IDA Fiscal Sponsorship Handbook 2011/2012 - International ...

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IDAFiscalSponsorshipHandbook 2011/2012DEFINING FISCSAL SPONSORSHIPFiscal sponsorship is a formal legal and financial arrangement in which a 501(c)(3)public charity, such as the IDA, agrees to sponsor a project that furthers our mission, forthe purpose of raising funds through grants and donations. When a project is screenedand accepted into our program, IDA essentially establishes a “re-granting” relationshipwith the project, agreeing to accept donations and administer them to the project withinthe terms of our agreement. This arrangement is a well-accepted model of nonprofit artsfunding. Donors, foundations, and corporations are able to donate funds to IDAspecifically for the purpose of supporting a sponsored project. IDA then administersthose funds to the project and exercises financial oversight to assure that funds arespent for their designated purpose.We understand that defining the fiscal sponsorship relationship can be challenging. If atany point you get questions from a funder that you are unable to answer please referthem to IDAʼs fiscal sponsorship team. Weʼre happy to discuss fiscal sponsorship andour program with potential or current funders and donors at any time.Relationship of Fiscal Sponsor and Project:The primary reason that projects seek sponsorship from IDA is to be eligible for grantsrequiring non-profit status and to be able to accept tax-deductible donations fromindividuals and businesses. It is important to remember that grants and donationssolicited are being made to IDA, and not directly to the project or the project director.IDA maintains full discretion and control over funds granted to us in behalf of asponsored project. If you continue to uphold your contract with IDA and fulfill all programrelated responsibilities, IDA agrees to grant those funds to your project, lessadministrative fees, and monitor how they are spent on your project.The IRS has a strict policy against “conduit” arrangements. In order to protect against aconduit arrangement, the IRS requires that IDA has “complete discretion and control”over the funds at all times, and the IRS holds IDA legally responsible to see that itspayments to the projects, and all activities resulting from them, further the IDAʼs missionand purpose for being tax-exempt.If you have any questions about the relationship between IDA and your project, donʼthesitate to call us.What Fiscal Sponsorship Isnʼt:Obtaining fiscal sponsorship does not mean that your project becomes a nonprofit orbecomes a 501(c)(3) organization. Your project is also not a direct project of IDA orowned by IDA in any way. Instead, your project remains an independent entityresponsible for managing itʼs own tax reporting and liability issues. Being sponsored bya nonprofit does not in any way exempt you from tax liability.IDA will accept and administer funds in behalf of your project. When you prepareapplications for funding or solicit donations it is important to be clear about therelationship between IDA and your project. IDA will be the organizational applicant forfunding and the recipient of all charitable donations in behalf of your project.FSPHANDBOOK–12/20/20114
IDAFiscalSponsorshipHandbook 2011/2012Do not represent yourself as working for IDA or representing IDA outside of the fiscalsponsorship arrangement. Letters or fundraising material should not be issued on IDAletterhead without express permission of IDA. You may not use IDAʼs name or tax IDnumber without permission or establish accounts in IDAʼs name without permission.There are a few terms that should be avoided when referring to or talking about yourfiscal sponsorship. The term “Fiscal Agent” is outdated and should not be used whenreferring to your relationship with IDA. You should also avoid the terms “Conduit” or“Pass Through” to refer to the re-granting relationship. Please also be careful whentalking with funders especially, to never use the term “investor” to refer to a donor. Weprefer that you always use the term Fiscal Sponsor when discussing our relationship tothe project and donor or grantor when referring to a funder who has given money to IDAin behalf of your project.Again, if at any time you have questions about dealing with funders and how to approacha unique situation, donʼt hesitate to contact us.Best Practices:IDA is a participating member of the National Network of Fiscal Sponsors through theTides Center. We adhere to the best of our ability to the best practices established forSponsors practicing the “re-granting” model of fiscal sponsorship. For information aboutthese best practices or general questions about fiscal sponsorship, visit:http://www.tidescenter.org/fiscal-sponsorship/nnfs.HOW TO APPLYThe current version of our application, along with our review criteria and all theinformation youʼll need to get started is available here:www.documentary.org/sponsorship/apply.MANAGING YOUR FISCAL SPONSORSHIP PROJECTThe first place you should look for answers to your fiscal sponsorship related questionsis this handbook or the programʼs page on IDAʼs website:www.documentary.org/sponsorship.Online you will find important information like a link to the most up to date version of thishandbook, lists of frequently asked questions, and the most up to date versions ofimportant program related forms and documents including check requests, balancerequest forms and project report forms. We also have several frequently requesteddocuments, which may be needed to accompany grant applications, available fordownload as PDFs.If you have been with the program for a while, there have likely been some changes todocuments and procedures since you got started. We have phased out almost all hardcopy forms and documents in favor of online forms and email whenever possible. Pleasebe sure to read all the information below about our new check request forms, balancerequest forms and project report forms and let us know if you have any questions.FSPHANDBOOK–12/20/20115
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