Over the past two decades, the social sector has increasingly recognized that no single entity or approach can solve complex social challenges at scale. Meanwhile, funders and nonprofits have been grappling with some big questions: How can we move faster? How can we better collaborate with other funders? How can we more effectively work across sectors? How can we test potentially risky ideas—and responsibly end them if they don’t work? How can we support small, sometimes struggling nonprofits? How can we respond more quickly to emerging needs?
There are no simple answers to such questions. However, an emerging model of sophisticated fiscal sponsorship is enabling social sector innovators to take action in light of many of the challenges such questions represent. Lee Bodner and Kriss Deiglmeier, leaders at the New Venture Fund and the Tides Foundation, respectively, explore this emerging model in a paper jointly released by their two organizations: “Reimagining Fiscal Sponsorship: Expanding the ways in which donors, nonprofits, and other social change actors can collaborate for change.”
They note that sophisticated fiscal sponsorship organizations can help close gaps and overcome obstacles that otherwise limit the effectiveness of funders, nonprofits, and the entire social impact sector. Such organizations deliver much more than traditional fiscal sponsorship, which basically entails providing a home for a nonprofit project that doesn’t have independent 501(c)(3) tax status and handling tax-deductible donations on its behalf. Sophisticated fiscal sponsors do that and do it well, Bodner and Deiglmeier note, but they also provide “a broad and deep bench of expertise available to donors and hosted projects.” On an as-needed basis, they deliver additional support services from nonprofit professionals, including:
- “Lawyers who are field leaders in nonprofit law, advising on the rules regulating advocacy, lobbying, and political activity;
- Human resource teams that offer comprehensive services to cultivate and keep nonprofit talent, including competitive benefits, management training, and performance management;
- Experts in governance models and best practices who can help mastermind complex, multi-stakeholder initiatives;
- Evaluators who can help different types of initiatives identify the best ways to measure impact;
- Consultants who can advise on strategy and organizational development to maintain a sustainable and healthy initiative, facilitate donor collaboratives, and support network building”
Through the combination of resources and flexibility they provide, sophisticated fiscal sponsors enable projects with lean budgets to tackle complex issues that require scale, capacity, and top-tier talent. They bridge gaps between small nonprofits and large funders, facilitating the movement of funds from big foundations that make large grants on set schedules to front-line groups that need small grants now. Sophisticated fiscal sponsors also advance collaboration by providing a neutral platform for pooling funds, expert guidance on governance models and decision-making, and increased flexibility for working with corporations, government agencies, and organizations in foreign countries. They enable sponsored initiatives to launch quickly, scale up or down as necessary, and adapt as their programmatic structures and goals evolve.
In sum: they identify and fill gaps in the infrastructure that otherwise make it difficult for stakeholders to work together to accomplish shared goals–and thereby enhance and accelerate social impact.
The teams at NVF and Arabella are proud to provide a customized, “ready-to-go” platform that is enabling social change innovators to turn great ideas into impact across the United States and in more than 75 countries worldwide. Over the coming weeks and months, we will use this blog to tell the stories of several of these remarkable social change efforts. In the meantime, to learn more about sophisticated fiscal sponsorship, download the paper.