Unless you are intending to form a nonprofit organization, which due to the amount of paperwork, processing duration and other requirements would be quite an undertaking, then you will want to partner with an organization that can offer you a fiscal sponsorship. Let's look at that now!
Note: You can watch either read the whole tutorial or watch a video of it further down the page. The content is the same. |
What is a Fiscal Sponsor?
A fiscal sponsorship is when a nonprofit organization that goes by the IRS tax exempt status of 501 (c) (3) enters into an agreement with you, the filmmaker, to accept funds on your behalf for your film project and then administer them to you. |
Do You Need A Fiscal Sponsor?
Depending on the sources of funding you have decided to seek, as per your fundraising strategy, will depend on whether obtaining a fiscal sponsor is necessary for you or not.Â
However, having a fiscal sponsor expands your fundraising options quite considerably.Â
Mandatory For Some Fundraising Options
Most granting organizations, such as governments and foundations, will require that you either have a nonprofit status or a fiscal sponsor. You may or may not have to have this in place to apply for grants, but you will certainly need to have it in place to receive funds. If apply to granting organizations is on your list of fundraising objectives then having a fiscal sponsor is a must!
Tax Deductible
Being under the umbrella of a fiscal sponsor means that donations received for your film project, but directed to and processed by them, will be tax deductible or a tax write-off for those donating the money. This means that their donation can be deducted from their taxable income on their tax return and is a great incentive for individuals, corporations and small businesses to give money to your project.
Credibility
In addition to those financial incentives, having a well respected and well-established fiscal sponsor can lend credibility to your project just through association, can facilitate relationship building with other organizations and offer a range of additional perks, services and support to your film project. Â Â
Perks, Services and Support
A fiscal sponsor can offer a range of benefits outside of the receiving and processing of funds. Which fiscal sponsor you choose will depend on what those benefits are and what really matter to you and your project, but potential offerings can include:
• Advice of fundraising
• Organizational support
• Financial services
• Administrative services
• Feedback on grant proposals
• Mentorship or Guidance
• Other perks, benefits or discounts
How To Choose A Fiscal Sponsor
Not all fiscal sponsors are created equally as a brief exploration would soon uncover. You will have to do some homework and be selective before making a decision on which could be the best option for you
Â
Here are some questions and things to consider as you look over your options:
• How long has this non profit been in operation? And how long have they been offering fiscal sponsorship?
• Are they accepting applications all year round?
• How soon can your project be sponsored?
• Is there an application fee?
• Do you need to be a member of a program or the organization in some way to apply for fiscal sponsorship?
• How big is this organization? Will you be able to develop a true partnership or relationship with them?
• What requirements must your film meet in order to qualify for acceptance? Do they have requirements on your experience or film credits?
* Are you clear about your goals and needs before you choose your potential sponsor or enter into an agreement?
* Does the fiscal sponsor have a similar mission statement as you do? Do your goals align?
* Consider your film topic. Would it make sense to choose an organization that’s related to that topic?
* What fee will the fiscal sponsor take? Usually a % amount of the money received. Is it a different amount for credit cards and cheques or do credit cards incur additional costs? Does the fee alter based on the cumulative amount raised?
* Can your fiscal sponsor accept recurring payments from donors?
* How do you request your funds?
* How long does it take for them to be processed and sent to you?
* In what way will funds be deposited or sent to you?
* Could there be a funding overlap between my film project and the fiscal sponsors projects?
* What happens to any interest generated on the money?
* Can the fiscal sponsor accept in-kind goods or services on your behalf?
* Will you be offered the chance to create a profile or be given a web page to support funding?
* Is this fiscal sponsor requesting an exclusive agreement? A film project can have multiple fiscal sponsors if the need arises so consider if this is important to you.
* What are the restrictions in leaving your fiscal sponsor should you choose to do so?
* Would the benefits and perks of a documentary film organization, such as IDA, be a great fit for you?
* Would you prefer to have a local fiscal sponsor that you could meet and talk to face-to-face?
Additional Tips
Confirm creative control, legal identity and ownership
Ensure there is no question of your fiscal sponsor having any creative control, legal identity or ownership of your project, unless that is something that you wish to agree to.
Request letter of support
A great tip from Morrie Warshawski in his brilliant book ‘Shaking the Money Tree’ is that  'once the agreement is sealed, have the sponsor write a very strong letter of support addressed to ‘To Whom It May Concern’ in which the sponsor gives the reasons for wanting to help with this project, and which urges other to help provide support'.Â
This will certainly be a great tool for your fundraising pack.
Request letter of non-profit status
Request a copy of the fiscal sponsor’s letter of non-profit status.
Must have a written legal agreement
Ensure you have a written legal agreement, including fees and payment information, and read it very carefully. You don’t want any surprises later on down the road.Â
Take your time and consider the best fiscal sponsor for you and your project.
How To Choose Your Fiscal Sponsor
If you would like to watch this tutorial on choosing your fiscal sponsor, you can do so here.
Top ResourcesÂ
International Documentary Association - Fiscal sponsorship w/ IDA
From the Heart Productions - Fiscal sponsorship information
Center for Independent Documentary - Fiscal sponsorship w/ CID
Independent Filmmaker Project - Fiscal sponsorship w/ IFP
List of other fiscal sponsorship optionsÂ
5 Things to Look for in a Fiscal Sponsor From The Documentary Life Podcast, Episode #52.