In the evolving landscape of philanthropy, fiscal sponsorship has become an increasingly popular model to empower nonprofit leaders and donors alike and accelerate and maximize their impact. Social Impact Commons recently released a report that showcases this trend, with useful insights into fiscal sponsorship’s rapid growth and the value and flexibility it provides.
The Fiscal Sponsorship Field Scan surveyed 100 organizations that support $2.6 billion of philanthropic capital to better understand the current ecosystem of fiscal sponsors, the communities supported by the model, and the model’s current and future capacity. The findings of the report echo the evolution of New Venture Fund, which has established itself as a leader in fiscal sponsorship, with revenue close to $800 million last year alone.
The survey found significant growth of the fiscal sponsorship model in recent years. The model has existed since the 1950s, but the report notes that “three times as many sponsorship programs were created in the last 20 years than were created in the 40 years prior to 2000.” In particular, the demand for fiscal sponsorship has surged since 2020. As New Venture Fund has shown, the ability to deploy resources much more quickly and effectively—a hallmark of fiscal sponsorship—proved itself during the pandemic and with other urgent social challenges in recent years.
The report illustrates the increased accessibility to funding facilitated by fiscal sponsorship. By partnering with an established nonprofit fiscal sponsor, projects can quickly accept tax-deductible donations, opening doors to a broader donor base. The resulting financial flexibility enables initiatives to secure vital resources that may otherwise be challenging to obtain, promoting sustainability and growth.
Navigating the administrative complexities of establishing and maintaining a nonprofit can be a daunting task for emerging initiatives. The survey solicited data on how fiscal sponsorship helps to alleviate these burdens, allowing projects to focus on their missions and delivering more of the impact they exist to advance. For example, it found that fiscal sponsors handle the bookkeeping (92%), grant management (83%), tax compliance (76%), and insurance needs (69%) for the vast majority of their sponsored projects. This flexible and streamlined approach enables project leaders to channel their energy into impactful work rather than navigating bureaucratic hurdles.
Importantly, the report highlights how in recent years fiscal sponsors have expanded the type of support they can provide to the nonprofit projects they host. The survey found that “fiscal sponsor support for projects is expanding beyond basic back-office support to include more whole-systems capacity building.” The collaborative nature of fiscal sponsorship provides emerging projects opportunities for incubation by providing valuable mentorship and guidance. Established fiscal sponsors often share their expertise, networks, and resources, creating a supportive environment for growth and greater impact. This not only enhances the likelihood of project success but also fosters knowledge transfer and the development of a stronger, long-lasting stand-alone organization. New Venture Fund is proud of the dozens of organizations that started as fiscally sponsored projects but now stand alone as independent organizations.
The survey report also underscores the diversity and adaptability of fiscal sponsorship across a wide range of initiatives, from grassroots community projects to innovative social enterprises. This versatility is crucial in a landscape where diverse approaches are needed to address complex societal challenges. Fiscal sponsorship serves as a catalyst for innovation, supporting projects that may not fit traditional nonprofit structures but have the potential for substantial positive impact.
As we witness a growing shift towards collaborative, adaptable, and inclusive approaches to addressing societal issues, fiscal sponsorship stands out as a powerful tool for unlocking opportunities for positive change. By embracing and advocating for fiscal sponsorship, we can collectively contribute to a thriving ecosystem where impactful projects have the resources and support they need to make a lasting difference.
You can read the full report on fiscal sponsorship here. To learn more about how New Venture Fund is making the world a better place through fiscal sponsorship, read our latest impact report.
