Questions

I’ve been buying food from local Food Banks for my food pantry to feed the needy clients that comes to our office. It’s getting very expensive for us and we’ll probably have to close down if we don’t find another alternative. We have the space but not the food. I know that the food bank gets the food for free and that’s what we want to do. We could also provide free food to other food pantries that are going through the same things that we are. Is there any hope for us?

You could start your own non-profit and try to build the partnerships from scratch based on the existing resources you may already have in place. However, after starting multiple non-profits myself, the best path for something like this may actually be to gain a fiscal sponsorship with a parent organization that has deeper resources and partnerships in non-profit activities, but doesn’t have a food pantry yet. Essentially, finding a private foundation that is interested in serving the needs of this space, has the budget and partnerships, but doesn’t have the human resource or time to create the activities to execute it — that’s your fiscal sponsor.

From an organizational and tax structure benefit, there are many positives to taking this approach: 1) You can still apply for grants when you have a fiscal sponsor and because of the parent organization, you often have better resources, support, and brand credibility to get those grants than if you were starting on your own. It’s like saving 3-5 years of time answering the “why should we support you” question. 2) The parent organization handles all of your filings and accounting to keep you legal, so you can focus on operating. Usually their organization will have a CPA on board that will manage your accounts, payroll, withholding, annual filing, in exchange for a small percentage of your revenue (3-6%). This is a small fee you agree to pay to ensure that the parent organization isn’t taking advantage of their accountant, who is paid to oversee the accounts. This fee should never be seen as the reason to have a fiscal sponsor relationship - as there are many more benefits I’ve listed above - it’s just house keeping. 3) The fiscal sponsor’s board is not necessarily your board, but their broader mission and vision should be aligned to yours. Your board members determine your activity and likely support the major project management decisions involved in the execution of your programming; however, the board of the parent organization has the right to refuse budget decisions on your operations. This never happens if you choose the right fiscal sponsor and are approaching your budget with logical considerations. They are there to help you make those logical decisions and a parent organization often has too many projects to worry about so they would never benefit from micromanaging yours. 4) You’ll leverage additional resources they have in terms of non-profit insurance rates, legal/contract fees if needed, operational resources, partnerships for cost-effective operations, etc.

Overall, you have a very clear vision for what you want to do. This is a project that other non-profits could also easily understand, support, and benefit from the execution of. It’s a win-win when they leverage their existing resources through a fiscal sponsorship that will allow you to operate, not worry about all the legal aspects of maintaining a 501c3 designation with the IRS, or building your brand before you can get others to support your vision. By leveraging the brand, resources, and support from a private foundation or larger non-profit that is looking to expand as a fiscal sponsor, you’ll likely save years of time and jump ahead to making immediate impact.


Answered 6 years ago

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