More than a million public charities are formally recognized by the IRS in the United States.1 Nearly three-quarters of these organizations report revenue of less than $500,000 per year, yet many have the same administrative and infrastructure costs as much larger organizations.2 In turn, some donors have called for a reduction in the duplication of basic administrative services through the consolidation of small nonprofit organizations under the umbrella of larger organizations that have the programmatic and operational capacity to achieve greater impact. Fiscal sponsorship has emerged as a leading option for those seeking to reduce operational costs and liberate visionaries and social entrepreneurs to focus on their mission, rather than on basic organizational infrastructure. For fiscal sponsors, this trend presents an enormous opportunity not only to acquire new clients and expand their programmatic portfolios, but also to create an internal culture that fosters collaboration between fiscally sponsored projects to pursue more ambitious, far-reaching outcomes while bypassing the transactional costs associated with inter-organizational collaboration.
Fundamentally, fiscal sponsorship is a contractual, service-oriented relationship entered into by a 501(c)(3) nonprofit organization and a group or individual whose activities will advance the fiscal sponsor’s charitable purpose. By providing the full suite of back-office services—bookkeeping/accounting, tax filing, general liability coverage, human resources, grant management, and donor administration, among other services—fiscal sponsors allow the project managers they work with to focus on their programs. Moreover, there is significant savings in areas such as financial audits—one versus many—where costs have been steadily increasing over the past years.
Yet, despite the research being conducted on how fiscal sponsorship improves the capacity of individual projects, the idea of turning fiscal sponsorship into a platform to cultivate the emergence of coalitions within a fiscal sponsor organization is notably absent in the literature. Ultimately, as Chris Cardona of the Ford Foundation states, “Promoting internal collaboration is a change management process.”3 Encouraging internal collaboration will require fiscal sponsors to make challenging decisions regarding the allocation of resources and operational modes, but, “By creating an enabling environment and adapting practices and process to support collaboration, an organization can ensure it is ready to realize the potential of its collaborative efforts.”4
Recently, the Ocean Foundation had the opportunity to test this concept through a cooperative funding proposal submitted by two of our fiscally sponsored projects—Ocean Conservation Research (OCR) and Hello Ocean—to conduct a baseline, systematic study to map the world’s anthropogenic ocean “noise pollution.”5 By pairing the scientific expertise of OCR with the impressive reach and communications prowess of Hello Ocean, this study represents a confluence of two very different skillsets for the advancement of acoustical science, to increase public awareness of the threats posed by noise pollution, and, ultimately, the shaping of future policy to help mitigate negative impacts on marine wildlife associated with a more “crowded” ocean. The collaboration entailed joint proposal development and project scoping. Yet, before any work was completed, key roles and responsibilities were discussed, and a team strategy was created.
Beyond the programmatic gains intrinsic to collaborative effort, structuring this relationship between two projects within the Ocean Foundation poses operational advantages even as the “public good” agendas advance. The projects each increase their potential capacity and effectiveness without the additional transaction costs of external contracts and inter-organizational funding agreements.
The question then becomes how to foster a collaborative culture across all fiscally sponsored projects within a fiscal sponsor organization? Is it possible for a fiscal sponsor to formally encourage relationship building among its projects to establish trust so the hosted projects enter into a framework defined by “coopetition,” rather than feeling like they are in competition with one another?6
The reality is that programmatic partnerships between projects cannot be expected to emerge organically. To foster intra-organizational collaboration, a fiscal sponsor can build or adapt an online project management platform or customer relationship management system (CRM) to encourage the formation of an active social network among individual projects. By creating a platform that focuses on communication and knowledge sharing, a fiscal sponsor, “Can enhance overall organizational capabilities through collective learning and synergistic benefits generated from the processes of exchanging information, know-how, or local expertise among competing units.”7
By making an upfront capital investment in an online platform or “portal” conducive to project interaction and collaboration—the cost of which is shared internally among many projects of varying size and sophistication—a fiscal sponsor may lay the groundwork for the creation of a stronger community of projects that is able to convert minimal investment into a multi-stakeholder nonprofit enterprise with unique components and areas of expertise that can both coordinate and operate independently. However, it is important that the platform is useful to an individual project’s primary purpose and operations, like through the inclusion of critical financial and programmatic metrics as modules within the “portal,” in order to encourage widespread adoption and continuous use of the new system. Only then will the platform’s networking capabilities translate into greater collaboration between projects.
Fractured Atlas, a New York-based fiscal sponsor, supports thousands of arts-based projects through a proprietary online payment processing and financial reporting system which drastically reduces overhead costs by directly integrating with the organization’s accounting system.8 This platform has allowed Fractured Atlas to scale up dramatically, and serves as an e