Is Fiscal Sponsorship a Service Provided for a Fee? Why it isn’t and why it matters.
Fiscal sponsorship is a significant part of the nonprofit sector, providing a way to support public-benefitting work. While there's no clear legal definition for fiscal sponsorship, various terms are used to describe it, like "affiliates," "partners," "allies," "projects," or "clients." In this insightful article, Social Impact Commons encourages adopting a common vocabulary for fiscal sponsorship terms, specifically urging sponsors to refer to the funds allocated for covering their operating expenses as "cost-sharing" instead of a "fiscal sponsorship fee."
The article highlights three key reasons for this linguistic shift:
Legal accuracy: Calling it a "fee for service" is misleading, as fiscal sponsorship is essentially nonprofits carrying out charitable programs.
Signaling values and intentions: Using "client" and "fee" terminology can create false expectations and undermine the trust and reciprocity needed in sponsor-project relationships.
Protecting the field: Accurate messaging ensures that fiscal sponsorship is seen as more than a transactional service, emphasizing its oversight and support role.
Consistent and accurate framing of these relationships will help stakeholders understand the true nature of fiscal sponsorship, benefiting both the field and its practitioners. Alternative terms for describing administrative cost sharing include "administrative cost allocation," "overhead cost share," and "member contribution."
