Fiscal Sponsorship Fund - Woodbury Foundation

Fiscal Sponsorship

Fund

Volunteers working together

on charitable initiatives

When other local volunteer groups come together to improve our community, yet find they are lacking the funds to complete their mission, that’s where assistance from the Fiscal Sponsorship Funds (FSF) can help them complete their goals.

FSF can be created when the WCF extends its tax-exempt status to a specific group of volunteers whose missions and goals align with those of the WCF. This sponsorship is often employed by volunteers collaborating on charitable projects. However, after completing their planned initiative, they may lack sufficient volunteers to evolve into a nonprofit organization.

In this arrangement, the WCF serves as the sponsor, accepting tax- deductible donations and managing grants or payments to vendors for the sponsored project or program. The sponsor is accountable for ensuring that the donated funds are allocated appropriately for charitable purposes and conducts due diligence to verify this. To avoid the setup becoming merely a conduit for charitable funds from the 501(c)(3) to the project or program, the IRS requires that the sponsor maintains “complete discretion and control” over the funds.

What is a Fiscal Sponsorship Fund (FSF)?

Fiscal Sponsorship Funds may be created when the WCF extends its tax-exempt status to a select volunteer group whose mission and objectives align with those of the WCF. WCF Sponsorship most often is used by volunteers who are collaborating on the planning or accomplishment of charitable work, but when the charitable project they are planning or the charitable program they want to accomplish is complete, they may not retain sufficient volunteers to choose to become a nonprofit organization. In such a Sponsorship arrangement, the sponsor, WCF in this case, accepts tax deductible donations and processes grants or payments to vendors on behalf of the sponsored project/program. The sponsor accepts responsibility for the use of the donated funds and does due diligence to ensure their application is for charitable purposes. To ensure this is not merely a pass-through of charitable dollars from the 501(c)(3) to the project or program, the IRS requires that the sponsor have “complete discretion and control” over the funds.

Opening a fund can be very simple. The WCF will meet with the leadership of the volunteer collaboration’s leadership to understand their approved goals and objectives of the proposed charitable project or program. As such, the goals and objectives are not determined by the WCF, rather they should be approved by the collaboration’s prior to or soon after the initial conversations. Based on the goals and objectives of the proposed fund, a Fund Agreement will be drafted which will establish the legal understanding between the volunteer collaboration, including the collaboration’s description of how the funds will be used and the estimated schedule of payments to vendors and providers to be used to complete the project or program. The agreement is signed by volunteer Collaborative’s leader(s) and the WFC.

How much will it cost my program or project?

The Annual Fee for a Fiscal Sponsorship Fund is established based on the amount of WCF’s operating, administration and accounting time expected to be required to work with donors to accept donations to your project or program, coordinate with and answer the collaboration’s questions and process the collaboration’s Distribution Request(s) as detailed in the Investment Fund Agreement. Typically, it will be a small percentage of the donated assets. Additionally, the fund may be assessed any investment management fees (which are netted out of investment returns reported by the WCF). Funds invested in the money market fund have no investment fees. Fees will be reviewed in detail prior to the opening of any fund.

How are Funds invested?

Because Sponsorship of projects are programs are usually short term, the donations are typically placed in a checking and/or savings account, where they are maybe pooled with other funds being managed by the WCF. Also, since Distribution Requests are also short term, a checking a savings account is appropriate. However, if the project or program, includes funds for future maintenance or operating expenses, and the collaboration plans to continue to fund raise to cover these future expenses, a new Fund Agreement between the collaboration and the WCF may be required to continue the project/program.

Making distributions from Funds – how does that work?

Distributions consistent with the Investment Fund Agreement may be made by completing a Distribution Request on the Foundation’s donor portal including documentation of the costs from the vendor or service provider. Please note, a Distribution Request is technically not binding as IRS rules require that the WCF must conduct due diligence prior to recommending final approval of all distributions. The WCF will, in all cases, rely heavily on the proper documentation provided to the WCF and as long as the distribution is allowable by law (and is consistent with the Investment Fund Agreement), requests will be granted. Such requests may take up to 15 days to complete.

4 Reasons to Donate to

Local Volunteer Organizations

Community Strengthening

Local volunteer groups, you help strengthen the sense of community.

Increased Impact

With adequate funding, they can organize more activities, reach more people in need, and create a greater positive impact in the community.

Resource Availability

A donation fund provides them with access to necessary resources like equipment, materials, and space, which they might otherwise be unable to afford.

Encouragement & Motivation

Boost the morale of volunteers by supporting their cause showing that their efforts are valued and appreciated, encouraging participation and attracting new volunteers.

Thank you for considering establishing a fun with the Woodbury Community Foundation!