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How Fiscal Sponsorship Advances Social Justice

By Risa Wilkerson on July 25th, 2022

Asta

 

One way Healthy Places by Design stays true to our values of equity, community, integrity, and collaboration is by recruiting team and board members who share those values. The synergistic leadership that results from that practice is key to achieving our mission.

Asta Petkeviciute, Chief Financial Officer for Social Impact Commons, is one of our board members who live these values. Social Impact Commons is the first national network and community of practice advancing management commons (fiscal sponsorship). A fiscal sponsor is a nonprofit organization that provides fiduciary oversight, financial management, and other administrative services to help build the capacity of charitable projects. Social Impact Commons builds knowledge and resources, and strengthens the capacity of the fiscal sponsorship community.

We recently talked about the parallels between the fiscal sponsorship community and the mission of nonprofits, especially those focused on social justice. I wanted to share that conversation with our community.

 

Risa Wilkerson (RW): What intrigued you about fiscal sponsorship enough to devote your career to it? 

Asta Petkeviciute (AP): We follow windy roads that lead us through our lives. Overall, nonprofit work seemed a natural fit for me and has been ingrained since I was little. I'm Lithuanian, and when I was five, my parents and school coordinated our visits to orphanages in Lithuania, and sharing what you have with those that need it more seemed natural then. Since then, I have worked with many nonprofits as a teenager and led peer counseling groups and other initiatives in high school and at the University in Lithuania.

And as I immigrated to the United States 22 years ago, working with nonprofits nationally and globally was just a natural choice for me. During the first 15 years of living in the US, I focused on international development and public health with a precise focus on financial and operational capacity building. And what I found most exciting then and continue to be excited about is helping nonprofits with change management initiatives and seeing people's eyes light up when something they've been trying to fix for many years can be achieved with a minor tweak. Building one organization's capacity at a time is truly rewarding but consumes many diverse resources. So in 2015, I joined TSNE MissionWorks, one of the oldest fiscal sponsors in the country.

RW: Yes, that's our fiscal sponsor and where we met, of course.

AP: Yes, and that's where I learned how fiscal sponsors could enhance and help grassroots communities flourish on a larger scale. Fiscal sponsors attract unincorporated or incorporated groups that prefer to share the infrastructure with others. And, of course, fiscal sponsors need support too. Hence, the mission of Social Impact Commons is to provide direct support to the fiscal sponsorship community. We create tools and share knowledge to enhance each organization we work with and the fiscal sponsorship field.

"And that is one of the attributes of fiscal sponsorship - being able to start new programs at the spur of the moment."

 

RW: So, fiscal sponsorship is similar to the health field. To have an impact on the overall health of the nation, you have to think about population health, not just individual health. Similarly, you're saying you can help one organization at a time or, through fiscal sponsorship, scale that impact.

AP: Yes! Social Impact Commons has almost 30 fiscal sponsor members serving around 1500 independent missions. It's fascinating to see how many innovative services they offer and how it influences projects' long-term impact and the longevity of their fiscally sponsored organizations (FSOs). Especially with COVID, every fiscal sponsor has grown because the demand for shared infrastructure has increased. And that is one of the attributes of fiscal sponsorship – being able to start new programs at the spur of the moment.

RW: What is the most common misconception about being an FSO (fiscally sponsored organization)?

AP: I feel that fiscal sponsorship is still one of the best-kept secrets. And we could have a very long conversation about the misconceptions. We have a knowledge resource coming out soon summarizing all of them. But to start with, I could highlight a few of the most commonly observed myths.

The first colossal misconception is that FSOs are handicapped because they depend on someone else's infrastructure. From my observation working with many FSOs, they are as active, sustainable, and impactful as stand-alone organizations. The difference is that FSOs can spend more time and funds on their programs; they're more efficient. Moreover, FSO's employees can access benefits such as group retirement and health insurance plans that otherwise would be unattainable if they were a small independent organization.

The second misconception is that fiscal sponsorship is only an interim solution. Our research shows the opposite. We have seen many successful FSOs operating in the shared infrastructure environment for 15-25 years, and their budgets can be as high as five to 10 million or more. There is no limit. You might outgrow a particular, fiscal sponsor, but not necessarily the opportunity to share infrastructure with others.

Third, people think “if I have my own EIN (tax ID number), I need to operate it.” That's not true. Our experience and research show that a growing number of FSOs choose to put their EIN on hold and be part of a fiscal sponsorship community, where they receive support from government grants management, receive better and more cost-effective benefits, and focus their full attention on the program rather than infrastructure and compliance.

And last but not least important, there is a misconception that fiscal sponsorship fees are too high. I spend a lot of time working with fiscal sponsors to understand better the equilibrium between the fees they charge across their portfolios and the costs it takes to provide adequate support. And at the same time, I always suggest that FSOs compare the fees they pay to the fiscal sponsor against the projected expenses of what it will take to operate independently. Our research reveals that usually, FSOs spend around 10% more on the program than on management infrastructure, which is an exciting impactful repurpose of nonprofit resources and highlights the value of shared infrastructure as a contributor to the solidarity economy movement.

 

"Fiscal sponsorship is an opportunity to provide more equitable access to resources and to help those with a big drive, interest, and passion for realizing their vision."

RW: We've certainly experienced the organizational efficiencies and team benefits of being an FSO. And the advantages are broader, too. Let's talk about how fiscal sponsors can advance social justice.

AP: Fiscal sponsorship is an opportunity to provide more equitable access to resources and to help those with a big drive, interest, and passion for realizing their vision. Since we started Social Impact Commons, we highlight daily that fiscal sponsors must focus on what they provide to FSOs and how they provide these services. We are big advocates of incorporating organizational values and power-sharing approaches into FSO program design and implementation. We work with fiscal sponsors to include FSO voices in their governance structure and daily operations and how to receive feedback and learn together. Co-learning is essential because everyone comes from different environments and knowledge levels on finances, benefits, grantees, or contract terms.

RW: What I hear you saying is that fiscal sponsors are at their best when they reflect the values of social justice organizations.

AP: Exactly. Our research shows that the most significant numbers of FSOs are small grassroots projects. So, how you (fiscal sponsors) incorporate their voices into your program design is essential, whether it is expense management, overall programming, or additional services. That requires intentionality. And it takes longer, of course, but it's a necessary part of success. Naturally, there is a perceived disproportion of power at play… as if fiscal sponsors are the ones that hold the money. That shouldn't be the case because FSOs are leading the fundraising, program design and implementation, and spending decisions. However, fiscal sponsors have to intentionally set up operations documenting the balanced relationships while helping to steward the resources.

"Fiscal sponsors have to intentionally set up operations documenting the balanced relationships while helping to steward the resources."

RW: What are some examples of inspiring practices?

AP: One of our members and the FSOs in their portfolio decided to incorporate organizational development and fundraising support for all its FSOs. Moreover, this member designed space for funders to learn more about their portfolio and continue to prioritize group fundraising efforts. Their goal is to raise at least $100k for each of their FSOs for each year. That is powerful. And from the impact side, it was fascinating to see how much these FSOs have flourished and, in some cases, grown from this intentional program design.

Another exciting example of the success of fiscal sponsors is how in the early days of COVID, many fiscal sponsors applied for COVID relief on behalf of all the projects they support. That showed the beautiful aspect and the power of collaborative management.

RW: We saw that, too. The Paycheck Protection Program often helped bigger nonprofits who had the capacity to respond quickly and understand the nuances of the application, and many smaller nonprofits were left out. So if we care about social justice, we need to see fiscal sponsorship as a key strategy since they can help changemakers focus on the work itself and gain support for the administrative side.

AP: Absolutely. Social justice is an essential aspect of our organization and program design. Of the 30 groups we work with, 70% are BIPOC lead and serve BIPOC communities. We want to see more of our colleagues be part of this fiscal sponsorship community and enhance the availability of funding and programming for BIPOC and other marginalized people.

"We want to see more of our colleagues be part of this fiscal sponsorship community and enhance the availability of funding and programming for BIPOC and other marginalized people."

 

RW: Thanks, Asta. I think our readers can see now why we are thrilled to have you on our board. This month, you are also becoming our Chair (thank you!).  Why is this engagement right for you?

AP: HPbD's mission nicely aligns with various aspects of my career, and I want to stay involved with a systems approach to improve public health indicators. Beyond that, I want to be engaged with FSOs, and Healthy Places by Design is a great, very passionate organization from both perspectives. We share values, aspirations, and a systems-thinking approach.

RW: Finally, as an organization, we are deeply focused on the importance of social connections to our health. What helps you to feel connected to others in meaningful ways?

AP: For me, community engagement is essential and comes in several forms. My family and I are connected to a Lithuanian community in Boston. We are also active members in the Arlington, MA, community where I live and with the community of our colleagues and friends. And my kids are learning about social connectedness and nonprofits and often participate in fundraising and community efforts.

So as a mom and an immigrant, I genuinely value the work on social connectivity that Healthy Places by Design is leading. And I can't highlight enough the investment needed in this area and its influence on social determinants of health.

Thank you, Asta. It's been a pleasure.
Author
Risa Wilkerson

Executive Director

Action-driven optimist, abundance thinker, and simplicity seeker.