New Report: Fiscal Sponsorship on the Rise, Stewarding Billions of Dollars for Diverse Nonprofit Programs and Expanding Shared Infrastructure and Capacity Building
From Social Impact Commons:
Fiscal sponsors are a significant part of the nonprofit funding ecosystem, showing rapid growth in the last 20 years, stewarding billions of dollars in community investment, and providing critical back-office infrastructure to diverse nonprofit programs. Those are among the key findings in a new report released today by Social Impact Commons and the National Network of Fiscal Sponsors (NNFS). This report is the first of its kind in more than 17 years, providing a significantly updated picture of the role fiscal sponsors play and how they can support greater growth and impact.
A fiscal sponsor is a nonprofit organization that provides diverse nonprofit initiatives with access to charitable funding and additional shared support, including corporate structure, finance, HR, legal, insurance, risk management, and other resources. Nonprofit organizations and initiatives partnering with fiscal sponsors can then capitalize on these shared resources and focus more of their efforts on their mission. The new report is based on survey responses from 100 fiscal sponsors, conducted during 2022 and 2023.
Collectively, the 100 sponsors that participated stewarded over $2.6 billion in community investments in the previous year. Other key findings from the report include:
- The last 20 years have seen larger growth in the field than the previous 50. Nearly three quarters of respondents (73%) were formed since 2000. Leading this growth were a majority (53%) locally and regionally focused sponsors, working within the communities they serve, followed by sponsors with a national (38%) and international (9%) geographic reach. Most respondents (58%) were medium to large in budget with expenses between $1 and $50 million.
- Fiscal sponsors and their project leadership exhibit appreciably greater race, gender, and other demographic diversity than the general nonprofit sector, comparing the field scan data with broader sector data collected by the Candid organization.
- Sponsors are expanding beyond basic back-office support. Finance, HR, legal, insurance, and compliance are still among the most offered by 73% of respondents, but many sponsors are also offering capacity building development support (61%) and strategic financial advice (49%).
- Demand for fiscal sponsorship currently exceeds supply of sponsorship programs. Roughly one in four respondents, 28%, reported that they temporarily suspended or stopped new project intake, and 62% reported that they need to recruit additional staff.
“Fiscal sponsors are a large and growing part of the nonprofit landscape,” said Thaddeus Squire, Chief Commons Steward of Impact Commons. “They provide a wide range of support and guidance to the projects they sponsor, and our research shows they sponsor projects with very diverse leadership. Nonprofit organizations of all types should consider fiscal sponsorship in developing their programming, funding, and overall business model development. 76% of the organizations that responded to our survey offered fiscal sponsorship alongside other programs, indicating that fiscal sponsorship, as shared infrastructure, is also a potential business model for nonprofits.”
In addition to the field scan, Social Impact Commons today published a position paper which presents a vision for the fiscal sponsorship field, focusing on a broader collaborative approach to nonprofit infrastructure sharing, called management commons. This vision would ultimately result in fiscal sponsors providing more equitable access to nonprofit leaders, building shared resources for particular areas of charitable work, geographic regions, and cultural groups.
Fiscal sponsors would ultimately provide much of the shared infrastructure nonprofits need in a more financially sustainable manner, offering a long-term alternative to stand-alone nonprofit operations and enabling individual nonprofits to be laser-focused on mission. In a broader sense, the practices of nonprofit resource sharing at the core of management commons could also apply to any nonprofit organization, suggesting a fundamental shift in the sector toward more collective action and solidarity economy solutions.
Earlier research by Social Impact Commons and cited in the position paper showed that nonprofits’ “overhead” operating costs were 50 percent lower when using fiscal sponsors compared to operating independently. If those savings were applied across the nonprofit sector as a whole, it could mean reallocating tens of billions away from administrative costs toward front-line programming per year.
“Building the management commons is essential to enabling the overall success of the nonprofit sector,” said Neville Vakharia, board chair of Impact Commons. “This approach has benefits on scale, efficiency, justice, and sustainability. We must collectively work to create this infrastructure to truly move toward social justice.”
The survey that formed the basis of the field scan was conducted between November 1, 2022, and March 31, 2023, with 100 sponsors responding substantially to all parts of the survey. The respondents were diverse in many ways. Respondents came from close to 20 different states. Half managed fewer than 30 sponsored projects, but 18% managed more than 100 projects. The field scan was self-funded by Impact Commons and NNFS. Impact Commons was able to lead this work with generous operating support from the Andrew W. Mellon Foundation and Fidelity Charitable Trustees’ Initiative.