How it works: Part of the Community Foundation’s guiding philosophy is that the most effective and innovative projects are often initiated at the grassroots community level. Many of these projects are catalyzed by an individual or sponsored by a neighborhood organization, and are too small or too new to have their charitable status recognized by the IRS.

Projects which are temporary in nature may also be ideal candidates for fiscal sponsorship, because this allows the project to focus on achieving its program objectives rather than the administrative issues and costs inherent in establishing a new corporation and seeking IRS recognition of charitable status.

In a fiscal sponsorship relationship, the Community Foundation extends its charitable umbrella over select projects/grantees whose missions closely match the Foundation's own. Donations earmarked for a Project operating under the Foundation's sponsorship are actually given to the Foundation. This allows donors to receive the full benefits of making a charitable donation. The Foundation then places the donations in a special restricted fund dedicated only to the support of the project.

Grants are disbursed to the Project, and the Project provides regular reports documenting its activities and expenditures, in accordance with the terms of a master Grant Agreement executed between the Project and the Foundation.

Since each fiscal sponsorship relationship is designed based on the needs of the Project, applicants are encouraged to consult with the Foundation before submitting a sponsorship application. In order to defray its expenses associated with administering the sponsorship, the Foundation charges a fee of 5% of donations received for the Project.

How does the fiscal sponsorship relationship work?

The Project/Grantee solicits grants, gifts, or contributions to the Community Foundation, earmarked for the Foundation's restricted fund for this Project. Checks should be made payable to Community Foundation - Your Project so that it is clear that they are specifically earmarked for your Project's restricted fund. You can either have people send the checks to you, and then forward them to the Foundation, or have checks sent directly to the Foundation. An administrative charge of 5% of donations shall be deducted by the Community Foundation to defray the Foundation's costs of administering the restricted fund. The Project shall keep the Community Foundation appraised of its fundraising activities and provide copies of fundraising solicitations. Generally, the Community Foundation must pre-approve all fundraising solicitations. The cost of any reports or other compliance measures required by funding sources are borne by the Project.

How often does the Community Foundation disburse fiscal sponsorship grants?

As funders make donations earmarked for the project to the Community Foundation, the contributions are placed in the Foundation¹s restricted fund for the project. In cases where the Foundation is receiving numerous small donations on behalf of a project, The Foundation will generally consolidate the contributions in its project-specific restricted fund and award lump-sum grants once or twice per month. These grants to sponsored projects are generally disbursed on or about the 1st and/or 15th of each month. In instances where a large contribution is received for the support of the project, the Foundation will typically award sufficient funding to cover 3 to 6 months operations. Upon receipt of the project¹s quarterly report, some or all of the balance of funds remaining will be released to the project. At its discretion, the Community Foundation may elect to maintain a positive balance in its restricted fund for the project.

Why do I have to send information to the Community Foundation?

Your project needs to send information to the Community Foundation about its activities because the Community Foundation has assumed liabilities to the IRS about the charitable nature of your activities. The Community Foundation 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 that the Community Foundation can maintain those records is if you keep us appraised of your activities. Typically, the Community Foundation may retain a positive balance in its restricted project fund pending receipt and acceptance of appropriate reports.

Does fiscal sponsorship make my project a 501(c)(3) charity?

501(c)(3) is a specific section of federal code which describes the type of activities (ie -- educational, research, etc...) which are defined as charitable under federal law. The IRS then interprets the law and, practically speaking, either recognizes or denies recognition of charitable status. Since your project has not yet applied to the IRS for recognition, it is acting under the "charitable umbrella" of the Community Foundation. Essentially, we have formed and documented the basis for an opinion that your project's activities are charitable in nature and will further our charitable purposes. That's why we need to be sticklers about record keeping. The Community Foundation needs to be able to justify your project's actions as furthering the Foundation's own charitable purposes.

Is my project a part of the Community Foundation?

Mostly no. The project is a separate legal entity and is not an agent or legal representative of the Foundation. The project owns its own work products and equipment. Project staff do not work for the Foundation. Project correspondence should not be on Foundation letterhead. The project is a part of the Community Foundation only in the sense that any grantee is part of the Foundation which provides enabling support.

Who owns the project's work products?

The project owns all of its work products. Any tangible or intangible property, including copyrights, obtained or created by the project are the sole property of the project.

Is fiscal sponsorship forever?

No. We will typically renew the terms of the grant agreement as needed. This provides an opportunity to modify the agreement if necessary to accommodate your project's growth.

Administrative fee negotiable?

Perhaps. The fee serves both as a contribution to the overhead incurred by the Grantor as well as an incentive for the Grantee to move as quickly as possible toward completion of the Project or obtaining its own 501(c)(3).