1. What services does 4Community Solutions (4CS) provide its fiscally sponsored projects?
We provide service in the following areas as part of the fiscal sponsorship fee:
- Financial management
- Donation management
- Grants management
Additional services may be contracted between a fiscally sponsored project and 4CS on an individual basis, including grant writing, social media, and marketing services. For projects wanting access to training on such topics for nonprofits, fiscally sponsored projects may attend classes through Nonprofit Management Solutions at their member rate.
2. What is the relationship between a fiscal sponsor and its project?
Fiscal Sponsorship: 4CS prefers the following fiscal sponsorship models. Model 1 is a direct project, where the project and 4CS are legally considered one and the same, with 4CS receiving assets on behalf of, and incurring all liability for, the project. Model 2 provides a restricted fund for payments to an independent contractor to support the project. 4CS is not responsible for program elements such as insurance, accounting, contracts, fundraising, or day-to-day use of project funds. Model 3 involves re-granting funds received from a donor to a specific fiscally sponsored program. 4CS is not responsible for the project’s operations, incurred liabilities, or grant reporting. The grantee must use these funds solely for the stated grant purposes and repay 4CS any funds not spent.
Note: The nature of a project’s fiscally sponsored relationship with 4Community Solutions is determined at the time of acceptance by our Board of Directors. To learn more about the policies that govern these relationships, please see our Mutual Expectations.
3. How and why may the relationship end?
Fiscally sponsored projects may terminate their work with 4CS when they:
- Complete the project and spend down their funds. If funds remain after the project is completed, the project team may designate a similar nonprofit to receive the funds, return the balance to the donor, or grant the funds to 4CS.
- Switch fiscal sponsors by transferring remaining project funds to another 501(c)3 organization, with all grantors notified of the transfer.
- Become their own 501(c)3 organization by assuming responsibility for its own operation. Any remaining project funds on account will be transferred to the new entity.
- Merge with another 501(c)3 organization. Upon receipt of the duly authorized merger agreement, any remaining funds will be transferred to the merged entity.
- Be terminated by 4CS due to a zero balance or no significant activity in connection with the project for more than one year.
4. What does 4CS charge for its services?
The fee is 5% of revenues as they are received (from grants, donations and net revenues from non-business-related income). Fees may be reduced to a lower percentage in certain circumstances by the 4CS Board of Directors. Federal, state, and city grants and contracts are charged 10% due to the complexity of administering them and the fiduciary requirements. Projects need to have a minimum of $10,000 in revenues each fiscal year, in order not to be billed a service fee of $45 per month. Projects with employees must monitor cash flow so that they maintain enough funds to cover three months of payroll at all times. Failure to do so could result in employee layoffs. If fees paid exceed 4CS financial obligations to provide services, 4CS will disburse pro-rated rebates to fiscally sponsored projects on an annual basis.
5. Does it matter where I set up my project?
4CS is not currently accepting projects located or doing business outside of San Diego County, California.
6. Are project donations accepted from any source?
Yes, in U.S. currency only. These include: gifts of stock, earned revenue, contributions from foundations, corporations, governments, or individuals.
Note: We require that a project provide $10,000 in identified funding (in-hand or formally committed) or have $1,100 to cover two years of fiscal sponsorship in order to be considered.
7. What types of activities does 4CS accept for sponsorship?
We accept all types of charitable activities. In FY 2011, 4Community Solutions served nine projects in San Diego County in the areas of arts & culture (11%), education (0%), environment (0%), safety (44%), human services (11%), youth (22%), and public affairs (0%). 4Community Solutions currently has ? fiscally sponsored projects –San Diego North Citizen Corps Council, San Diego Teen CERT, Rancho Bernardo Fire Safe Council, Poway Neighborhood Emergency Coordinators, Penasquitos Emergency Response Council, Poway Community Association, RB United, Operation Skatepark, and Carols by Candlelight.
4CS accepts the following types of projects:
- New, incubating organizations
- Projects of limited duration
- Community efforts responding to crises and urgent calls to action
- Collaborative, philanthropic efforts
8. How does fiscal sponsorship work?
It typically involves an arrangement with an existing 501(c)3 nonprofit organization assists an individual or organization with a charitable project by permitting the project to solicit tax-deductible contributions or grants through the fiscal sponsor that the project is not able to receive on its own. Through this arrangement, funds intended for the project are deposited with the sponsor, which them disburses them to the project.
9. What are the advantages of Fiscal Sponsorship?
- Ability to receive tax-deductible contributions
- Ability to start the new project quickly by providing administrative support and permitting charitable fundraising without the delays associated with incorporating and filing for tax-exemption (typically six months)
- Lower initial expense
- Wider base of support due to relationships fiscal sponsor already has with funders
- Technical assistance and administrative support with fundraising, accounting services, insurance, etc., allowing the project to focus its time and energy on the mission, not administrative matters.
4CS offers a way for community-based charitable projects to start, grow and achieve important community gains without delay under the auspices of a fully-qualified nonprofit organization.