Robi Rahman🔸 comments on Fiscal sponsorship, ops support, or incubation?

[Robi Rahman🔸]

This doesn’t answer your question, but: I’ve heard several people opine that “fiscal sponsorship” is a really bad name for what it entails. I work at Epoch, which is a fiscal sponsee of Rethink Priorities (and yes, RP uses the word “sponsee” for us and all their sponsees). My understanding is that we (Epoch) pay some kind of fee to RP (annual? maybe a percentage of our budget? idk), and in return, RP’s HR people handle our HR stuff and some of their ops people spend some time doing ops work for us. This is almost the complete opposite of being “fiscally sponsored” in the sense of being sponsored by and receiving money from the sponsor.

h/​t @SarahPomeranz

[merilalama]

Hey Robi! Yeah, I agree fiscal sponsorship can be a misleading term, since “sponsor” suggests someone who provides money. In the case of fiscal sponsorship, what the sponsor provides is tax-exempt status. I’d be somewhat reticent to use another term because this one is widely used in the nonprofit world. From Wikipedia:

Fiscal sponsorship refers to the practice of non-profit organizations offering their legal and tax-exempt status to groups (...). It typically involves a fee-based contractual arrangement between a project and an established non-profit.

I do think the EA community could use a bit more clarity around what fiscal sponsorship is, though. Maybe us at RP will write some posts about this soon.

I should note also that fiscal sponsors often don’t provide operational support, as RP does for Epoch and other fiscally sponsored projects. So that’s not what the term “fiscal sponsorship” primarily refers to. Outside of EA, I think it’s more commonly just a way for non-profit projects to accept tax-exempt donations.

[Harry Luk]

Thank you for your comment.

Yes, just want to confirm the costs involved:

Not all sponsors charge a fee, but it’s typical to be charged between 5-10% of your annual budget

CE’s handbook page 350 estimates costs as well:

Fiscal sponsors charge fees, ranging anywhere from 2-15% either of expenditures or reveneues.

Couple reasons why the cost could be worth it is:

You avoid the hassle of setting up an entity and building an operations function

Your project can become associated with a very reputable entity, which signals its potential to the community