FISCAL SPONSORSHIP: FAQS
Year organization became a 501(c)(3): 2012
of first fiscal sponsorship: 2012
Number of sponsored projects: 5
8% administrative fee.
Aligned mission/values: Heaven’s Door Foundation (HDF) promotes the healthy development of individuals, families and communities, supporting arts for a cause.
Types of projects or services we sponsor:
- Health and Wellness
- Environment/sustainable growth
- Fashion and Arts for a Cause
- Festivals and events
- Other: Faith Based Media
Q: What does it mean that the Heaven’s Door Foundation (HDF) is a “Fiscal Sponsor” for Projects?
A: HDF acts as the 501(c)(3) umbrella for each Project. HDF holds legal and financial responsibility for its Projects. Fiscal sponsorship is a formal arrangement in which a 501(c)(3) public charity sponsors a project that may lack exempt status. This alternative to starting your own nonprofit allows you to seek grants and solicit tax-deductible donations under your sponsor's exempt status.
All funds must come directly to the non-profit fiscal sponsor which acts as umbrella for the company receiving donations and to accurately record all donations in order to provide authentic donation receipts. It can't be where a Project receive the monies and HDF sends out donation receipts for monies that have not been received to HDF. A standard fiscal sponsorship fee is deducted and then monies are sent to the Project being sponsored. A contract is drawn up and signed by both parties.
Q: How do I apply for Project Fiscal Sponsorship?
A: When approaching your prospects, be ready to give a verbal or written proposal that explains:
- Your project: Why it's needed, and its goals, objectives, method, evaluation, staffing, and budget. This is similar to a grant proposal. To learn more about writing one, please see proposal writing resources.
- How it advances the nonprofit's mission.
- Other ways the nonprofit can benefit from being associated with your project.
- Since most grantmakers give to organizations, not individuals, fiscal sponsorship may help you qualify for more funding opportunities. Thus, you may be able to fund and start your project sooner. Meanwhile, you can work on getting your own nonprofit status if that is your ultimate goal.
Q: Why does HDF charge Projects a fee?
A: The 8% fee offsets the cost of services provided to Projects. Services include accounting, 990 filing and coaching. By sharing these costs with other HDF Projects, the fee is less than what Projects would pay vendors independently for the same service of a similar quality.
Where can I find examples of policies, procedures, and guidelines for fiscal sponsorship agreements? Links to guidelines of real fiscal sponsorship programs so you can see what is involved.
Q: Is there a separation fee?
A: No, but Projects do cover the costs associated with this process, which includes the filing fees.
Q: How can I apply to be a Project of HDF?
A: HDF receives more proposals for fiscal sponsorship than we can accept. We ask that you make sure your Project plan fits within HDF’s eligibility requirements and criteria by reading our How to Apply page. You can also contact HDF at 800-504-9409 with any further questions.
The application review process takes one to three months. On occasion, HDF will expedite a review process for legitimate funding or other time-sensitive reasons.
Q: What is the role of HDF’s Board of Directors versus the role of the Project’s board?
A: HDF’s Board of Directors is the legal governing body for all of HDF; they have legal and fiduciary responsibility over HDF as a whole. Project boards have no legal or governing authority, however, they still provide an important mechanism for accountability and support for Projects, including financial and programmatic governance to ensure the Project has the resources it needs to fulfill its mission. Projects are required to maintain a Project board with a minimum of four (4) members that meet at least quarterly.
Q: Does HDF raise funds for Projects?
A: No, Projects are responsible for their own fundraising. However, HDF is committed to supporting these efforts. HDF provides one-on-one coaching to Project staff and boards on fundraising, and will review Project grant proposals prior to submission.
Q: Does HDF offer office space to Projects?
A: HDF does not provide office space to Projects. Projects do have access to HDF’s meeting space, computers, printer, and internet. Projects may also use HDF’s copiers at a minimal charge.
Q: Is there a minimum or maximum amount of time HDF requires a Project to remain under its umbrella?
A: Generally, a Project must be with HDF a minimum of six months prior to beginning the separation process to become an independent 501(c)(3). There is no maximum amount of time an active Project can remain with HDF.
Q: What if we have already incorporated or even received our 501(c)(3) designation from the IRS?
A: Although there are exceptions, in most cases HDF does not sponsor groups that have a separate legal entity. That means that in order to apply for fiscal sponsorship, you must be willing to dissolve your nonprofit corporation and shelve your 501(c)(3) while under HDF’s umbrella. HDF can help with that process.
If you would like to keep your individual 501(c)(3) status, you may still want to consider using HDF’s accounting services, which provide professional accounting services to established 501(c)(3) organizations.
Q: Does HDF provide liability insurance for Projects?
A: No, that must be provided by the entity. It is the responsibility of the Project to obtain additional insurance costs to cover a Project’s property or special events are passed on to the Project. Depending on the nature of a Project’s activities, a Project may also need to purchase additional insurance with Project funds (e.g., a childcare center will need specialized insurance).
Q: How does funding work as a Project of HDF?
A: Most foundations accept proposals from HDF-sponsored Projects. HDF has worked closely with the funding community to understand the accounting and oversight benefits of HDF’s comprehensive fiscal sponsorship program.
Please contact us if you have any questions about specific funders.
Q: I have an idea for a nonprofit, but am not quite ready to apply for fiscal sponsorship. What resources are available for me?
A: The Fiscal Sponsor Directory besides listing sponsors nationwide, has news, history and more general information about fiscal sponsorship. The National Network of Fiscal Sponsors website also has details about the fiscal sponsor-project relationship.