Talking About Your Fiscally Sponsored Project

Talking About Your Fiscally Sponsored Project

How to effectively communicate about your legal status as a fiscally sponsored project with your stakeholders.

Where it applies, we encourage all of our projects to increase their capacity for impact through smart marketing, branding and communications strategies. Connecting with stakeholders is always worth the time. Making good use of that time is key. As a fiscally sponsored project, how you talk about the legal status of your project and your relationship with Social Good Fund, in a way that makes sense to people, is very helpful and important.

To begin, it’s always in your interest to be clear about your status as a fiscally sponsored project of Social Good Fund with your donors and funders. Institutional funders such as foundations, corporate sponsors, and public sector entities need to be aware of, and understand, your project’s legal status and relationship with the fiscal sponsor. Likewise, individuals who donate should understand why they are making their donation to, and receiving a receipt from, Social Good Fund.

Always make sure your funders understand that you are a fiscally sponsored project, a short story: Project X worked for several years as an informal group to fulfill their mission. They got used to calling themselves a nonprofit. When they decided to become a fiscally sponsored project so that they could seek foundation grants, they never stopped calling themselves a nonprofit, giving the impression that they were an independent 501(c)(3). They worked hard building a relationship with a foundation funder for several months. At no point did the project tell the funder that they were a fiscally sponsored project, nor did the funder ask. The foundation invited the project to submit a lengthy proposal and ultimately informed the project that they had successfully won a grant award. It was only at the point when the foundation was ready to send a grant check that the funder became aware that the project was actually a fiscally sponsored project. The foundation was furious. They immediately revoked the award letter and told the project that they felt deceived and they could no longer trust the project. All the hard work and planning went up in smoke. Plans had to be altered, people told they wouldn’t be hired and their reputation damaged. This could have been prevented if: the project had submitted the proposal for Social Good Fund’s review prior to submission- we look for this kind of thing; the project had been clear on their website that they were fiscally sponsored, and the project directors fully comprehended the necessity to be forthright with the funder about their legal status. (Arguably, the foundation could also have been more understanding.)

It’s also important to be clear about your project’s legal status with anyone who works with your project including volunteers, independent contractors and, of course, employees and anyone else you may want to enter a legally binding contract with.

Rather than being shy about communicating about their status as a fiscally sponsored project, many Social Good projects have found that volunteering this information early in the process of developing relationships with stakeholders to be very helpful. It builds trust and allows the project to speak with more detail about the strategic and careful choices the project is making as it grows. From the point of view of funders, working with a sponsor can lend credibility and a sense of security that the money will be tracked and used properly.

The simplest way to communicate about your legal status is to put the following language on the footer of your project website homepage and on all materials being used for fundraising, including on your project’s donation page.

“XYZ Children’s Organization is a fiscally sponsored project of Social Good Fund, a California nonprofit corporation and registered 501(c)(3) organization, Tax ID (EIN) 46-1323531.”