When evaluating a direct model fiscal sponsorship relationship, we encourage you to ask the following questions:
- Is the fiscal sponsor leadership familiar with NNFS fiscal sponsorship best practices? These practices reflect the highest operational standards for any organization operating in the public interest.
- Does the fiscal sponsor’s exempt purpose allow for the Project activities? Some Project activities may not qualify for fiscal sponsorship under a particular sponsor.
- Is there is a written agreement in place that includes detail on fiscal sponsor fees and charges?
- Are the fiscal sponsor’s finances stable and can they demonstrate clean audits? You want to make sure you’re doing business with a reputable organization that is going to be around as long as your Project.
- Will Project funds be tracked separately? The fiscal sponsor should track each Project’s funds separately.
- Will there be regular financial reporting to the Project, including Generally Accepted Accounting Principles (GAAP) and cash?
- Will the Project be included in the 990 & audit? As part of the fiscal sponsor’s tax-exempt activities, the Project should be included in the 990 tax return and audited financials.
- Does the fiscal sponsor have sufficient policies, procedures and staff capacity to provide responsible fiscal sponsorship?
- Does the fiscal sponsor have sufficient liability insurance coverage for your Project’s activities?
- Have you identified Project leadership?
- Is the fiscal sponsor’s board aware of the fiscal sponsor relationship and associated responsibilities?
- Does the fiscal sponsor have a predetermined process for Project separation, should that occur, including how assets and liabilities will be transferred?