Fiscal Sponsorship: FAQs
Q: What does it mean that the Colorado Nonprofit Development Center (CNDC) is a “fiscal sponsor” for Projects?
A: CNDC acts as the 501(c)(3) umbrella for each Project. CNDC holds legal and financial responsibility for its Projects.
Q: Why does CNDC charge Projects a fee?
A: The fee offsets the cost of services provided to Projects. Services include accounting, audit, 990, payroll service, benefits administration, coaching, and technical assistance. By sharing these costs with other CNDC Projects, the fee is less than what Projects would pay vendors independently for the same service of a similar quality.
Q: Is there a separation fee?
A: No, but Projects do cover the costs associated with this process, which includes the filing fees.
Q: How can I apply to be a Project of CNDC?
A: CNDC receives more proposals for fiscal sponsorship than we can accept. We ask that you make sure your Project plan fits within CNDC’s eligibility requirements and criteria by reading our How to Apply page. You can also contact CNDC at 720-855-0501 with any further questions.
The application review process takes four to six weeks. On occasion, CNDC will expedite a review process for legitimate funding or other time-sensitive reasons.
Q: What is the role of CNDC’s Board of Directors versus the role of the Project’s board?
A: CNDC’s Board of Directors is the legal governing body for all of CNDC; they have legal and fiduciary responsibility over CNDC as a whole. Project boards have no legal or governing authority, however, they still provide an important mechanism for accountability and support for Projects, including financial and programmatic governance to ensure the Project has the resources it needs to fulfill its mission. Projects are required to maintain a Project board with a minimum of four (4) members that meet at least quarterly.
Q: Does CNDC raise funds for Projects?
A: No, Projects are responsible for their own fundraising. However, CNDC is committed to supporting these efforts. CNDC provides one-on-one coaching to Project staff and boards on fundraising, and will review Project grant proposals prior to submission.
Q: Does CNDC offer office space to Projects?
A: CNDC does not provide office space to Projects. Projects do have access to CNDC’s meeting space, computers, printer, and internet. Projects may also use CNDC’s copiers at a minimal charge.
Q: Is there a minimum or maximum amount of time CNDC requires a Project to remain under its umbrella?
A: Generally, a Project must be with CNDC a minimum of six months prior to beginning the separation process to become an independent 501(c)(3). There is no maximum amount of time an active Project can remain with CNDC.
Q: What if we have already incorporated in Colorado or even received our 501(c)(3) designation from the IRS?
A: Although there are exceptions, in most cases CNDC does not sponsor groups that have a separate legal entity. That means that in order to apply for fiscal sponsorship, you must be willing to dissolve your nonprofit corporation and shelve your 501(c)(3) while under CNDC’s umbrella. CNDC can help with that process.
If you would like to keep your individual 501(c)(3) status, you may still want to consider using CNDC’s accounting services, which provide professional accounting services to established 501(c)(3) organizations.
Q: Does CNDC provide liability insurance for Projects?
A: Most Project activities are covered under CNDC’s general liability insurance and property coverage. The additional insurance costs to cover a Project’s property or special events are passed on to the Project. Depending on the nature of a Project’s activities, a Project may need to purchase additional insurance with Project funds (e.g., a childcare center will need specialized insurance).
Q: How does funding work as a Project of CNDC?
A: Most foundations accept proposals from CNDC-sponsored Projects. CNDC has worked closely with the funding community to understand the accounting and oversight benefits of CNDC’s comprehensive fiscal sponsorship program.
Please contact us if you have any questions about specific funders.