Fiscal Sponsorship: Myths and Facts

Nonprofit organizations may extend their tax-exempt status to individuals or unincorporated groups under fiscal sponsorship arrangements. These arrangements are often misunderstood since there is a lack of literature and discussion in this area.

After conducting interviews with foundation leaders and experts in the field, the consulting group BTW has released a paper to help the sector address the following misconceptions:

Myth #1: Fiscal sponsorship is only good for incubation
Myth #2: Fiscal sponsorship is just financial management
Myth #3: Fiscal sponsorship has limited utility in the nonprofit sector

By debunking these myths, the authors hope to inspire discussion so that fiscal sponsorship can play a more important role in helping the sector become more effective.

Here is the link to the report: More Than the Money: Fiscal Sponsorship’s Unrealized Potential (2007).

For more information, you might also review the first ever survey of fiscal sponsors that was published by the Tides Center: Fiscal Sponsorship Field Scan: Understanding Current Needs and Practices (2006).

Funding the Gulf Coast Recovery Efforts: A New Report

To provide a more complete picture of the institutional giving that supported recovery efforts following hurricanes Katrina and Rita, the Foundation Center has just released the report, Giving in the Aftermath of the Gulf Coast Hurricanes: Update on the Foundation and Corporate Response.

The analysis reveals that U.S. foundations and corporations committed more than $1 billion in cash and in-kind giving for the rebuilding process. One of the key findings was that corporate giving was more directed toward immediate needs, while foundations concentrated their grants on long-term recovery.

Learn more from the press release or the full report.

Campaign Feasibility Studies

An effective capital campaign requires careful planning and strong support from donors. To increase your success rate, you organization may conduct a pre-campaign development planning study, also known as a feasibility study. According to fundraising consultant Elliott S. Oshry, "The process, therefore, is a planning exercise designed to develop the comprehensive campaign plan, to broker the case among key constituents, to raise the sights of prospective donors, and to accelerate the pre-ask cultivation process."

Oshry is one of the contributors to The Fundraising Feasibility Study: It's Not About the Money, published by John Wiley. This book presents a step-by-step model to help organizations prepare for their campaigns. Chapters cover the study timeline; the roles of various committees, trustees, officers, staff, and consultants; interview strategies; data analysis and other topics. The appendices contain sample documents including an action plan, interview schedule, telephone script, interviewer questionnaire, reports and various forms.

Learn more about this title at John Wiley's Web site.

Biographies of Philanthropists

As featured in Philanthropy News Digest, philanthropist Brooke Astor passed away earlier this month at the age of 105. Inheriting her late husband's fortune, she was known to have visited every organization or group that sought support from the Vincent Astor Foundation.

You can learn more about her life and philanthropic work in a new biography from W. W. Norton & Company, The Last Mrs. Astor: A New York Story. Written by Frances Kiernan, a former editor at The New Yorker, the volume is based on firsthand knowledge and interviews with Brooke Astor's friends and colleagues.

Here is a link to the New York Times book review.

To find more biographies of philanthropists in the Catalog of Nonprofit Literature, click here .

General Operating Support: An Action Guide

Perhaps you are a grantmaker interested in providing general operating support, but may not have a good grasp of the issues involved. Grantmakers for Effective Organizations has just published the guide that you have been waiting for.

Simply titled General Operating Support, this booklet explains what general operating support is, why it is important, and how grantmakers can approach this type of funding. A sidebar provides advice on making the case to the board. Here are two examples from the "Debunking the Myths" section.

Myth:

“We’re adequately supporting nonprofit infrastructure through the overhead associated with our project grants.”

Reality:

Grantmakers rarely cover all associated direct and indirect costs of funded projects. In some cases, this is because nonprofits lack the capacity to account for such costs accurately. More often, it is because the percentages grantmakers allow are arbitrary and too low.

Myth:

“General operating support grants are not as accountable as restricted project grants.”

Reality:

Because project grants are designated for a specific purpose and a specific set of activities, it is easier to track those funds. However, if you are interested in understanding the organization’s progress or outcomes, there is very little difference in accountability between project and general operating support. In both cases, the grantmaker needs to work with the grantee to design evaluation questions that clarify the impact of the grantee’s work.

Learn more about this guide at the Grantmakers for Effective Organizations web site. You can request a copy by contacting Dakota Fine at fine@geofunders.org.

Dashboard Reports for Nonprofits

Do board members and senior staff in your organization have access to key performance indicators to them make better decisions? Typically used by corporations, more nonprofits are using dashboard-style reports to make sure organizations are heading in the right direction. For example a quarterly dashboard report may contain the most important measures of financial health, customer satisfaction rates, human resources data, expenses, and other statistics.

Earlier this year, BoardSource published The Nonprofit Dashboard: A Tool for Tracking Progress to help you get started. The book discusses how to develop, implement, and maintain a dashboard reporting system. Chapters explains how to define the dashboard metrics and how to design the reports. Many examples are included in the guide and a dashboard generator is included in a CD-ROM. Learn more at the BoardSource web site.

Funding for International Students and Researchers

While many of the resources found in the Foundation Center's library collections are geared toward nonprofit organizations, we do maintain a section of publications for individual grantseekers.

For example, we recently added the Institute of International Education's Funding for United States Study 2007-2008. The directory provides information on more than 500 grants, fellowships, and scholarships for undergraduate and graduate study, as well as doctoral and postdoctoral research in the U.S. The publication lists funding opportunities from the following types of organizations:

U.S. and foreign governments
Colleges and universities
Educational associations
Libraries
Research centers
Foundations
Corporations
Other Organizations

Learn more about the directory and IIE's programs at the organization's web site.

Investment Benchmarks for Foundations and Charities

If you are interested in comparing your organization’s investment practices and performance with other groups, have a look at two new reports from the Commonfund Institute.

The Commonfund Benchmarks Study 2007 Foundations Report surveyed 279 private and community foundations while the Operating Charities Report surveyed 101 cultural, religious, and social service organizations. Both reports contain chapters that cover investment objectives, investment returns, asset allocation, spending, costs, management, governance, and other topics.

To learn more, visit the Commonfund Institute's web site.

Promoting Foundation Accountability

To help grantmakers achieve greater accountability, the Minnesota Council on Foundations (MCF) shares best practices with two new publications in its Philanthropy & Public Trust Series.

Principles for Grantmakers & Practice Options for Philanthropic Organizations presents statements of responsibilities that MCF members subscribe to and provides guidelines in several areas. Topics covered include governance, communications, programs, finance, human resources, fund development, and diversity. The booklet also contains an accountability self-assessment tool.

What Every Grantmaker Should Know & Frequently Asked Legal Questions addresses key legal issues including self-dealing, excess benefit transactions, compensation, conflicts of interest, investments, grantmaking, public policy, lobbying, payout requirements, reporting, public disclosure, and audits.

Both publications are available at the Minnesota Council on Foundations web site.

Foundation Board Manual

Looking for a manual for your foundation board of trustees? The Association of Small Foundations has published The Trustee Handbook to share best practices. Designed for boards of foundations with few or no staff, the guide covers a variety of topics including board effectiveness, grantmaking, legal and tax issues, and financial oversight. The handbooks contains many useful documents:

board member position description
board and grantmaking policies
grant guidelines
grant application
acknowledgment letter
declination letter
site visit report
grant evaluation report

Learn more at the Association of Small Foundations' web site: http://www.smallfoundations.org

Planning for Generational Change

As individuals from the Boomer generation leave the workforce, nonprofits need to explore how this trend will affect their leadership as well as the services they provide. Is your organization recruiting board members from all generations, including Gen X and Gen Y? What are the financial implications of generational change?

Nonprofit management expert Peter Brinckerhoff has written a practical guide “Generations: The Challenge of a Lifetime for Your Nonprofit” to help you plan for the transition. The book provides steps to deal with generational differences in human resources, marketing, programming, technology, and management. Each chapter ends with a summary and discussion questions. I think you will find the examples and action steps quite useful. More information about the title is available at the Fieldstone Alliance’s web site.

Library New Acquisitions Lists

We have just posted our bimonthly update of new books and articles that have been indexed and abstracted for the Catalog of Nonprofit Literature. On the right side of the New Acquisitions page, you will see links for main headings such as Corporate Philanthropy, Fundraising, International Philanthropy, and more.

Reminder: Get instant updates to the Catalog of Nonprofit Literature by subscribing to its RSS feed with a feed aggregator.

Recent Off the Shelf Book Reviews

Here are highlights from Philanthropy News Digest's Off the Shelf reviews that have been posted in the past month:

Taking Philanthropy Seriously: Beyond Noble Intentions to Responsible Giving. Susan Verducci, William Damon, editors (Indiana University Press, 2006)

"Largely comprised of essays from leading academics, third sector professionals, and former government officials, Taking Philanthropy Seriously examines the currents moving through contemporary American philanthropy, many of which — like venture philanthropy — aren't that new, and also traces the ethics and politics of more traditional giving, from the Greeks and Romans through the Rockefellers and Gateses." More...

A Billion Bootstraps: Microcredit, Barefoot Banking, and the Business Solution for Ending Poverty. Eric Thurman, Philip Smith (McGraw-Hill, 2007)

"...Philip Smith and Eric Thurman argue that microcredit — with its focus on tiny individual investments in the livelihoods of the poorest of the poor — is the most effective and promising philanthropic idea of our time. The book, one-third economics lesson, one-third folksy travelogue, and one-third matchless account of literal salvation, is a worthwhile and approachable read for anyone looking to understand the mechanisms of global poverty and how a new breed of "venture philanthropists" are reinventing international philanthropy." More...

Be Bold: Create a Career with Impact. Cheryl L. Dorsey, Lara Galinsky (New York, NY : Echoing Green, 2006)

"...Dorsey and Galinsky — president and vice president, respectively, at Echoing Green, an innovative nonprofit that provides first-stage funding and support in the form of two-year fellowships to visionary leaders with bold ideas for social change — relate how twelve Echoing Green fellows were moved to create nonprofit organizations that fill the unmet needs of society." More...

For a full list of archived Off the Shelf reviews, click HERE.