One possibility might be for the smaller organizations to be legally independent with their own funding streams and boards, and then contract the actual substantive work of their organization out to EVF (so the work would technically be done by EVF employees who are contractors of the smaller organization). A little awkward, but it would keep title to the smaller organization’s assets, IP, and the like legally under the control of the smaller organization. A decision of whether to break up the smaller org-EVF relationship could be exercised by either party, while only EVF has that power now. And since the workers were ultimately getting paid by the smaller organization (which could decide their services were no longer needed), it could give the smaller organization more control over its workers than under the current model where EVF holds all the formal power.
All that would be logistically at least a bit of a headache, so you’d have to balance the interests of more independence for the smaller organization vs. efficiency.
I agree insofar as a more complex arrangement does not make sense for startups.
But take the Good Ventures Foundation / Open Phil relationship as a simplified example. As I understand it, GVF basically does nothing other than cut checks when Open Phil recommends it. Although Open Phil’s funding is doubtless routed in a way that avoids its characterization as a private foundation, my understanding is that it practically comes from Good Ventures (or from an allied source). In other words, GVF gives Open Phil a grant to perform essentially all of the operations GVF would like to see done.
Either Open Phil or GVF could pull the plug on this relationship and break up if either wanted to. Although GVF has no legal control over the actions of Open Phil staff, it has legal control over the relevant assets (and could easily be structured to protect/license certain IP as well). And it has great practical control over how Open Phil runs the program (although GVF has shown zero interest in using that power), which it could enforce if desired with some creative writing of grant rules.
So it is possible for Organization A to “hire” Organization B to run programs it wants without Organization A giving up all control and authority to Organization B. It incurs some extra costs and hassle that have to be balanced against the benefits and usually won’t make sense for smaller organizations.
Right. But OpenPhil doesn’t administer Good Ventures books, OpenPhil doesn’t ensure Good Ventures is compliant with relevant laws, OpenPhil doesn’t hire/employ Good Ventures staff, and OpenPhil doesn’t administer Good Ventures’s payroll, and OpenPhil doesn’t operate or provide Good Ventures’s a “private foundation” or “LLC” status.
So while what you’re describing is definitely a viable (if not complex) arrangement, it is not similar to the kind of arrangement I’m aiming to describe.
Similarly, RP can and does offer services (e.g., research consulting, running an event, administering a fund) on behalf of another org without legally absorbing that org, but the kind of fiscal sponsorship I’m describing that RP and Effective Ventures does require legally absorbing the org (while still credibly promising independence).
I think I should aim to be clearer that I definitely do think it will often be the right choice for an org to not seek fiscal sponsorship (or to eventually spin off from fiscal sponsorship) and become its own org with its own 501c3 status and its own board and its own books and its own payroll, but I think there are also a bunch of projects where all that overhead doesn’t make sense (yet) and so fiscal sponsorship is the right play.
I definitely want to affirm that what you’re offering is incredibly valuable for many organizations, especially those that are younger or smaller, and that it is the right play for many organizations.
Yes, if the smaller org pulled the contractor-supply contract, it could then hire away the former contractors as employees. That loses the advantages of EVF involvement but is an option.
One possibility might be for the smaller organizations to be legally independent with their own funding streams and boards, and then contract the actual substantive work of their organization out to EVF (so the work would technically be done by EVF employees who are contractors of the smaller organization). A little awkward, but it would keep title to the smaller organization’s assets, IP, and the like legally under the control of the smaller organization. A decision of whether to break up the smaller org-EVF relationship could be exercised by either party, while only EVF has that power now. And since the workers were ultimately getting paid by the smaller organization (which could decide their services were no longer needed), it could give the smaller organization more control over its workers than under the current model where EVF holds all the formal power.
All that would be logistically at least a bit of a headache, so you’d have to balance the interests of more independence for the smaller organization vs. efficiency.
See my other comment here for why I don’t think that would work in practice
I agree insofar as a more complex arrangement does not make sense for startups.
But take the Good Ventures Foundation / Open Phil relationship as a simplified example. As I understand it, GVF basically does nothing other than cut checks when Open Phil recommends it. Although Open Phil’s funding is doubtless routed in a way that avoids its characterization as a private foundation, my understanding is that it practically comes from Good Ventures (or from an allied source). In other words, GVF gives Open Phil a grant to perform essentially all of the operations GVF would like to see done.
Either Open Phil or GVF could pull the plug on this relationship and break up if either wanted to. Although GVF has no legal control over the actions of Open Phil staff, it has legal control over the relevant assets (and could easily be structured to protect/license certain IP as well). And it has great practical control over how Open Phil runs the program (although GVF has shown zero interest in using that power), which it could enforce if desired with some creative writing of grant rules.
So it is possible for Organization A to “hire” Organization B to run programs it wants without Organization A giving up all control and authority to Organization B. It incurs some extra costs and hassle that have to be balanced against the benefits and usually won’t make sense for smaller organizations.
Right. But OpenPhil doesn’t administer Good Ventures books, OpenPhil doesn’t ensure Good Ventures is compliant with relevant laws, OpenPhil doesn’t hire/employ Good Ventures staff, and OpenPhil doesn’t administer Good Ventures’s payroll, and OpenPhil doesn’t operate or provide Good Ventures’s a “private foundation” or “LLC” status.
So while what you’re describing is definitely a viable (if not complex) arrangement, it is not similar to the kind of arrangement I’m aiming to describe.
Similarly, RP can and does offer services (e.g., research consulting, running an event, administering a fund) on behalf of another org without legally absorbing that org, but the kind of fiscal sponsorship I’m describing that RP and Effective Ventures does require legally absorbing the org (while still credibly promising independence).
I think I should aim to be clearer that I definitely do think it will often be the right choice for an org to not seek fiscal sponsorship (or to eventually spin off from fiscal sponsorship) and become its own org with its own 501c3 status and its own board and its own books and its own payroll, but I think there are also a bunch of projects where all that overhead doesn’t make sense (yet) and so fiscal sponsorship is the right play.
I definitely want to affirm that what you’re offering is incredibly valuable for many organizations, especially those that are younger or smaller, and that it is the right play for many organizations.
Thanks!
Would the smaller orgs really be able to do this, if their “employees” are actually employed by EVF?
Yes, if the smaller org pulled the contractor-supply contract, it could then hire away the former contractors as employees. That loses the advantages of EVF involvement but is an option.