Monday, August 18, 2008

Fiscal Sponsorship Resources

Setting up as a nonprofit is not easy. Starting a for-profit in California took me one or two weeks, and I think it's still that fast. But, setting up a nonprofit and getting 501(c)(3) status can take a year or more and cost ten or twenty thousand dollars (unless you get pro bono legal help).

Many folks doing starting up nonprofit work might be better off finding a fiscal sponsor. This is a qualified nonprofit (i.e., has charitable status) that will steward the new program and take care of being a nonprofit and filing the annual returns. In exchange for a fee to cover their costs, donations are fully tax deductible.

Many folks ask us to be a fiscal sponsor for their social tech projects, but we've decided it would be a distraction from our core work, plus we're not experts in supporting other projects.

In the San Francisco area, the Tides Center is best known for offering fiscal sponsorship. I've heard it costs roughly 9% of donations, but that's not authoritative. They offer a range of services for their fee.

I also know a tech project that has used the FJC Fiscal Sponsorship Program, based in New York. I just talked to one of their founding philanthropists. He noted their fees are low, but they don't offer all of the services of Tides.

So, if you're getting started with something, and want to see if it has the option of really getting off the ground as a nonprofit, but you don't have millions of dollars (yet!), consider starting with a fiscal sponsor. You'll save money and aggravation. Be sure to secure the ability to spin off as your own 501(c)(3) when the timing is right.

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