Keep Your Hands Off of Fiscal Sponsorship's Third Rail

February 17, 2012

As the recent debacle at International Humanities Center clearly shows, there’s a right way and a wrong way to provide fiscal sponsorship services to groups getting new civic and social ventures up and running.  IHC appears to have overlooked the fact that there’s a published set of recommended best practices to guide fiscal sponsors.  If whoever made such a mess of things had followed those guidelines, they might have spared a lot of caring folks doing good things for their communities a lot of pain and anguish.

During the research in the early 1990’s that led to the creation of Community Partners, an experienced colleague shared a horror story.  She told me about a group that had touched the third rail of fiscal sponsorship: they spent charitable funds donated for sponsored project activities on general operations of the sponsoring organization.  The group fried itself and collapsed, and did a lot of damage in the community as a result.  How idiotic, I thought.  But the story sobered me.  I worked with our then-fledging board of directors and staff to make sure that Community Partners had policies, systems and practices in place to prevent such a travesty from happening here.

Time and experience have proved those instincts sound.  When the group of organizations now known as the National Network of Fiscal Sponsors (NNFS) formed a few years ago, we worked hard to draft, ratify and adopt both as a network and as individual organizations a set of rigorous guidelines.  We knew that our credibility as some of the most active, visible organizations in America providing fiscal sponsorship capacity hinged on holding ourselves highly accountable.  In plain language, the NNFS guideline about uses of project funds and assets states:  “The fiscal sponsor, with the exception of the agreed-upon administrative overhead charges to sponsored projects, does not expend funds dedicated for project purposes for any other purpose…”.  But a pledge means nothing without honorable people to back it up.

As our founding board chair, Al Rodriguez, admonished from day one:  “Watch the money like a hawk.”  Al’s heirs on our current board of directors and our professional staff – all of whom take seriously their role as stewards of the funds we handle and the promises implied in accepting them – say essentially the same thing as they go about fulfilling their roles and duties.  They know that the quality of fiscal sponsorship is only as good as the nonprofit organization providing it.

Paul Vandeventer
President & CEO, Community Partners

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