Financial Management
Option 1 (recommended) - Fiscal Sponsorship
With a small environmental granting program, the easiest way to manage finances is through a larger nonprofit organization that shares your general mission and location and agrees to fiscally sponsor you. This organization, hereafter referred to as the nonprofit fiscal sponsor or simply the fiscal sponsor, would support you by holding your money in one of their financial accounts, therefore effectively sharing with you their tax-exempt status. The fiscal sponsor would then cut checks for reimbursements of program administration expenses and for your funded projects. Because funded projects are required to have a nonprofit project sponsor, funds can be transferred from your nonprofit fiscal sponsor’s account to their nonprofit project sponsor’s account, which is an entirely tax-exempt process, helping to minimize worries about taxes and to maximize the amount of money that you can provide to projects as funding. Read more about fiscal sponsorship on the Grant Space, Foundation Center, and National Council of Nonprofits websites.
To find a nonprofit fiscal sponsor for your grant program, look online for nonprofit organizations near you that share a similar mission. Are there nonprofits nearby that work with the environment? Are there organizations that focus on empowering young people? Are there service-learning groups? Perhaps there is a nonprofit seed grant organization without a focus on youth or the environment yet? Remember that the organization need not share your grant program’s entire focus, but it should share at least one aspect of your mission. Looking for nonprofits with which you already have some sort of connection is also helpful. Do you or any of your potential board members have personal connections to any of these nonprofits? Think of which organizations would actively want to see this sort of youth environmental empowerment program accomplish its mission, and approach these organizations first.
Once you have identified several possible nonprofit fiscal sponsors, check to make sure that each organization is reputable, sturdy, and making yearly progress. You do not want to be associated with an organization that misuses funds or has a negative impact on the world. Additionally, your sponsoring organization should be structurally strong enough that it will not likely cease to exist any time in the near future. Check annual reports to gauge whether the nonprofit is moving forward with its mission, indicating a dedication to the mission and likely organizational stability, or if it is struggling to stay afloat. Remove the weaker organizations from your list of potential fiscal sponsors. (Of course, don’t disregard them as potential partners or as valuable organizations; you just want to make sure that your fiscal sponsor’s future appears stable.)
When you have narrowed down your list to a small handful of potential nonprofit fiscal sponsors, use the email template “To Potential Non-Profit Fiscal Sponsor” to create an email to the director of the most-desired potential fiscal sponsor. This email will introduce your grant program and request a meeting to further discuss your ideas for collaboration with the nonprofit. Although it may be tempting to pitch your request for fiscal sponsorship via email, talking with the head of the nonprofit in person better conveys your excitement for your grant program and often results in more positive answers than do emails. Furthermore, even if the meeting does not result in an agreement to fiscal sponsorship, it can lead to a different sort of support from the approached nonprofit that emails typically do not result in.
Read through, edit, and print out the “Fiscal Sponsorship Follow-Up Letter” before your meeting. You should hand this letter to the director of the potential sponsoring organization before you leave the meeting. We also strongly recommend visiting the Grant Space, Foundation Center, and National Council of Nonprofits websites for more details on the hows, whats, and whys of fiscal sponsorship. Reading through the “Example Fiscal Sponsorship Agreement” can also be useful. These will all help you have a meaningful and educated conversation with the head of your potential sponsoring organization about what fiscal sponsorship would mean for your program and for the organization. It may also help to write up and bring notes for the meeting that outline the main points you want to hit. During your meeting, be sure to smile, be confident, and let your enthusiasm for your grant program shine. Thank the organization director for his/her/their time.
Continue to meet with organizations until one agrees to be your fiscal sponsor.
If you have approached all organizations on your list and are still having trouble getting a fiscal sponsor, try the Fiscal Sponsor Directory online. They have a database of willing fiscal sponsors in various areas around the United States. However, their fiscal sponsors charge a certain percent (usually 5-10%) of your yearly funds to sponsor you. Clearly, it would be best to minimize or eliminate this fee so that more money can go to funding youth-led environmental projects. But even a grant program with less funding available to fund projects still funds projects, making a positive impact on the world and on the young people involved in the program. Because finding a fiscal sponsor is critical to your program’s existence, paying a fee may be what it takes to have a functioning program.
Once you have your sponsoring organization, talk to them about how their finances work. Request that they have a way to earmark your program funds to be used for your program only and not for the sponsoring organization’s activities. Ask about how donations to your grant program can be made (ie, to what name should checks be made out to ensure that the funds reach your program?). Also ask them how they would like you to submit requests for checks to be written, and find out how far in advance you should request a check to be written. This will ensure that your projects receive the funding they need in time. Write this key information down.
Keep your fiscal sponsor up-to-date on your program’s success. If you receive recognition or press, share this with the sponsor. This sort of positive publicity will encourage a longer-term relationship with your fiscal sponsor. Also be sure to invite representatives from your sponsoring organization to attend your award ceremony and to visit funded projects as they are being completed.
Put information about your fiscal sponsor on your website and put its logo on award ceremony programs, on big checks, and other documents as you see fit.
With a small environmental granting program, the easiest way to manage finances is through a larger nonprofit organization that shares your general mission and location and agrees to fiscally sponsor you. This organization, hereafter referred to as the nonprofit fiscal sponsor or simply the fiscal sponsor, would support you by holding your money in one of their financial accounts, therefore effectively sharing with you their tax-exempt status. The fiscal sponsor would then cut checks for reimbursements of program administration expenses and for your funded projects. Because funded projects are required to have a nonprofit project sponsor, funds can be transferred from your nonprofit fiscal sponsor’s account to their nonprofit project sponsor’s account, which is an entirely tax-exempt process, helping to minimize worries about taxes and to maximize the amount of money that you can provide to projects as funding. Read more about fiscal sponsorship on the Grant Space, Foundation Center, and National Council of Nonprofits websites.
To find a nonprofit fiscal sponsor for your grant program, look online for nonprofit organizations near you that share a similar mission. Are there nonprofits nearby that work with the environment? Are there organizations that focus on empowering young people? Are there service-learning groups? Perhaps there is a nonprofit seed grant organization without a focus on youth or the environment yet? Remember that the organization need not share your grant program’s entire focus, but it should share at least one aspect of your mission. Looking for nonprofits with which you already have some sort of connection is also helpful. Do you or any of your potential board members have personal connections to any of these nonprofits? Think of which organizations would actively want to see this sort of youth environmental empowerment program accomplish its mission, and approach these organizations first.
Once you have identified several possible nonprofit fiscal sponsors, check to make sure that each organization is reputable, sturdy, and making yearly progress. You do not want to be associated with an organization that misuses funds or has a negative impact on the world. Additionally, your sponsoring organization should be structurally strong enough that it will not likely cease to exist any time in the near future. Check annual reports to gauge whether the nonprofit is moving forward with its mission, indicating a dedication to the mission and likely organizational stability, or if it is struggling to stay afloat. Remove the weaker organizations from your list of potential fiscal sponsors. (Of course, don’t disregard them as potential partners or as valuable organizations; you just want to make sure that your fiscal sponsor’s future appears stable.)
When you have narrowed down your list to a small handful of potential nonprofit fiscal sponsors, use the email template “To Potential Non-Profit Fiscal Sponsor” to create an email to the director of the most-desired potential fiscal sponsor. This email will introduce your grant program and request a meeting to further discuss your ideas for collaboration with the nonprofit. Although it may be tempting to pitch your request for fiscal sponsorship via email, talking with the head of the nonprofit in person better conveys your excitement for your grant program and often results in more positive answers than do emails. Furthermore, even if the meeting does not result in an agreement to fiscal sponsorship, it can lead to a different sort of support from the approached nonprofit that emails typically do not result in.
Read through, edit, and print out the “Fiscal Sponsorship Follow-Up Letter” before your meeting. You should hand this letter to the director of the potential sponsoring organization before you leave the meeting. We also strongly recommend visiting the Grant Space, Foundation Center, and National Council of Nonprofits websites for more details on the hows, whats, and whys of fiscal sponsorship. Reading through the “Example Fiscal Sponsorship Agreement” can also be useful. These will all help you have a meaningful and educated conversation with the head of your potential sponsoring organization about what fiscal sponsorship would mean for your program and for the organization. It may also help to write up and bring notes for the meeting that outline the main points you want to hit. During your meeting, be sure to smile, be confident, and let your enthusiasm for your grant program shine. Thank the organization director for his/her/their time.
Continue to meet with organizations until one agrees to be your fiscal sponsor.
If you have approached all organizations on your list and are still having trouble getting a fiscal sponsor, try the Fiscal Sponsor Directory online. They have a database of willing fiscal sponsors in various areas around the United States. However, their fiscal sponsors charge a certain percent (usually 5-10%) of your yearly funds to sponsor you. Clearly, it would be best to minimize or eliminate this fee so that more money can go to funding youth-led environmental projects. But even a grant program with less funding available to fund projects still funds projects, making a positive impact on the world and on the young people involved in the program. Because finding a fiscal sponsor is critical to your program’s existence, paying a fee may be what it takes to have a functioning program.
Once you have your sponsoring organization, talk to them about how their finances work. Request that they have a way to earmark your program funds to be used for your program only and not for the sponsoring organization’s activities. Ask about how donations to your grant program can be made (ie, to what name should checks be made out to ensure that the funds reach your program?). Also ask them how they would like you to submit requests for checks to be written, and find out how far in advance you should request a check to be written. This will ensure that your projects receive the funding they need in time. Write this key information down.
Keep your fiscal sponsor up-to-date on your program’s success. If you receive recognition or press, share this with the sponsor. This sort of positive publicity will encourage a longer-term relationship with your fiscal sponsor. Also be sure to invite representatives from your sponsoring organization to attend your award ceremony and to visit funded projects as they are being completed.
Put information about your fiscal sponsor on your website and put its logo on award ceremony programs, on big checks, and other documents as you see fit.
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