Incubator & Fiscal Sponsorship FAQ

Frequently Asked Questions about Fiscal Sponsorship

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What is a fiscal sponsor?

A Fiscal Sponsor (also sometimes called a fiscal agent) is an organization that will receive tax-deductible contributions and agrees to accept, and be responsible for, charitable gifts on behalf of a project that does not have its own tax exemption. Using a fiscal sponsor, a non-exempt individual, project, event, or organization can take advantage of a lot of the benefits of a tax exempt nonprofit organization.

Who are fiscal sponsorships for?

Fiscal Sponsorship is a good solution for organizations (or certain individual projects or events) that only want to do a few small projects over a specified period of time, those who don't have the time or staff for a lot of organizational administration, or people who want to "test the waters" of running a nonprofit organization before taking the plunge (and doing a lot of paperwork!)

What does a fiscal sponsor do? Why are they valuable?

A Fiscal Sponsor:

  • Accepts and safeguards charitable donations on behalf of a project.
    Most donors and funders require a recipient to be a 501(c)(3) corporation. Nonprofit 501(c) (3) corporations are able to accept contributed funds without any tax liability. If a grant or gift is made to an individual, the IRS usually considers it taxable income.
  • Takes on legal liability for those funds
  • Creates and maintains accounting records for the project
  • Prepares legal, financial, and tax reports as required for donors and funders (Filing grant reports remains the responsibility of the project organizers.)
  • Brings experience to the project and may provide such additional aids such as administrative services and/or strategic planning assistance.

Who can be a fiscal sponsor?

Legally, any existing tax exempt nonprofit organization can act as a fiscal sponsor (including a church or library) but, because of the legal complexity and administration required, not all non profits will do so! If you're looking for a fiscal sponsor, it's best to partner with an organization with whom you have a good relationship, and/or one that has an existing sponsorship program.

Who is eligible for Springboard's Incubator program?

Springboard's program is designed for artist-led groups and projects. Our sponsored projects must have a non profit purpose, and the arts product or process must be based in Minnesota. We cannot manage funds meant for for-profit purposes, and will not manage funds on behalf of for-profit corporations (S and C corps) or LLCs.

Eventually I want to get my own nonprofit status but I'm not sure what I need to do. Can Springboard help?

Yes- we've helped a lot of new organizations through the start-up process. Fiscal sponsorship is a good testing ground, and we have legal and consulting resources that can help you figure out your next steps.

I only have a few projects and I'm not interested in forming a separate nonprofit. Can I still be sponsored by Springboard?

Yes. Springboard sponsors organizations of various sizes and stages.

Is the Incubator Program free?

Sponsoring organizations nearly always charge fees to cover administration costs. Ours include a $95 application fee, a $95 annual fee to maintain membership in the program after the first 12 months, and 7% of grants and donations raised. We also charge rush fees if we need to accommodate requests for materials on short notice.

Fiscal sponsorship is an important part of Springboard's non-profit mission, and the fees do not cover 100% of the program's administrative costs.

A comparison of similar arts-based sponsorship programs around the US is (link - pending)

What do I get for my fees?

Springboard's program is mainly designed to be an "incubator" for emerging organizations. We offer several services and discounts to our sponsored projects - check out a list of the benefits here. 

How does the application process work?

Potential projects can determine their eligibility with a short questionnaire online here. (link) Eligible candidates can continue to the online application form here. (link)

If you have questions about eligibility, you can check out the information here - if you still have specific questions, you can email .(JavaScript must be enabled to view this email address)

Applications are reviewed by a selection committee once a month. Eligible applications are then approved by our Board of Directors.

How long does it take for my application to be reviewed?

We receive applications on an ongoing basis, and the process from receipt of application to acceptance usually takes about 4-6 weeks.

My application for the Incubator Program was approved! Now what?

Congratulations! We'll send you a contract to review, sign, and return to us.

Once we have a signed contract on file, we'll send you information about how to set up an online fundraising campaign, and links to forms and tools to help manage your account with us online. Then, let us know when you're getting your grant proposal or other fundraisers together! We want to know your materials are legally acceptable, and grantors will almost always need some paperwork from us before you turn in proposals.

How long is the contract?

Contracts can remain active so long as a member is current with an annual fee, and can be terminated by the project at any time. (If, for example, a sponsored project gets their own federal tax exempt status, having a fiscal sponsor becomes unnecessary.) If Springboard decides to end a contract for any reason, we must give the project 30 days notice. Once a fiscal sponsorship relationship with Springboard ends, we will keep your records on file for five years.

We got the grant but the check is made out to Springboard. How do we get our money?

Grants and donations MUST be made out to or processed by a fiscal sponsor organization to be tax deductible. Send checks, with your project name in the memo, to Springboard for deposit. We will deposit your funds and hold them for you in a separate checking account. To get those funds back from us, fill out a secure online funds request form, and we will send you a check. We process deposits and cut checks once a week.

Our first project is done but we have more ideas! Do we need to reapply for Springboard to sponsor our next project?

No, just let us know what you're planning. Your subsequent projects must fit with our mission and be consistent with our program and tax-exempt guidelines.

Do people donating to my project get a tax deduction?

Yes! Checks from individual donors, like grants, must be made out to Springboard in order for them to be tax deductible. Make sure they write the name of your project in the memo line so we don't mistake the donation as ours instead!

Can my friends and family donate money to my project online?

Yes! Our sponsored projects can create fundraising pages through Give MN. A directory of projects using GiveMN is here. Instructions detailing how to set up a GiveMN page are sent once an approved project returns their signed contract.

My application to Springboard's Incubator Program was approved but I didn't get the grant I applied for. What happens now?

You might not win them all, but don't give up! Not receiving funding doesn't effect your contract with us. Check out our workshop schedule for grant writing classes or schedule a consultation if you could use more help with your fundraising strategies - and let us know when you're prepared to start your next proposal!

How many organizations does Springboard sponsor?

We sponsor about 200 small organizations and artist projects.

As a newly sponsored project, how can I make things easier for you?

Hey, thanks for asking!

  • Be aware of your deadlines - it makes things easier for everyone (and avoids any rush fees!) Many of our sponsored projects apply for the same grants, so our plate gets filled up fast for popular deadlines.
  • Make sure your donors make checks out to Springboard and not to your organization, and write your project's name is in the memo field.
  • Keep track of your records. While Springboard staff is, of course, practically perfect in every way, it's always good to be prepared.
  • Keep Springboard aware of what's going on, if you're exploring new funding, making changes, or have new projects coming up. We're here to help you!