fiscal sponsors and compare. 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 project needs.
We also offer a free 1 HR consultation. Please click here to schedule an appointment.
DONOR ADVISED FUND (DAF)
What is a Donor Advised Fund?
Generally, a donor advised fund (DAF) is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization.
Where do the funds originate and who legally owns the funds?
Each account is composed of contributions made by individual donors. Once the donor makes the contribution, IPG has legal control over it. However, the donor, or the donor's representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account.
Who can contribute to a DAF?
Inclined individuals, families and businesses can make an irrevocable gift to a public charity that sponsors a DAF and take an immediate tax deduction. Most DAFs accept cash equivalents, securities, and other assets.
What is the donation process?
Donors make an irrevocable, tax‐deductible contribution of cash, long‐term appreciated securities or other assets to a charity that sponsors a DAF program, like IPG. IPG in turn, creates an account in the donor’s name. DAF donors may choose from a variety of investment options and proceeds are put into an account with our partner banking institution from which donors may make grant recommendations.
What is the structure of the sponsoring DAF organization?
Sponsoring organizations of DAF are nonprofit 501c3 organizations recognized by the Internal Revenue Service.
Who can receive grants from a DAF?
IPG vets all charity organizations that the DAF recommends to receive funding. Vetting requires several checks and balances, however, the first step is to check the charitable organizations' status as tax‐exempt under Internal Revenue Code (IRC) Section 501(c)(3) and public charities under IRS Section 509(a). Grants can also be given to private operating foundations or state or local government organizations qualified to receive tax‐deductible charitable contributions, such as institutions defined in Internal Revenue Code Section 170(c)(1).
Does IPG accept nonprofit requests for proposals (RFP)?
No. DAF donors are self‐directed in their charitable giving and therefore do not look to us for recommendations on where to give, but to advise on how to give more effectively and efficiently.
Is there a minimum donation amount that has to be made from a DAF?
IPG requires that a minimum of $500 be made per recommendation.
What is the process to donate funds from a DAF to a charity?
The donor completes a grant recommendation form that we review. Upon completing the review, we create a grant acceptance form and send to the receiving charity to make them aware of the grant, grant amount, any restrictions on the grant, timeline of payment, reporting schedule of how funds were used (if required), and for what purpose the grant is given. The receiving charity in turn agrees to the terms of the grant and returns a signed copy to IPG. Upon receipt, along with the charity's IRS Determination Letter and W9, IPG issues a check and donation check letter confirming the donation. If a grant report is requested, the receiving charity typically has 6 months to a year to provide details of how funds were used.
Does IPG charge a fee to manage my DAF?
Yes. We charge a monthly administrative fee in advance that is deducted from your account. These fees cover our administrative and operating expenses. The fees charged vary according to the investment program that you and your financial adviser recommend.
Can we fundraise through a DAF?
Can securities be donated to a DAF?
Yes. Typically, securities that a donor has owned for more than one year are best to consider for gifting purposes. The donor will avoid any capital gains tax on the securities, and will receive the highest income tax deduction available - even better than those of a private foundation.
Can I pay for a pledge or auction item with my DAF account?
What does IPG do when it receives my donated funds?
When a contribution is received and accepted, IPG will deposit the proceeds of the contribution into your respective DAF account. We then will consult with you or your recommended investment adviser to liquidate and reinvest the proceeds, or hold the assets for future use.
Can my DAF's interest income earned qualify for an additional tax deduction?
Why does IPG state that I "recommend" where my donated funds go?
Tax laws for donor-advised funds require that you relinquish ownership and control over contributed assets. As a donor adviser, you retain the privilege to advise and recommend on how your fund is named, invested, granted, and pans for the fund upon your death.
How do we get started with setting up a DAF at IPG?
Please complete this inquiry form as the first step and one of our advisers will contact you within five (5) business days.
We also offer a free 1 HR consultation. Please click here to schedule an appointment.