In the philanthropic sector, intermediaries and fiscal sponsors play a vital role. They are the critical links that connect resources from donors to historically overlooked causes and marginalized communities. Pooling funds, providing back-office support, and absorbing risk enable grassroots groups to focus on their core mission and impact.

Recently, I had the privilege of attending the Human Rights Funders Network Festival session titled “In the Chrysalis: A Time for Reimagining Fiscal Sponsorship.” The rich discussions and insights shared by my fellow attendees got me thinking about fiscal sponsorship and intermediary funds in a new light — through the lens of supply chain analysis.

Intermediaries act as an interface and buffer between large institutional funders and small, often unconventional recipients. This setup has unlocked significant funding flows to chronically underfunded areas. A 2023 report by Social Impacts Common and the National Network of Fiscal Sponsors found that fiscal sponsors enabled over $2.6 billion in charitable activities that may not have happened otherwise.

At Fenomenal Funds, we’ve seen first-hand the power of this model. As a feminist funding collaborative, we act as an intermediary mechanism to channel resources to all 47 Prospera International Network of Women’s Fund members across various regions. By pooling contributions from our four funding partners and hosting them through a fiscal sponsor, we’re able to overcome restrictions on funding amounts, geographic focus, and thematic priorities that any individual donor would face. The result is a more flexible, responsive, and impactful funding vehicle for feminist movements.

However, for this funding chain to be genuinely empowering rather than exploitative, there are entrenched power dynamics and mental models we must confront. Too often, upstream funders’ due diligence requirements and strings attached place an outsized burden on downstream actors. Grassroots groups can end up spending excessive time on funder-facing activities rather than community-facing work and risk and administrative costs can get displaced to those with the least capacity to absorb them.

Read the full article about fiscal sponsorship and intermediary funds by Phoebe So at The Center for Effective Philanthropy.