I have the pleasure of speaking at the Fiscal Sponsor Conversations forum (“FSC”) on Tuesday, August 12, at 10 am PDT / 1 pm EDT. With inspiration from an old post I wrote, Fiscal Sponsorship: Six Ways to Do It Wrong, FSC organizers Andrew Schulman and Oliver Hack asked me to present on Fiscal Sponsorship: Six Ways to Tank Your Organization.

Focusing on some worst case scenarios, we intend to help fiscal sponsors identify and manage risks that could threaten their existence or ability to function:

1. Project money used to cover general operational costs.
2. Overreliance on public grants.
3. Lax or nonexistent board finance oversight.
4. Allowance of projects to spend into the red.
5. Allowance of massive accrued vacation liability.
6. Lax cyber security controls.

Additionally, there are a few other scenarios Erin Bradrick and I thought would be important to mention:

• Failure to explain the legal realities of fiscal sponsorship and align expectations at the outset.
• Failure to reasonably address foreseeable issues of fit (regarding mission-consistency, values, and culture) while focusing instead on fiscal sponsorship as a revenue source.

I hope you’ll join the conversation and share some of your thoughts. Fiscal sponsorship is an incredibly valuable tool for advancing charitable projects. And promoting good practices protects the field, the nonprofit sector, and the broader community.

Fiscal Sponsorship: Six Ways to Do It Wrong

1. Sponsor organization fiscally sponsors a project without adequate due diligence/review of the project; its mission; its founders and steering committee; and their past, present and planned activities.
2. Project gets fiscally sponsored by a sponsor without adequate due diligence/review of the sponsor; its mission; its reputation; its previous experience with fiscal sponsorship; its sponsorship policies; and its charges to the project’s fund.
3. The fiscal sponsorship arrangement is created without a written agreement. 
4. The fiscal sponsorship agreement does not include clear exit provisions.
5. The sponsor does not provide sufficient oversight over the project. 
6. A Model C-like fiscal sponsorship is structured in a manner that has the sponsor serving as a conduit for donations to go to the project.

Resources

Fiscal Sponsor: Before You Accept a Project …

Stipulated Judgment Against Fiscal Sponsor for Misspending Donations

Presentation Slidedeck