Choosing the Right Fiscal Sponsor

 

When done well, fiscal sponsorship is an effective and efficient way to begin charitable ventures and build the capacity of existing organizations. When done poorly, confusion about finances and responsibilities can jeopardize the fiscal sponsor and the fiscally sponsored group.

 

There are a variety of models for fiscal sponsorship. CNDC practices comprehensive fiscal sponsorship. CNDC accepts legal and financial responsibility for its projects, which are part of, not separate from, CNDC.

 

A group or funder considering using a fiscal sponsor should expect that the sponsor, at minimum, will do the following:

 

• Maintain sufficient financial resources to assure
  continuous, uninterrupted operation;
• Conduct an annual financial audit consistent with
  Generally Accepted Accounting Principles;
• Account for and report on each of its sponsored
  project’s funds separately and provide regular and
  timely financials to project leaders;
• Maintain adequate insurance to assume financial and
  legal responsibility for the projects it sponsors;
• Never use funds dedicated for project purposes for
  any other purpose;
• Disclose in advance any charges, such as legal fees
  or insurance premiums, for which projects are liable;
• Establish and maintain sound systems, policies,
  procedures and internal controls;
• Review, approve and sign all contracts, leases and
  other legally binding project commitments; and
• Have a written fiscal sponsorship agreement detailing
  the terms and expectations of the relationship.

 

The Colorado Nonprofit Development Center is a founding member of the National Network of Fiscal Sponsors. To learn more about the network and other fiscal sponsor organizations across the country, visit the Tides Center website at www.tidescenter.org.