Rick Levy, Executive Director of Lift Up Africa joined us as part of Next Mile Project’s Lunch and Learn series and City Awake Boston to discuss his organization and Fiscal Sponsorship.
What is Fiscal Sponsorship?
- Fiscal Sponsorships allow organizations that are not a 501(c)3 to utilize the legal benefits of a nonprofit status.
- Small organizations have limited resources. They may find it difficult or overwhelming to handle the time commitment and financial responsibly involved with becoming a full-fledged 501c3.
- By consolidating or packaging many services small organizations require, fiscal sponsors can help keep overhead down.
- State Registrations, tax forms, commercial contracts, and other legal documents can also take one away from engaging in meaningful projects. Fiscal sponsors afford freedom to focus on social justice projects rather than busy work.
- There are many models of Fiscal Sponsorship arrangements
- The list includes: direct project, independent contractor, preapproved grant relationship, group exemption, supporting organization, technical assistance, and payments ‘for the use of sponsor.’ Read more (attach chart?)
What is Lift Up Africa?
- Lift Up Africa (LUA) supports programs that encourage self-reliance and provide solutions to disease, hunger, unemployment, and lack of education.
- They strive to use local resources whenever possible and concentrate on basic needs such as clean water, health care, continual food supplies and dependable energy sources.
- Their ultimate goal is to build sustainable systems.
- Their Fiscal Sponsorship Program currently services over 20 organizations.
What does Fiscal Sponsorship with Lift Up Africa look like?
- LUA will assist programs in Africa, help with grant writing requirements, administrative services, accounting, human resources and legal oversight activities.
- They also assist in marketing efforts, and participate in and provide fundraising support.
- LUA values the relationships they cultivate with partner organizations, building every affiliation with a foundation of respect.
- They charge 10% of revenue to pay for services.
- Read more extensively about partnering with LUA: Fiscal Sponsorship Program Info Packet
Why are some organizations are so skeptical of this model?
- Many organizations are uncomfortable with the idea of ceding control when in reality they are not.
- Fiscal Sponsors are not interested in dictating the goals, fundraising plans or marketing strategies of any partner organizations. They simply wish to help bear the load of administrative responsibility and bestow expert advice whenever needed.
What is the application Process for LUA?
- If an established organization is interested in a Fiscal Sponsorship, they must submit a business plan, fundraising plan, and budget
- LUA will review then initiate a conversation to see if a collaborative, respectful relationship is worth pursing.
Advice to Nonprofits grappling with administrative or legal questions:
- Where do you need to register?
- It varies state to state but as a general rule of thumb, you’re on a state’s radar if you garner over $1,000 in donations.
- Some east coast states are particularly harsh (New Hampshire for instance requires registration no matter what)
- Some states require a nonprofit to register both with the Secretary of State and the Attorney General’s office.
What are some of the most common mistakes or oversights made by nonprofits?
- State Filings, not just state registries but also annual returns that must be completed in March with the Secretary of State.
- Tax Returns – people tend to avoid tasks with which they are unfamiliar or uncomfortable completing.