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For a growing number of grassroots projects, fiscal sponsorship isn’t just a launchpad—it’s the whole runway.
Historically, fiscal sponsorship has been seen as a tool to help founders or grassroots organizations get a new project off the ground. The idea: lean on an established nonprofit to handle some of the administrative burden, but once things are up and running, it’s time for that baby bird to leave the nest.
But that sentiment seems to be shifting. Some project founders are opting to stick with the fiscal sponsor structure over the long term; some have found there’s no reason to ever go independent.
Because fiscal sponsors handle many of the tedious-yet-important back-office logistics, project leaders have more freedom to focus on fundraising or rolling up their sleeves and setting about doing the work that inspired them in the first place. Fiscal sponsors can also provide shared office space; access to expensive software; and financial, legal, and technical support that small projects might never be able to afford on their own.
When the Build Initiative launched in 2022, as a national resource hub that helps state leaders design better early childhood systems, they sought the support of a fiscal sponsor. And they never left.
“We thought this would be a five-year initiative, sort of a learning lab for philanthropies and state leaders,” said Executive Director Susan Hibbard. “But there is still a need for it, and so it’s continued.”
The Build Initiative’s fiscal sponsor is Third Sector New England, a Boston-based outfit that offers comprehensive support. They provide accounting, legal, expense reporting, and HR services for Hibbard and her team, and also offer programs such as training for new supervisors, and add-on consulting services.
Hibbard shared that this arrangement allows her and her staff to focus on the work they’re driven to do. “We don’t need a full-time accountant; we don’t need a full-time HR person,” said Hibbard. “So instead of having all these part-time people, we can share those services with other like-minded organizations.”
The idea to stick around for more than two decades was not necessarily expected. Hibbard recalls a time when some of Build’s funders started pushing the organization to spin out into its own 501(c)(3).
“I think [when they saw our fiscal sponsor] they were picturing the idea of an incubator – like when you’re ready to be a ‘real organization’, you become a nonprofit,” said Hibbard. “But once I explained that we weren’t in incubation, that we’re an organization that has shared services, they loved that.”
Long-term support is also working for Peter Cameron, founder and managing editor of The Badger Project, a nonpartisan investigative journalism publication in Wisconsin.
A former daily newspaper reporter, Cameron founded The Badger Project in 2018 as a way to provide missing coverage of state politics, campaign finance, and law enforcement issues across the state.
From the outset, he had no intention of growing the project into a sprawling organization. “I want to continue being a journalist,” said Cameron. “I don’t want to be a manager. I don’t want to be a CEO. I want to be in the trenches, and keeping the organization small allows me to do that.”
Cameron linked up with the Center for Community Stewardship, a full-service fiscal sponsor based in Madison. The Center receives donations on The Badger Project’s behalf, manages its financial administration, and provides website and technical support. And the level of service it provides has grown over time. Now, Cameron says he has access to a discount program that helped him save money on a new laptop, as well as a debit card that makes managing expenses simpler.
This arrangement enables Cameron to do the journalism work that matters to him – and in a tough media market, also gave him the flexibility to experiment with his business model early on.
Cameron had originally planned to sell the stories he and his small-but-mighty team produced to other publishers and traditional news organizations throughout Wisconsin. But he quickly realized those organizations don’t have any budget to spare, so he switched to a donor- and grant-supported model. The stability of C4CS was critical.
“This was always an experiment,” he said. “Journalism was the thing that I knew how to do, and everything else was just an experiment. We’re building the plane while it’s flying.”
Of course, not every project sticks around for the long term. Projects “spin out” of fiscal sponsors for a variety of reasons, often in a healthy way.
Some project leaders decide they want more autonomy. Others determine that moving to a for-profit or hybrid model is the best long-term approach. Sponsors sometimes alter their services or the fees they charge, which can change the calculus for a project leader. And external factors, like changes to the law, can push the financial or political risk of a project beyond a threshold a sponsor is comfortable with.
While there’s no hard data on how long projects remain with sponsors, a major fiscal sponsorship field scan in 2023 offered a useful snapshot of current trends. The group of 100 sponsors surveyed said they had collectively seen 442 projects spin out in the previous year. About 48% of those left to become independent 501(c)(3) nonprofits, and 28% moved on to a different fiscal sponsor. Others closed, completed their missions, or were short-term by design.
Heidi Hernandez Gatty is vice president of sponsored projects and funds at Rockefeller Philanthropy Advisors. She says she's not surprised that the long-term approach is working for people as the fiscal sponsor sector has matured.
“The fiscal sponsorship field has grown in sophistication,” she said. “Technology has helped enable more efficiencies and greater levels of transparency. And the availability of [remote work] has helped allow a distribution of talent. I think fiscal sponsors, especially post-pandemic, have been able to distribute staff across the country and really find excellent, dedicated talent.”
Sharing resources for the long-term does not come without effort. For Susan Hibbard of the Build Initiative, that means working with the other organizations operating underneath Third Sector New England to agree on the services and payment structures that make sense for the whole group.
“There’s a lot of compromise and negotiation, whereas if you do your own thing, it’s going to work exactly for you,” she said. “But figuring all that out is a tension within any organization.”
Hibbard understands there might come a day when spinning out as an independent 501(c)(3) would make sense for her organization. But for now, she has no intention of leaving.
Proximate is an independent media platform covering movements for participatory problem-solving. We look at the news through the lens of money: how it’s given away, how it’s invested, and how it’s distributed by government.
We are a fiscally sponsored project of Movement Strategy Center.
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