Frequently Asked Questions about Fiscal Sponsorship
A fiscal sponsor is an organization that agrees to accept, and be responsible for, tax-deductible contributions and charitable gifts on behalf of a project that does not have its own tax exemption. Using a fiscal sponsor, a non-exempt individual, project, event, or organization can take advantage of a lot of the benefits of a tax exempt nonprofit organization.
Fiscal Sponsorship is a good solution for organizations (or certain individual projects or events) that only want to do a few small projects over a specified period of time, those who don’t have the time or staff for a lot of organizational administration, or those who need to be able to receive tax-deductible donations while they wait for 501(c)(3) nonprofit status approval from the IRS.
A fiscal sponsor:
Accepts and safeguards charitable donations on behalf of a project
Takes on legal liability for those funds
Creates and maintains some accounting records for the project
Qualifies the project for some grants and funding that would otherwise be inaccessible
Brings experience to the project and may provide such additional aids such as administrative services and/or strategic planning assistance
Legally, any existing tax exempt nonprofit organization can act as a fiscal sponsor (including a church or library) but, because of the legal complexity and administration required, not all non profits will do so. If you’re looking for a fiscal sponsor, it’s best to partner with an organization with which you have a good relationship, and/or one that has an existing fiscal sponsorship program.
Springboard’s program is designed for artist-led groups and projects. Our sponsored projects must have a nonprofit purpose, and the arts product or process must be based in Minnesota.
A “nonprofit purpose” means that the organization or project’s mission comes before any individual’s advancement or profit motive. That mission must also be in service of some aspect of the “public good.”
Springboard can sponsor organizations that are registered as sole proprietorships, nonprofit corporations, or single-member LLCs that are non-profit in purpose and meet all other eligibility requirements. Springboard cannot manage funds meant for for-profit purposes and can only enter into a fiscal sponsorship agreement with a for-profit corporation (S and C corps) or S, C, or P classification LLCs to support a nonprofit project that is distinct from their standard for-profit activities.
Yes. We’ve helped a lot of new organizations through the start-up process. Fiscal sponsorship is a good testing ground, and we have legal and consulting resources that can help you figure out your next steps.
Yes. Springboard sponsors both projects and organizations of various sizes and stages.
All of Springboard’s fiscally sponsored projects and organizations are self-managed, which means that they are responsible for filing their own tax return.
If your project is a sole proprietorship, single-member LLC, or unincorporated association, you will need to account for your project on your personal tax return(s). This mean you will need to:
– Fill out a 1099-MISC form for any individual(s) you pay a total of $600 or more during the calendar year.
– Claim all income from Springboard on your tax return and deduct project expenses by filling out a Schedule C.
If you are a corporation in Minnesota that has yet to file their application for 501(c)(3) or is waiting on the IRS is as a sole proprietor, then you may need to complete a 990, depending on your budget size. Consult a tax professional for more information.
Sponsoring organizations nearly always charge fees to cover administration costs. It's free to apply to Incubator, but programs that are admitted into the program are charged an annual fee on a sliding scale of $60.00 -$120.00, and 7% of any funds that are deposited with us. We also charge rush fees if we need to accommodate requests for materials on short notice.
Springboard offers fiscal sponsorship because it is an important part of our non-profit mission; the fees do not cover the full cost of the program’s costs.
Potential projects can determine their eligibility with a short online questionnaire. Eligible candidates can continue to the online application form.
If you still have specific questions, you can email email@example.com.
Applications are reviewed by a selection committee once a month. Project are then notified of their admittance or receive follow-up questions for further review.
We receive applications on an ongoing basis, and the process from receipt of application to acceptance can take up to 6 weeks. We generally review applications around the middle of the month.
Congratulations! We’ll set up some time to discuss the program 1 on 1. We'll then send you a contract to review, sign, and return to us.
Once we have a signed contract on file, we’ll send you information about how to set up an online fundraising campaign and links to forms and tools to help manage your account with us online. Then, let us know when you’re getting your grant proposal or other fundraisers together! We want to know your materials are legally acceptable, and grantors will almost always need some paperwork from us before you turn in proposals.
Sponsorships can remain active so long as a member is current with an annual renewal, and can be terminated by the project at any time. (If, for example, a sponsored project obtains their own federal tax exempt status, the project would no longer need a fiscal sponsor.) If Springboard decides to end a contract for any reason, we must give the project 30 days notice. Once a fiscal sponsorship relationship with Springboard ends, we will keep your records on file for five years.
Grants and donations MUST be made out to or processed by a fiscal sponsor organization to be tax deductible. Send checks, with your project name in the memo, to Springboard for deposit. We will deposit your funds and hold them for you in a separate checking account. To get those funds back from us, fill out a secure online funds request form, and we will send you a check. We process deposits and cut checks once a week.
Not necessarily. As long as your subsequent project fits with our mission and is consistent with our program and tax-exempt guidelines, then we can transition your account into your new organization/project.
Yes. Checks from individual donors, like grants, must be made out to Springboard in order for them to be tax deductible. Make sure they write the name of your project in the memo line so we don’t mistake the donation as ours instead. We cannot accept checks that are made out to your organization, and we cannot accept donations from someone else through you (i.e., if you were to deposit a donation check into your own account and then write Springboard a check for the same amount).
Yes. Our sponsored projects can create fundraising pages through Give MN. You can browse the projects fundraising on GiveMN here. Instructions detailing how to set up a GiveMN page are sent once an approved project returns their signed contract.
You might not win them all, but don’t give up. Not receiving funding doesn’t affect your contract with us. Check out our workshop schedule for grant writing classes or schedule a consultation if you could use more help with your fundraising strategies – and let us know when you’re prepared to start your next proposal.
We sponsor around 180 small organizations and artist projects.
Be aware of your deadlines – it makes things easier for everyone (and avoids rush fees). Many of our sponsored projects apply for the same grants, so our plate gets filled up fast for popular deadlines.
Make sure your donors make checks out to Springboard and not to your organization, and write your project’s name in the memo field.
Keep track of your records. It’s always good to be prepared.
Keep Springboard aware of what’s going on. If you’re exploring new funding, making changes, or have new projects coming up, let us know. We’re here to help you.
We hold monthly info/Q&A sessions for Incubator on the fourth Wednesday of every month at noon. For the foreseeable future, we'll be holding this meeting via Zoom. Let us know if you'd like to attend and we’ll send you info on how to connect. Members and non-members alike are welcome.