Nonprofit Launch Plan Podcast for Startup, Small, and Growing Nonprofits

Matt Stockman (00:00)

Fiscal sponsorship is a financial and operational nonprofit structure that a lot of nonprofit leaders struggle to understand clearly, but for the right organization, it can completely change the speed, the sustainability, and the operational health of a mission. Simply put, fiscal sponsorship allows a charitable project or an emerging nonprofit to operate under the legal and tax-exempt umbrella of an existing 501c3,

rather than immediately building a standalone nonprofit organization from scratch. And in today's episode,

I'm unpacking the ins and outs of how fiscal sponsorship actually works, the difference between fiscal sponsorship and fiscal agency, when it makes sense to pursue it, and why you might want to consider exploring this model as a way to focus less on infrastructure and more on impact.

Welcome to the Nonprofit Launch Plan podcast for startups, small and growing nonprofits. This podcast is here to help you build your non-profit the ground up on a strong, sustainable foundation by providing the clear frameworks, practical tools and the real world guidance that you can actually put into practice. I'm your host, Matt Stockman. Here at Nonprofit Launch Plan, we believe that every successful nonprofit has got to be operating in peak performance across six key areas in order to be successful. Those areas are leadership,

fundraising, marketing, programs and services, operations, and finances. So on every episode of the podcast, we focus on one of these core areas to help you create lasting impact without all the complexity. Now, before we dive into today's episode, if you like the kinds of things that you're learning and picking up from listening to the podcast, there's always more of that in my free weekly email.

The nonprofit launch briefing each week I send out this one meaningful email about something different than what we talk about in the podcast. So it's always new material every week, strategies, practical tools, fundraising insight, real world guidance for startup small and growing nonprofits. If you're serious about building a healthy nonprofit with real impact, I'd love to have you sign up on the list. Shoot me a quick email with the simple, sign me up in the subject line and I'll get you all squared away. My email is Matt.

at NonprofitLaunchPlan.com. Again, just sign me up in the subject line and send it to mattatnonprofitlaunchplan.com. Now, let's dive in. Fiscal sponsorship is a tool that allows a charitable project or an emerging nonprofit to operate under the legal and the tax-exempt umbrella of an existing 501c3.

rather than having to immediately build out all of the things a standalone nonprofit organization needs from scratch. And my guests on this edition of the podcast today are Noah Stockman and Brianna Carr from Third Sector New England, commonly known as TSNE. TSNE is a nonprofit organization itself that provides infrastructure and operational support, things like consulting, executive search.

nonprofit management training and one of the most established fiscal sponsorship programs in the country. And if you're unfamiliar with fiscal sponsorship or you've heard the name but not really sure what it means, this episode I think is gonna be really valuable because for a lot of nonprofit leaders, fiscal sponsorship can provide a way to begin doing meaningful charitable work.

right away without first spending months building a separate legal entity or creating administrative systems or hiring an HR person, figuring out all the compliance or navigating all the complexity of nonprofit operations alone. So in this conversation, we're gonna talk about stuff like what fiscal sponsorship actually is in practical terms, when fiscal sponsorship makes sense and when it may not.

how organizations like yours can operate under another nonprofit's umbrella, what operational support can look like on the day-to-day, the role of an advisory board and a fiscally sponsored project, and a whole lot more.

So whether you are in the earliest stages of exploring a nonprofit idea or you're leading a growing organization that is stretched thin operationally, or you're considering whether there's a better way to structure your work, something smarter, I think this episode is going to give you a framework for thinking about nonprofit infrastructure in some potentially new and different ways. I'm excited for you to hear it. Here's my conversation with Noah Stockman, by the way, no relation to me, and Brianna Carr.

from Third Sector, New England.

Matt Stockman (04:47)
somebody who's brand new to getting into nonprofit work in general, how would you explain fiscal sponsorship in kind of simple, practical terms for the person who has maybe heard the phrase and doesn't really know much more about that?

Brianna Carr (05:02)
sponsorship, you know, it's a very widely common, know, and long standing nonprofit practices and TSME was actually the first fiscal sponsor in the country and with

Fiscal sponsorship, a nonprofit organization sponsors a charitable mission aligned project and the sponsoring project will assume comprehensive legal and fiduciary control of the sponsor project. And what that really means we say again in layman's terms is a small acquisition almost of the organization and you will come under the umbrella of the fiscal sponsor.

Matt Stockman (05:33)
Mm-hmm.

Brianna Carr (05:43)
Most organizations, whether it is big or large, do some level of Model A comprehensive fiscal sponsorship and Model C ⁓ pre-approved grant fiscal sponsorship.

Matt Stockman (05:56)
Is this a temporary typically or permanent thing?

Brianna Carr (06:00)
It depends. It depends on what the organization really is looking for. I would definitely say for any organization that is looking for temporary fiscal sponsorship, you probably want to go to

go a route that is through Model C ⁓ and that's just a very light touch. You pre-approved grant, probably have to have your own. If it's not, ⁓ you could have your own different LLC, something along those lines, but if you're doing, you know, more long-term work, you're going to want to see ⁓ the Model C, Model A fiscal sponsorship, comprehensive fiscal sponsorship.

Matt Stockman (06:43)
In model A, model C is a IRS designation.

Brianna Carr (06:48)
Sorry, so they're the different models of fiscal sponsorship. there are about

Matt Stockman (06:51)
Okay.

Brianna Carr (06:53)
Six, seven different models of fiscal sponsorship. The ones that are most commonly used are model A comprehensive fiscal sponsorship where it's a small acquisition as I mentioned, and then model C, a pre-approved grant fiscal sponsorship where an organization or maybe it's a funder will come to us, a fiscal sponsor, and say, hey, we have these charitable dollars we want to utilize and we want your support. And we'll do, if it's accounting,

and voicing, making sure we're doing our due diligence as a 501c3 to steward their funds for the charitable mission of the funder.

Matt Stockman (07:34)
Talk a little bit about the difference. I hear people use the word fiscal sponsorship and then the phrase fiscal agency. Can you explain what the difference is between those and what might make a difference about that for a nonprofit leader?

Noah Stockman (07:51)
So they're commonly sort of used interchangeably. However, they're very different services. And it really comes down to the relationship with the sponsor. ⁓ So fiscal sponsorship, as Brie kind of explained, is ⁓ becoming a part of...

the fiscal sponsors organization. So it's like, we always talk about it as kind of like a client and employee relationship, which is, as you mentioned, does provide some complexity, but, ⁓

Matt Stockman (08:17)
Okay.

Right.

Noah Stockman (08:22)
fiscal sponsor, they all have their own taxes of 501c3 entity. And that is the single entity that governs, you know, in all of these projects that fall under fiscal sponsorship. ⁓ And so as a professional fiscal sponsor, we have the responsibility for all the funds and we have the legal right to direct the funds of the fiscally sponsored project. However, you know, we work in close cooperation, collaboration with

the projects as they, you we like to ⁓ work kind of hand in hand to ensure that the funds are being used to support their mission. ⁓ Whereas a fiscal agent is essentially, it can be a 501c3, it could be something else, but if it's a 501c3, it's essentially receiving and just holding the funds for a separate organization. Whereas we provide sort of the legal ⁓ infrastructure for these projects to operate.

And we provide full financial, human resources, legal, compliance ⁓ services. so we do one audit. We ⁓ have a very robust insurance policy that we provide for all of our projects. So it's very much like a...

suite of services, whereas fiscal agency is just really a transactional relationship.

Matt Stockman (09:48)
Okay, that is a interesting and important distinction because my follow-up was going to be like, well, when does it make sense for somebody to pursue one versus the other? I think what I hear you say is sponsorship provides a whole kind of host of ancillary benefits that you don't get with just finding a fiscal agent. Would that be a fair statement to say?

Noah Stockman (10:15)
That's correct. Yeah, absolutely. And, ⁓ you know, I would just add that the fiscal agency sort of cannot offer that same level of service because of how they're operating.

Matt Stockman (10:16)
Okay.

Gotcha. Okay.

Right. Help me understand and help the podcast listener understand when or what particular situations or circumstances doesn't make the most sense to pursue something like a fiscal sponsorship for a new nonprofit that's just getting underway or maybe trying to move in a new direction. Can you talk a little bit that scenario arises?

Brianna Carr (10:54)
So I think when people think about launching, you know, nonprofit or when they're thinking about pursuing fiscal sponsorship, ⁓ honestly, they look at pursuing a nonprofit as a kind of a natural next step. But in reality, it's forming a whole new independent 501c3 is like starting a business. It takes like real time, it takes money, a lot of energy to build up operations systems. And, you know, you have to go through the legal process, even if it's just a

for tax exam status with the IRS, can take up to six to nine months. So one of the questions we get a lot is like, when is a good time to consider fiscal sponsorship instead? And the honest answer is it really just depends. It depends on the organization. For some folks, it could be at the very beginning. You might have a strong idea, a clear mission, maybe even funding lined up, you don't have the infrastructure to support it. And so fiscal sponsorship,

can give you a way to start doing the work right away without getting slowed down by setting up a whole organization.

But it's not just for new projects, honestly, it's really sometimes it makes sense when a project is in transition. Maybe you're winding down ⁓ or need a place to responsibly house remaining funds, close things out with integrity, or maybe you're in a moment of reassessment where your team wants to take a step back, look at your mission and not be weighed down by the day-to-day administrative duties or operations. And so,

So these are kind of the situations where project just needs a different kind of support. And instead of managing HR, finance, compliance, and all the administrative pieces internally, fiscal sponsorship can allow organizations to shift the work to a partner. And so their energy can go back to programming strategy, fundraising, focusing on the mission.

Matt Stockman (12:57)
For somebody who may be.

has an idea, sees a problem in the world that they feel like they're called to solve and wants to get into nonprofit work and maybe they're actually moving towards doing some of that work even before they've even thought about applying for their 501c3. They can come to you and say, here's my mission, it's really clear, here's how I want to serve, here's the things that I have in place, so on and so forth.

enter into a fiscal sponsorship agreement and start operating before ever, and they sort of operate under your five one C three then at that point, is that a fair way to put it?

Noah Stockman (13:39)
That's correct. the only thing I would add to that is that ⁓ there's, you know, there are hundreds of fiscal sponsors in this country that are doing this type of work. And I would say there are fiscal sponsors that sort of have a niche, whether it be, you know, we support only arts organizations or, you know, or we like to work with small grassroots startup projects. ⁓ You know, so

I would say finding the right fiscal sponsor is really key.

Matt Stockman (14:10)
Yeah,

okay.

Noah Stockman (14:11)
However, you know, that in theory like that, that is it, is that, you know, it's, it's, can come with an idea. ⁓ and it, depending on, you know, the particular mission and fit for that fiscal sponsor. ⁓ you know, we at TS &E, we like, we prefer to see some level of operating history. So whether that be under a separate organization that, you know, I would say oftentimes the projects that are coming to us are programs of another organization that

Matt Stockman (14:41)
Yeah.

Noah Stockman (14:42)
have grown or sort of moved out of the general,

Matt Stockman (14:43)
Okay. Yep.

Noah Stockman (14:45)
of the direct mission area. So they're trying to spin off and create their own thing. that's probably the most popular that we see. And we can work with their old organization to get their financials and their operating history, how many staff, know, so we have some basis to make our decision. ⁓ But yes, in theory, what you're saying is true.

Matt Stockman (14:51)
I could see that, yeah.

Yeah.

And you've got some history, like they have a

s- you have some history to look past on and they have s- they have a story that they've already been able to tell, they just need some of the back end support that you guys provide. Then at that- in that situation. Gotcha. Okay.

Brianna Carr (15:07)
Mm-hmm.

Noah Stockman (15:11)
Exactly.

That's right.

And sometimes it'll

be a volunteer led organization and they're looking to make their first hire. And so they need, you know, additionally, they need to be able to offer benefits and things like that. So.

Matt Stockman (15:31)
Yeah,

that's good. Can you walk us through kind of what it looks like on a day to day? If I'm an executive director of an organization and I get into an with an organization like yours, Talk a little bit about what the day-to-day kind of thing is like.

Brianna Carr (15:47)
I would say if you're working under physical sponsorship with TSNE, your day to day is actually going to look really different, dependent on the relationship you have with us. Every fiscally sponsored project has a different type of relationship with us because we recognize that there's really no one size fits all experience here. Everybody is doing different work and so their programming looks a lot different. And so it not only depends on the model you're in, but it also depends on the

level of support you're going to need and how your team engages with TSNE. If you have a more resourced organization and you have more staff members, if you have less staff members, if more people are experts in certain aspects of how we communicate, whether it be financial or through our HR policies and procedures, the relationship can look pretty different. But at a baseline, what we can say is you're not going to do the work alone. You're partnered with

the TSN team, a grants and finance manager, a grants and finance associate, a human resource business partner, and a contracts attorney. And they help you navigate the behind the scenes pieces of running your organization. So on any given day, that might look like checking your budget, working through a grant report, coordinating on how funds are being spent. And, you know, for some projects, that partnership is really hands on because

Matt Stockman (17:01)
Wow, yeah.

Brianna Carr (17:16)
just the nature of their work. For others, it's more just touch point based. And a big part of the experience is the administrative that's supportive of TSNE. And so TSNE is handling things like, you know, the financial tracking, processing payments, making sure everything stays compliant. And if you're in a model that includes, you know, model AHR support, they're also supporting hiring, payroll and benefits.

Our goal is really to support those operational burdens for organizations to get them off their plate so they can focus on their programs

Matt Stockman (17:56)
That's great and really robust and a lot of things that you offer for somebody who really trying to get off the ground, which is

Is there responsibilities that maybe before were the executive directors or the director of development or the CFO that moved to your organization? In other words, does any of that transfer when you start working with a nonprofit?

Noah Stockman (18:21)
Yeah, absolutely.

Yeah, ⁓ and that's like the foundation of this whole thing and how it works is that it needs to be kind of a two-way relationship. It's not just, like you said, like we're a service provider and they have contracted with us to provide a service because they have information that we need, we have information that they need, so it really works best when people understand.

where those responsibilities lie. And we have a very robust and detailed ⁓ fiscal sponsorship agreement that outlines all of the responsibilities, including that of the advisory board, which we haven't even talked about yet, but is a key part of this as well. They have to have an advisory board. It's not a fiduciary board, but it is a group of people that ⁓ are engaged with that organization or that project around fulfilling their mission, programming activities, fundraising, et cetera.

A successful fiscal sponsorship relationship depends on those clear roles and responsibilities. ⁓

You know, we, to give you a short list of examples, you we provide fiduciary legal compliance, ethical accountability as the sole legal entity. We ultimately do retain control and discretion of the use of funds. ⁓ We maintain the records, we demonstrate that the funds were used for tax exempt purposes. We establish and maintain processes and policies that promote.

robust communication between the sponsored project and TSNE, ongoing communication. ⁓ We collaborate with the project to deliver on our shared administrative services. ⁓ But the things that we rely on them for is really ⁓

to give us information about who they're, what's in the pipeline, you know, what grants, what applications, what funders are out there they're going after. That not only helps us to be able to support them, but also be able to forecast their financials for them. ⁓ They have to sort of, they have to be available to us and maintain clear communication. They kind of have to appoint one kind of liaison point person to serve in that day-to-day communication role.

And then they have to review their financials and their reports to make sure that everything we've done is accurate from their eyes too. So that's really key to the whole thing too, is that they're engaged in these processes and not just relying on us to just do it for them, right? And then, you know, we do, like I mentioned, require them to maintain an active advisory board that does kind of oversee the work that the organization, sorry, the project does.

Matt Stockman (20:48)
Yeah, yeah.

Noah Stockman (21:12)
⁓ but also has a three-legged stool that allows us to work successfully with a project.

Matt Stockman (21:22)
So, and is the reason you refer to that group as an advisory board is because a lot of these organizations aren't technically a 501c3. they don't like what's the difference between a board and an advisory board in a situation like this? Talk a little bit more about that.

Noah Stockman (21:35)
Yeah. Yeah.

Okay, the largest distinction is that an advisory board has no fiduciary responsibilities for the project.

that only sits with our board of directors, which is we have one for TSNE. ⁓ Other than that, there is a lot, there is some overlap. that, know, in some organizations you may have an advisory board that's fundraising for a certain activity or program. ⁓ But ultimately that responsibility does sit with a board of directors. ⁓ At TSNE, ⁓ you know, they really help the executive director of the project make

Matt Stockman (21:56)
Okay.

Noah Stockman (22:21)
sort of more managerial decisions. They are typically people that the project director feels are

Matt Stockman (22:24)
Mm-hmm.

Noah Stockman (22:31)
⁓ connected to the work they're doing in some way, or form, ⁓ and can advise on some of the programmatic elements. ⁓ But the advisory board is key to the relationship because it allows us to have kind of two points of accountability. One of the relationship with TSNE to the project director, but then one of the advisory board to both TSNE and the project director.

Matt Stockman (23:00)
Yeah. Okay.

Noah Stockman (23:01)
So they would engage around the performance review of the project director. They're sort of more on the ground level than even we are.

Matt Stockman (23:12)
Yeah, okay. ⁓ That's helpful. That explains it well. What would you say to somebody who may be listening to the podcast, who you've said a number of things that spark some interest in them, and they would like to pursue whatever the next few steps should be, given your best practices and what you know, like, how would you coach that person?

Brianna Carr (23:35)
if someone is wondering, you know, is fiscal sponsorship right for me? The first thing I usually say is start by really looking at where your project is right now. You know, are you in those early stages where you've got a strong idea, some momentum, but you're not quite ready to take on the cost and complexity of forming a full nonprofit? Or maybe you're actually in transition?

Matt Stockman (23:55)
Right?

Brianna Carr (23:58)
winding a project down and needing a responsible place to house the funds as I mentioned before. ⁓ Sometimes it's the opposite. The work is growing but the administrative side is starting to take over and you need space to refocus on the mission instead of building infrastructure.

That kind of reflection matters because in fiscal sponsorship, it really just isn't a default option. It really is about fit. So from there, it helps to get clear on what kind of support you actually need. If it's just legal and financial home for funding, or do you need deeper operational support, things like finance, HR, compliance, and grants management handles in a more integrated way.

That clearly helps you understand whether fiscal sponsorship with an organization like TSME makes sense for you. Because if it feels like the right next step, the process is pretty straightforward. You go to TSME's website at tsn.org, submit an inquiry form, and through our online process, our intake coordinator will then review it and call you, get additional information, and then send an application, which are accepted

on a rolling basis. So there really isn't a really hard deadline, but quarterly we review them by our board of directors. ⁓

Matt Stockman (25:16)
Right.

Brianna Carr (25:20)
And it usually takes about 2 to 4 months. So you want to start planning ahead and depending on how complex the project is and what kind of structure they're looking for. It could take a little bit longer. And then the final step after review and conversations with leadership. The sponsorship decision is ultimately made by our board of directors. So it's a really thoughtful process we have. You know, it's not just about getting into.

to fiscal sponsorship at TSNE. It's really about making sure the structure actually supports the work, where your work is and where it's trying to go.

Matt Stockman (26:00)
I know somebody is going to be asking, like, hey, if we get into a fiscal sponsorship agreement and whether it's grant dollars come in or individual donor dollars come in, does the fiscal sponsor take a portion of that ⁓ as an administrative fee? What other costs are?

tied in with something like this. Explain a little bit about the finances on the back end a little bit.

Brianna Carr (26:27)
we chart something called an indirect cost rate for fiscal sponsorship.

Matt Stockman (26:31)
Okay.

Brianna Carr (26:33)
And so that indirect cost is for the first year is 14 % on all expenses. And after the first year, the rate is reviewed as part of our regular fiscal sponsorship agreement renewal process, and currently will not drop below 10 % nor exceed above 14%. And with that first year, we're able to understand the complexity of the work that we have.

Matt Stockman (26:55)
Gotcha.

Brianna Carr (27:03)
with that project. And so then the services

include all of those listed, HR services, legal dependent on if it's model A. ⁓ And we also have general liability insurance, accounting, we do the annual audit, 990 payroll services and everything. ⁓ And then for model C, it is dependent on level of effort as well. And those costs are generally between five and 7%. But we have some that are at 8%.

Matt Stockman (27:35)
Gotcha.

Noah Stockman (27:38)
a couple of important points that Bree just made too. And one is ⁓ we, as a fiscal sponsor at TSNE, we charge our indirect rate based on expenses. Most other fiscal sponsors charge based on revenue. And that seems like a pretty nominal difference, but it's actually pretty significant because, ⁓ yeah, it is because, ⁓ you know,

Matt Stockman (27:56)
I was gonna say it sounds actually pretty significant,

Noah Stockman (28:03)
you know, you're taking on it when it comes in the door or when it goes out the door, right? And generally, most organizations are operating where the revenue exceeds their expenses. So generally, that would be a higher percentage on expenses. But the other thing is, is that we believe that it's an equitable policy because ⁓ they may be taking in money that they're not going to spend for three years. And so we think, you know, our sort of our workload and our level of effort really happens because they're doing the fund

Matt Stockman (28:06)
Right.

Right.

Noah Stockman (28:32)
raising. So we're just taking the money in and then our work starts when the money comes in. So that's when we feel like taking a percentage of the expense is a more equitable practice because it allows them to have the money in their accounts for longer and hopefully build up some interest based on that as well. And then secondly is that ⁓ that's really our value proposition is that we can keep an organization's overhead between 10 and 14 percent. And that in the nonprofit industry is

Matt Stockman (28:52)
Yeah.

Noah Stockman (29:02)
is absolutely below market. Most people are at 25, even 35%. And so, and that, you you can argue, well, that includes fundraising. Well, you know, even at that, you know, there's still room for fundraising costs for an organization that takes fiscal sponsorship services being so significantly below market.

Matt Stockman (29:02)
That's huge. Yeah.

Right.

That's really good. Great point. Thank you for pointing that

Is providing something like fiscal sponsorship, is that a specific part of your nonprofit design that, or is this something that any other nonprofit could provide to other nonprofits?

Noah Stockman (29:44)
I mean, it depends on whose perspective you're looking at it from. think from the IRS perspective, it's any organization. We have no special designation to do this from the IRS perspective.

Matt Stockman (29:54)
No designation that means

you're licensed, for lack of a better way to put it, to do this and other organizations may not be. Gotcha. Okay.

Noah Stockman (30:00)
Right.

Correct, we are a 501c3 just like every other nonprofit

charitable. ⁓ I would also, from my perspective, I think a lot of organizations sort of ⁓ haphazardly get into fiscal sponsorship and get in over their heads. And we've seen a lot of that lately with the sort of current climate, the nonprofit sector that they're looking around and saying, okay, we have to clean house here and make sure all our affairs are in order.

Matt Stockman (30:18)
I would, yeah.

Noah Stockman (30:31)
we're doing this fiscal sponsorship, you we sort of got into it because it was, you know, picture was you're you know, a PTA and the, like the, you know, the youth basketball program wanted to do a fundraiser for you. Like, so, or they wanted to do a fundraiser and have you kind of provide fiscal sponsorship for them. Well, they're not equipped to do that, you know, on a, level that an established fiscal professional fiscal sponsor can. So, so again, both sides, but we have no,

Matt Stockman (30:50)
Right.

Noah Stockman (31:01)
special

power, I mean, no special powers other than our experience and how we ⁓ approach our work and our values. ⁓

Matt Stockman (31:05)
Yeah.

Noah Stockman (31:11)
But there's no special distinction. I think you do see a lot of work and some foundations even doing this for grantees that they sort of sort of just got into it not and then it's grown and it's gotten kind of unruly. So, you know, both yes and no, think it's important to understand what you're getting into when you agree to.

Matt Stockman (31:26)
Yeah.

I understand. Yeah.

I mean, to be fair, I'm not advocating that necessarily. I was really just getting at, like, do you have to have a special designation to do this? it sounds like technically the answer is no, which does not mean it's a good idea necessarily, right? For other nonprofit organizations. Yeah, gotcha. somebody who you think who might be listening who's maybe just

Noah Stockman (31:36)
Yeah.

Right.

Matt Stockman (31:55)
overwhelmed by all of this. It feels like the next right step for them would be to reach out to someone like you guys and just start to do some research, get some information, dig in a little bit. Do you offer some sort of, ⁓ for lack of a better way to put it, just sort of some resources for people who are really on the investigation side of this? They haven't made any decisions yet. They're just trying to figure out what the next step looks like.

Brianna Carr (32:23)
yeah, definitely. You could visit our website, fill out the inquiry form, and we can at least give you a phone call to let you know what fiscal sponsorship looks like. ⁓ If it's an organization that is interested in becoming a fiscal sponsor, we also do do that on an ad hoc basis here and there. Definitely is a

Matt Stockman (32:34)
Yeah.

Brianna Carr (32:45)
Something I suggest is a first step if that's what you're considering is consultation on it before you do it. But that is that would be the resources that we offer around fiscal sponsorship and fiscal sponsorship with TSME.

Matt Stockman (33:02)
what should a nonprofit leader be looking for in a fiscal sponsorship organization and what are maybe some red flags about this is somebody who you might want to rethink or not give a whole lot of attention or focus to?

Noah Stockman (33:19)
I think number one is mission alignment, know, look at our values, look at your values, are we values aligned? ⁓ Do we understand and believe in your work? ⁓ Which, you know, generally I can't, you know, as long as it's got ⁓ a charitable purpose, we're generally on board. We don't specialize in any one area or one subject. ⁓

You know, I look at the track record of that fiscal sponsor. Have they supported similar projects before? ⁓ What's the reputation? How long has the sponsor been doing this work? I think a lot of times...

⁓ You see sort of sponsors pop up and then they sort of just, you know, and then they sort of away. So we encourage applicants to talk with our partners as well as other fiscal sponsors to see the differences. And also it's important to understand ⁓ what the suite of services are offered because a lot of times, like you said, Model C, is just a grant, a re-granting or a pre-approved grant relationship is a lot different.

different

than Model A. And even from fiscal sponsor to fiscal sponsor, Model A might look different. So I think it's always an apples to apples comparison. So I think it's important to do some due diligence and look around and ask yourself, ⁓ what are the needs of my project and who best fits those needs.

Matt Stockman (34:36)
Sure, yeah.

Yeah, that's

great. question. Is there anything else that you feel like, I can't believe you didn't ask X, Y, or Z, ⁓ something that we missed you feel like is probably worth ⁓ adding to

Noah Stockman (34:53)
That's a

Thanks for

no, I'm just going to say, you know, I think, uh, at TSNE, you know, we certainly, we've been doing this a long time and, and, you know, we've, we've, we've learned a lot of lessons along the way. There's no one, you know, sort of reference manual. There, there is one book out there called, uh, fiscal sponsorship, six ways to do it right. And from, from what we can tell, that's the only sort of published, uh,

Matt Stockman (35:27)
Wow.

Noah Stockman (35:28)
sort of, ⁓ you know, and it's not very thick. ⁓ So there's a lot of ways to do it. Yeah, I mean, you know, we use that book. I mean, it's really provides a little bit of framework for the different models of physical education. There's A through L, I believe. So there's a bunch of different models. ⁓ But, you know, I think that ⁓ what we see is the value is that ⁓ organizations that couldn't otherwise get access to

Matt Stockman (35:32)
Sounds like you guys should write a book.

Noah Stockman (35:58)
⁓ the level of

services, benefits, infrastructure that we provide ⁓ can get access to that and it really helps support their mission and their growth. we've seen projects that come to us and grow into organizations, go out on their own. We've seen projects come to us and just, they really love this operating model. They don't want to have to think about the audit or the filings or the sort of compliance and reporting that has to

Matt Stockman (36:17)
Yeah.

Yep. Yep.

Noah Stockman (36:30)
to happen or the legal liability or negotiate their own health benefits. mean, lot of small organizations can't afford the benefits. mean, benefits generally is a major line item these days. So ⁓ we're able to sort of provide that. ⁓ we believe that nonprofit employees shouldn't have to sort of sacrifice on benefits.

and salaries and things like that. So we really work with them to make sure their salaries are competitive and we work with projects and organizations all over the country. And we can specialize and we're registered, we do business in 37 states. So we're really a national footprint with fiscal sponsorship. And so we have to know about all the local laws and all the local specialization.

Matt Stockman (37:28)
Yeah.

Noah Stockman (37:30)
around employment, which is something that changes dramatically from state to state. So we think that we can provide excellent services at a real value because we're doing it at scale with full complement of staffing that meets all of your sort back of the house needs. And that's really, I think, attractive to a lot of organizational leaders. So I think that's really where the sort of special sauce lies in that relationship.

Matt Stockman (37:34)
Sure.

Yeah.

Noah Stockman (38:00)
with each project and being able to offer that comprehensive service.

Matt Stockman (38:05)
Well, I hope today's conversation has helped kind of demystify what fiscal sponsorship actually could look like for you as you're launching your nonprofit because I think for a lot of nonprofit leaders, maybe you, there's an assumption that the only legitimate path forward is immediately creating a standalone nonprofit organization filing for your 501c3 status, building up this entire operational infrastructure and carrying all of that.

administrative responsibility internally on your shoulders from day one. But there are situations where a different structure may actually create more health, ⁓ more sustainability, more mission focus and impact, especially in the early stages of growth, or during seasons of transition from one program to another or one phase to another. I also appreciate that the emphasis on fiscal sponsorship is not a shortcut.

or a loophole, it's actually more of a relationship and a partnership built around accountability for you and for them, alignment, communication, compliance, and shared stewardship of mission and resources as well. And so for some organizations, that becomes a really powerful model for long-term sustainability. So if today's episode maybe sparked some questions for you about nonprofit structure, operational systems, fiscal sponsorship,

or the next stage of growth for your organization, I'd encourage you to continue during your homework, ask some good questions, and then explore the options that are available to you before making any major organizational decisions. And if you need help with that, feel free to reach out to me, book some time. It's absolutely free for a discovery call. Just go to nonprofitlaunchplan.com and click book call.

and schedule the time right there. And remember also, before we wrap up, if you like what you learn on the podcast,

you can get more of it in your inbox each week. Sign up for my free weekly email. It's called the Nonprofit Launch Briefing. Each week I send you a meaningful email with something you need to be considering or thinking about or working on as a nonprofit leader. And it's something different than what you hear on the podcast. It's not just a repeat or a recap of the podcast. It's designed to help you lead smarter and grow stronger and avoid just a lot of common mistakes of other nonprofit leaders.

So if you're serious about building a healthy nonprofit with real impact, I'd love to have you on the email list. Just shoot me a quick email with a simple, sign me up in the subject line. My email is matt at nonprofitlaunchplan.com. Again, sign me up in the subject line and my email is mattmatt at nonprofitlaunchplan.com.

That's it for this episode of the Nonprofit Launch Plan podcast for startups, small and growing nonprofits. If the podcast is helpful at all, please consider sharing it with another nonprofit leader who is just getting started and needs the clarity and support. And until next time, keep building wisely, keep making a difference, and thanks for watching and listening.