Through fiscal sponsorship, Tiny Seed Project will work with you in a professional, affordable, and fun way to help your project conserve the environment, improve local communities, or encourage creativity. Listed below are answers to questions we are frequently asked. We hope this provides you with additional information to better understand fiscal sponsorship, and the benefits your sponsored project will receive.
Frequently Asked Questions
What is fiscal sponsorship?
“Fiscal Sponsorship represents a comprehensive infrastructure support system for nonprofit leaders, and cost-effective access to expertise, processes and systems needed to accelerate charitable programmatic activities. Fiscal sponsorship services are driven by mission alignment and the focus on shared prosperity.” – Schulman Consulting Sponsor Conversations, Aug 2020
Fiscal sponsors, like Tiny Seed, have an IRS-recognized 501c3 tax-exempt charitable status, and are nonprofit organizations that sponsor projects to undertake educational, charitable or scientific activities. When a fiscal sponsor agrees to sponsor a project, that project receives the benefits and status of a nonprofit organization without going through the often arduous process of applying for and maintaining 501c3 status with the IRS.
Tiny Seed will work with you as a team, providing tax-exempt status to your sponsored project so you can receive tax-deductible contributions and be eligible to apply for grant funding. We are willing to receive tax-deductible charitable contributions, donations, and awards, as well as state, federal or private grant funds for activities that will further Tiny Seed’s mission.
What does a fiscal sponsor do?
Fiscal sponsors serve as the administrative “home” to small projects and organizations whose goals align with the fiscal sponsor’s mission. Tiny Seed provides tax filing, bookkeeping, accounting, and administrative support services, which allows project leaders to focus on their important work taking place on the ground. Tiny Seed also offers website and logo design, fundraising platform support, grant seeking, and grant administration.
Why work with a fiscal sponsor vs. becoming an independent nonprofit?
The initial investment, in both time and money, to apply for a 501c3 status is substantial, and can bog down a new project’s enthusiasm and limit success. Using a fiscal sponsor allows project leaders to devote time to their passion, and also provides expert guidance to grow their project. Joining a fiscal sponsor nonprofit organization is cost-effective and allows projects to scale up or down depending on the project’s needs.
Tiny Seed has a track record of providing fast, efficient, and accurate support, which allows projects to get off the ground in a very short time frame (weeks vs. months or years). In addition, Tiny Seed has an established nonprofit accounting system, grant administration expertise, and grant/donor protocols in place, all of which provides solid support to project leaders.
How much does it cost to work with a fiscal sponsor?
Tiny Seed recognizes that each sponsored project requires a unique set of services to start and maintain their activities. We determine our cost based on the services your project needs, using a percentage of the incoming funds to your sponsored project. Please see our Fiscal Sponsorship Services page for more information.
Tiny Seed also provides technical services, learn more here.
Are funders reluctant to work with fiscally sponsored organizations vs. independent nonprofit organizations?
No. In fact, the track record of a vested fiscal sponsor can help a start-up project receive funds, based on their established trust and transparent fund administration. Tiny Seed has charity organization status with Guidestar Platinum and 1% For The Planet demonstrating our success and trustworthiness with donated funds for sponsored projects.
Are there any drawbacks to fiscal sponsorship?
Working with a fiscal sponsor has many benefits when project leaders are looking for guidance, nonprofit management expertise, support, and affordable administrative services. However the project itself is not entirely independent because the fiscal sponsor has an ongoing fiduciary responsibility for ensuring all project funds are used to meet goals that are both charitable and mission-aligned. Some projects may not require comprehensive administrative support or may seek organizational autonomy, in which case they should consider applying for their own 501c3 status.
How are project funds administered when working with a fiscal sponsor?
Funds from multiple sources, including individual donors, private foundations, government grants, corporations, and other nonprofits may be directed to your project. As a registered nonprofit organization, Tiny Seed Project initially receives your funds, and we have the legal and fiduciary responsibility for those funds, including any reporting requirements imposed by the grantor or donor. Fiscal sponsors are generally not a source of funding, but rather receive and administer funds, providing your project with tax-deductible status. These funds are then disbursed to your sponsored project for use according to your project’s charitable mission.
More information about fiscal sponsorship?
Website: National Network of Fiscal Sponsors