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
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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 example for how an online portal, with a focus on social networking and data sharing, can likewise be used to facilitate the growth of internal project partnerships.
One of the first areas that can be addressed by using such a system is the coordination of social media and other communication outreach efforts. An ideal portal system would include an interactive calendar that allows other projects to view posted events, and decide whether it would be worthwhile becoming involved in that activity or the promotional campaign associated with it. A project that has a large social media presence may benefit from working with a different project that has more scientific expertise, or “shareable” content, including photo and videos from on-the-ground fieldwork. Like coalitions of independently incorporated nonprofits, fiscally sponsored projects that fall under the same organization can have greater impact by working together in networks to take advantage of each project’s “comparative advantage” to “build the larger field, share resources, and empower others.”9
Fostering a community of projects united by a shared objective and the means to seamlessly engage one another as part a larger, coordinated coalition allows a fiscal sponsor to leverage these newly formed networks to achieve greater results. Under the fiscal sponsor’s umbrella, projects can form diverse networks of practitioners and stakeholders whose voices are amplified through a pluralistic approach that can reach multiple audiences and constituencies. Building collaborative networks among large and small projects within a fiscal sponsor increases each project’s individual effectiveness. Likewise, it allows the field as a whole to leverage limited funds to achieve significant outcomes that no single organization representing a subset of stakeholders could achieve in isolation.
A technology-driven portal also presents advantages for outcome reporting. High capital costs associated with developing technological platforms for monitoring and evaluation has resulted in vast disparities in capacity to meet funder and evaluator demands for more outcome reporting. By providing a technological platform whose cost is shared among many individual projects or covered by a single innovative funder, fiscal sponsors working in environmental conservation have the opportunity to make the field more inclusive and diverse by ensuring that all projects, both large and small, have access to the most sophisticated tools for tracking outcomes and collaborating with others within the organization.
Intra-organizational collaboration among different projects also helps to illuminate the connections between different focus areas, thereby highlighting the importance of a systems approach to tackling interrelated issues to donors who may have only thought of the issues in isolation previously. This may enhance revenue or bring in new types of funders who prefer multi-stakeholder programs.
It is a given that fiscal sponsorship creates economies of scale, deepens the field’s ability to deploy diverse strategies at multiple levels, and can improve accountability. But, fiscal sponsorship also poses a unique opportunity to engage multiple stakeholders and constituencies associated with different projects housed within a single organization. While a few fiscal sponsors currently advertise their ability to “connect” projects for peer learning and advisory purposes, there are no fiscal sponsors currently using a technology-driven platform to effectively promote intra-organizational collaboration and coalition building. It is time we help connect our projects to more effectively advance the solutions that we care most about—to bring together disparate constituencies and complementary skillsets to consolidate both human and financial capital. We have the tools and understanding needed to create this “missing link” in order to unlock the true potential of fiscal sponsorship as more than an administrative function, but, rather, a mechanism to encourage the growth of new mission-driven communities unencumbered by many of the barriers that constrain inter-organizational partnerships and collaborative efforts. This is the next step in fiscal sponsorship’s evolution.
- Independent Sector. Accessed September 11, 2016.
- National Center for Charitable Statistics. Accessed September 11, 2016.
- Bartczak, Lori (2015). “Building Collaboration From the Inside Out.” Grantmakers for Effective Organizations. Page 4.
- Hello Ocean. Accessed March 9, 2016.
- Tsai, W. (2002). “Social Structure of ‘Coopetition’ Within a Multiunit Organization: Coordination, Competition, and Intraorganizational Knowledge Sharing.” Organization Science, 13(2). Page 189.
- Fractured Atlas. “About Fiscal Sponsorship.” Accessed March 9, 2016.
- Crutchfield, Leslie R. and Grant, Heather McLeod. Forces for Good: The Six Practices of High-Impact Nonprofits. Jossey-Bass. San Francisco. 2008. 1st Page 126.