Coming just on the heels of one of the deadliest natural disaster years in history in 2019, the COVID-19 pandemic in 2020 is our latest wake-up call, shining a stark spotlight on the escalating threats faced by our families, communities, and the ecosystems that support us. As the global caseload approaches three million and deaths rise above 200,000—and with the United States seemingly rushing into an economic depression—it is hard to lift our heads to see beyond the pandemic.
But while the global pandemic is our most immediate threat, it is hardly the only threat we face. And indeed, the pandemic itself is made far more vicious in the United States because of pre-existing problems, such as wealth and income inequality.
As David Leonhardt and Yarnya Serkez note in the New York Times. “Inequality didn’t cause the coronavirus crisis. But it is making the crisis much worse, having created an economy in which many Americans are struggling to get by, and are vulnerable to any interruption of work or income and any illness.”
Recognizing these broader challenges—which are global in scope—back in 2015, international officials came together to develop the United Nations’ Sustainable Development Goals (SDGs). These challenge leaders to address global threats by jointly working to achieve a sustainable future for our planet and our people in 17 interwoven areas critical to our collective survival, including eliminating poverty, securing gender equality, mitigating climate change, preventing environmental degradation, and building peaceful and inclusive societies that leave no one behind.
Taking on these urgent global challenges is an ambitious undertaking. It requires disrupting and supercharging the pace of global innovation to bring the most promising local and global solutions quickly to scale.
Across the public, private, and civil sectors, we need to rapidly pilot, prototype, launch, and scale promising new approaches. Nonprofits have a critical role to play in this—and, in many ways, while nonprofits are not always thought of as the nimblest of actors, they are uniquely well-positioned to help bring into being many of the social changes that our world most needs.
A Hidden Asset
Within the US nonprofit sector, there is an oft-overlooked set of actors that can help. Classified loosely under the somewhat opaque moniker “fiscal sponsors,” these organizations historically have provided fast-track access to donations for organizations that do not have the time or inclination to seek out 501c3 status for themselves and to provide financial and other back office administrative services (accounting, payroll, etc.) to projects seeking access to philanthropic funding to develop new social change approaches.
Fiscal sponsorship was first created in the 1960s, but a number of players in the field expanded significantly during the early 2000s. Now there are more than 200 of these organizations across the US, alongside a burgeoning group of fiscal sponsors offering a broader and more professionalized set of capacity-building supports.
By partnering with a fiscal sponsor, a group of local activists can easily seek and receive tax-exempt contributions and grants—bypassing the delays, costs, and distractions of forming a separate nonprofit organization with its own infrastructure.
But that’s just the tip of the iceberg (a metaphor which sadly, due to global heating, may lose its meaning during the next decade). Working alongside governmental and private sector partners, fiscal sponsors and their emerging “fiscal sponsor plus” cousins can play pivotal roles in helping deliver people- and planet-saving impact.
What might this look like? While predicting the future is hard, there are several distinct advantages that fiscal sponsors bring to the table as partners for lasting change.
Below are a few developing trends that highlight the opportunities that fiscal sponsorship partnership could create during the next decade:
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An Opening to Support Unencumbered Research
The philanthropic sector loves “big bet” gambles on new ideas and competitive challenges for innovation, but perhaps a more significant development is the rise of a generation of rogue researchers. As those who are familiar with the university world well know, university researchers often have to sacrifice 50–60 percent of their hard-won grant funding to institutional overhead. But what if they could move to nonprofit homes that can allow them to efficiently capture and deploy resources from both the nonprofit and governmental sectors to fuel their work?
These and other social entrepreneurs will have neither the time nor the desire to immerse themselves in the “mandatory minutia” of running a nonprofit (think tax compliance, board meetings, accounting reports). Rather than adopt a “build” strategy, they’ll recognize the advantage of a “buy” strategy, securing an organizational support partner that can help them be first to market.
The fiscal sponsors, alliances, and related umbrella organizations that appeal to this group will have referenceable financial and operational track records. They can bring new initiatives into strongly rooted relationships with major donors, foundations, and mission-aligned thought leaders. Their operations will be lean and streamlined, embracing emerging technologies and leveraging economies of scale in order to keep infrastructure expenses low while programs scale and grow. While unfettered by bureaucracy, they will supply the stability and benefits of mature organizations, providing flexible high-touch services and wraparound supports designed to accelerate impact.
Support organizations that administer governmental funding will be particularly well-poised to add value to research-related initiatives. They’ll provide incoming researchers and scientists with a cost-effective and agile funding platform that can ease institutional collaboration and fast-track low-cost access to the independent Institutional Review Boards needed to publish in peer-reviewed publications.
Supporting Networks and Coalitions
Impact at a global scale will require strong multi-stakeholder and cross-sector engagement at local, regional, and national levels. Funders will exert increasing pressure on recipients to develop alliances that can move the needle—both in the field and at the policy table—toward impact more rapidly. As a result, mission-based networks, coalitions, and consortiums will become a common structure for change. These organizations will move beyond their origins as conveners of best practices and wield their collective power to shape policy at the local, regional, and country levels.
Fiscal sponsor organizations could serve as a home base of choice for many of these emerging networks. Since most central coordinating functions are leanly staffed by design, networks and coalitions can benefit from the lower operating costs of a shared services model and the assurance that funding streams can be fully deployed for program-related impact.
How else can a fiscal sponsor help? As the coalition gains its own power, one obvious area is the realm of advocacy. In particular, grassroots advocacy groups and networks can benefit by being housed within a fiscal sponsor’s organization. This is because the larger organization has a higher lobbying limit than the group would have if it were a standalone nonprofit, freeing the group up to seize more opportunities to directly advocate for policies that can support systems change.
The Rise of the “Fiscal Sponsor Plus” Organization
Dedicated fiscal sponsors will continue to provide core financial and operational backbone services but will face competition from other nonprofit organizations seeking to add fiscal sponsorship as an additional service to help expand reach and diversify funding. There will also be growing competition from within the system as “fiscal sponsor plus” organizations develop business models that can deepen the value provided to projects without layering on additional cost. Several of these evolved “plus” models already exist, and I’ve highlighted a few below:
- Fractured Atlas now has more than 75,000 artist and organization members and has redefined fiscal sponsorship for arts professionals and organizations. In addition to fiscal sponsorship and several other services tailored to artists, they have also created software designed to help artists sell tickets, take donations, and grow their support base.
- In support of their mission to foster leadership diversity in the sector, Seattle-based RVC (Rainier Valley Corps) piloted an “Alliance” model in 2017. They currently sponsor 15 initiatives, providing core back-office support coupled with organizational development and field-building support.
- And, at my organization, Multiplier, we’ve taken another path, adding a dedicated “accelerator” team to support our projects. The team is composed of seasoned nonprofit leaders with targeted expertise in the areas that most often become barriers to scaling impact. These include program design and development, donor prospecting and fundraising advisory support, leadership and team development, and strategic partnership research and design.
A few years ago, NPQ published an article about fiscal sponsorship by Vu Le, who recently stepped down from directing RVC. Le notes that current structures often do not allow nonprofits to achieve their missions effectively. Le adds, “Every organization is expected to do its own HR, finance, evaluation, communications, IT, fundraising, governance, et cetera. Meanwhile, we compete with one another for resources, and we often have no idea what other nonprofits are doing. It is incredibly inefficient, perpetuates the Nonprofit Hunger Games, screws over grassroots organizations led by marginalized communities, and leaves us scrambling to respond to the horrifying social and political climate bearing down on our community.”
What the coronavirus pandemic teaches us—as well as those 17 global sustainable development challenges that will remain with us, even after the pandemic passes into history—is that our world is facing enormous problems that are too big for any one nonprofit to solve.
Of course, fiscal sponsors—even of the “fiscal sponsor-plus” variety—are only one element of the solution, but they are an important element, nonetheless. We need to find ways to more effectively leverage research. We need to find ways to support coalition and networks. And, yes, we need to work together more effectively.
As the editors of NPQ noted a few years ago, “Is there a way that the nonprofit institution can sometimes own us in a way that is not necessarily good for the basic mission and effort? Absolutely.”
So, let’s think together about how to leverage structures like fiscal sponsorship to enable us to avoid over-institutionalization and become more effective partners. Doing so hopefully will help us achieve more in our mission-related work. But even more importantly, the times we live in demand it.