August 30, 2009
Fiscal Sponsorship and an African Well
I am new to blogging but I have been told that Sunday is a slow news day for nonprofit law. I will fill the news hole with a personal nonprofit law anecdote.
As the director of a law school-based community development law clinic (which is a straight nonprofit law clinic in all but name) I often find myself in the position of dissuading people from rushing to form new nonprofit organizations. I counsel them to test their charitable ideas by seeking a fiscal sponsor: an existing tax exempt organization that will act as an administrative umbrella for their project. This way, they can seek tax deductible donations, and in some instances get help with basic project administration, without going through the hassle and expense of forming a new organization. If the project succeeds, if it has legs, they can always form the organization and apply for tax exemption later.
Not long ago, I had the chance to follow my own advice. My son and I had spent time together in the West African Republic of Niger and decided it would be a good idea to help fund the digging of a well in a rural village where I had done some research. We pulled together a core group of supporters who -- you guessed it -- wanted to form a new nonprofit. At my urging, we instead sought fiscal sponsorship from an existing tax exempt organization, Friends of Niger. They very kindly agreed to receive donations for what became known as the Saabu Dey Well Project. They were happy to publicize our project and, unlike some fiscal sponsors, did not ask for a slice of the funds we raised (otherwise known as administrative fee). My son raised the money through e-mail and snail mail appeals and by convincing his high school's student council to donate proceeds from its coffee cart sales to the project. A week or so ago, we received news that the the well diggers had hit sweet water at fifty-six meters.
I close by admitting that I am not my own best client. Even though I urge my clinic clients to draft letter agreements or MOUs to set the terms of their fiscal sponsorship arrangements, we did ours on a handshake. It seems to have worked out. Up next is the Fandou Berri Well Project.
August 30, 2009 | Permalink
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