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Ending the Stigma of Fiscal Sponsorship

PEAK Insight Journal Aug 8, 2018
This article is deemed a must-read by one or more of our expert collaborators.
Click here for more.
fiscal sponsorship stigma needs to end
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Giving Compass’ Take:

• Writing for PEAK Insight Journal, Vu Le discusses the misperceptions attached to fiscal sponsorship for nonprofits and how such a stigma is harming the sector.

• The points made here — including how sponsorship allows for more efficiency and promotes better ideas — should be embraced by all and noted by donors who typically only show preference for nonprofits that have 501c status.

• Rear the review of ‘Unicorns Unite: How Nonprofits & Foundations Can Build EPIC Partnerships.”


One of the common complaints lobbed against the nonprofit sector is that we have too many nonprofits competing for resources. So when someone suggests that they might possibly be thinking of maybe starting their own nonprofit, the response from many of us is often “Get the torches and pitchforks!” Then we chase after them, flinging rocks and hummus, until they and their ridiculous ideas of founding a nonprofit are driven out of our village.

The more reasonable and understanding of us, though, may suggest that they do some due diligence, possibly looking to be fiscally sponsored by another nonprofit instead of forming their own. According to the Network of Fiscal Sponsors, “Fiscal sponsorship generally entails a nonprofit organization agreeing to provide administrative services and oversight to, and assume some or all of the legal and financial responsibility for, the activities of groups or individuals engaged in work that relates to the fiscal sponsor’s mission.”

This makes a lot of sense. However, the concept of fiscal sponsorship is somehow unpalatable in many parts of our sector. It’s as if you’re not a “real” nonprofit unless you have 501c status. My organization until recently was fiscally sponsored, so we know how it feels. You feel like a kid trying to get a seat at the adult table. Like Pinocchio, you’re not a “real boy” if you’re fiscally sponsored!


Since you are interested in Impact Philanthropy, have you read these selections from Giving Compass related to impact giving and Impact Philanthropy?

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    Helping the Homeless is an Art

    I reached into my wallet and pried out my last two dollar bills. I am not sure what made him different than the others I passed. Perhaps it was his long, silky white hair that flashed in the sunlight that caught my attention, or his military-camo pants and drawing pad rested on his lap. The wrinkled cardboard laying against the brick wall next to him read, “homeless artist, anything helps, thank you” with a blue smiley face. I handed him the folded bills expecting to get a rushed nod and a thank you. Instead, he took the money and excitedly asked me if I would like to see his artwork he was drawing in his book. He laid down the front page of his pad, displaying many fine-point, black pen dots, clumped together making an image of mountains and pine trees. The man was thrilled to tell me his art was just posted online and that he hoped to share it with the world and to start finally selling it. His name is Lawrence, “also known as Gandalf,” on the street, he told me. He said it was probably because of his hair as he tugged at it slightly. Gandalf told me that his hair was going on 86 months old. Every 100 months he donates it to charity. 'It’s the least I can do to help give back,' he said." While Lawrence was just another man in the streets of Seattle, I shuddered to myself knowing that he was a member of a staggering statistic. According to the U.S. Department of Housing and Urban Development, Seattle has the third highest homeless population among large cities in the country today, at nearly 12,000 people counted this January. The number rose close to four percent from last year, and it continues to increase.  The clashing government, the lack of job opportunities, the full shelters, varying mental health factors and the rising heroin epidemic in our country are all possible enablers of the homeless. The problem is grim, intricate, complex and grips the lives of almost 600,000 Americans. Due to the lack of research, data, communication, funding and a long array of complex causes, helping the homeless can be overwhelming. The lack of affordable housing is a cause of homelessness, but investing in affordable housing also is a solution. There also are resources you can draw upon to guide your impact. Here are some organizations that you may support, spread awareness for, or volunteer with: The National Alliance to End Homelessness studies the causes, and disseminates data and knowledge to policymakers, providing solutions to end this epidemic. The National Coalition for the Homeless also lists ways that you can connect with the cause and take action. Funders Together to End Homelessness is a resource for donors who are working on homelessness issues and want to give with impact. United Way of King County works in King County, WA to bring together local governments, nonprofit organizations, shelters, citizens and the private sector to respond to the crisis and address its causes. Visit GivingCompass.org for our selection of initiatives and guidance, and highlights of efforts that are making headway in helping the homeless find employment and get back on their feet. As our eyes have sadly become glazed-over to the street-sitting, tattered cardboard signs and the ripped clothes, it is imperative that we remember each person is a human being; with dreams, interests, a personality, perhaps a family and also a few reasons that have sent them to the streets. We must also remind ourselves that the problem is not going to be solved overnight. Smart giving, sharing information and data, volunteering, and becoming more involved in our local politics are all small efforts that can assist one more American off of the sidewalks and into a better life. We must advocate for people like Gandalf, who even in his humble way, looks to improve humanity every 100 months. We cannot afford not to; it is “the least we can do to give back.” ______ Original Contribution by Tessa Tenborg.


Fiscally sponsored organizations are not the kids vying for a seat at the adult table. They may actually be the adults, since they can be more efficient and can focus more of their time and energy on what truly matters.

It’s time to stop with this archaic, ridiculous, and inequitable stigma against organizations that are fiscally sponsored, as well as against the concept of fiscal sponsorship itself. If our sector is going to remain relevant and effective in light of funding cuts and a volatile political climate, we need to be able to do things better, and that includes understanding and appreciating the important role that fiscal sponsorship plays. Here are six main reasons we need to encourage, not discourage, organizations from pursuing fiscal sponsorship and not independent nonprofit status:

It increases efficiency

It fosters transparency and accountability

It lets nonprofits focus on their work

It creates opportunities for collaboration and power building

It allows for new ideas to be tested

It supports grassroots, communities-of-color-led organizations

Read the full article about erasing the stigma against fiscal sponsorship by Vu Le at PEAK Insight Journal.

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