Artists and Fiscal Sponsorship: What Is It and Why Should You Use It?
Are you an artist or creative looking to execute a project? Has someone told you that you or your arts organization should be fiscally-sponsored? Are you curious about “physical sponsorship”? Does fiscal sponsorship make you a nonprofit? What even is fiscal sponsorship and why is it relevant for artists?
Fractured Atlas is a national arts service organization that has been providing fiscal sponsorship services for over 20 years. We’ve worked with artists, arts organizations, informal arts collectives, and projects of all types in all disciplines to raise over $171 million dollars for their work. We know you have a lot of questions and we’re going to give you the info you need.
First, a disclaimer: we’re not lawyers and some of the information in this article touches on legal topics. This is not legal advice. You should consult a lawyer to understand the best course of action for you and your work. We aren’t accountants either. You should always consult professionals with the specifics of your situation to know what would work best for you.
What is fiscal sponsorship for artists?
Fiscal sponsorship is one way artists can access donated funds without being their own nonprofit. You can then use this donated money to pay for things related to your work, pay your collaborators, and/or even pay yourself!
It often isn’t necessary for an artist to become a tax-exempt, nonprofit corporation, especially if they’re only looking to do their work intermittently. Nonprofits require a significant amount of oversight from a board of directors plus strong record-keeping and administrative processes. Nonprofits are great if you’re looking to build an organization that can operate and exist after you’ve moved on: nonprofits need a team of people and substantial resources to operate most effectively.
Technically, fiscal sponsorship is a contractual relationship between a 501(c)(3) nonprofit organization and a group or individual whose activities fall within the sponsoring organization’s mission. This relationship enables the 501(c)(3) to extend certain benefits of being nonprofit to the sponsored group, without the group having to file for nonprofit status on its own.
In other words, folks without tax exemption can use some of the benefits of a 501(c)(3)’s status to raise funds and execute projects as long as their work furthers the mission of the nonprofit.
Even simpler: if you do what the nonprofit does, you could possibly be fiscally-sponsored by them.
Fiscal sponsorship isn’t just for artists — it can be a useful tool for any project or program operating in the public sector. One just needs to connect to a reputable nonprofit with a fiscal sponsorship program in their area of focus.
Can artists raise money with fiscal sponsorship? What type would be best?
Yes — fiscal sponsorship can work for artists of all disciplines and project sizes. There are at least six (6) different types of fiscal sponsorship, but the two artists are most likely to run into are:
- Comprehensive Fiscal Sponsorship (Model A)
- Pre-Approved Grant Relationship Fiscal Sponsorship (Model C)
This is the model that we offer at Fractured Atlas.
For an in-depth understanding of the models, you should check out the National Network of Fiscal Sponsors’ guidelines. Each type has pros and cons based on what your creative endeavor needs; there’s no hard-and-fast rule about which model you should use for your artistic project.
Model A Fiscal Sponsorship (Comprehensive)
In simple terms, the project becomes a part of the nonprofit’s operations in a comprehensive model. The nonprofit provides a lot of oversight over the project’s day-to-day activities. The nonprofit both executes the work and receives the donations. There is usually a project director who manages the on-the-ground aspects and reports to the fiscal sponsor.
What Type of Artists Can Raise Money with Model A Fiscal Sponsorship?
Model A is great for projects that are ongoing and/or long-term, have dedicated staff, and need more support in their back-end operations (human resources, finance, administration, etc.) Some questions to ask yourself if you’re considering this model:
- Are you okay relinquishing control of your project to the nonprofit as long as the work gets done?
- Do you need extensive back-end support for things like insurance or human resources?
- Do you want someone else to handle filing your project’s taxes and/or payroll?
Model C Fiscal Sponsorship (Pre-Approved Grant)
In this case, the project operates independently from the nonprofit. Donations for the purposes of the project are given to the nonprofit. The nonprofit then releases those dollars to the project for related expenses. The project is responsible for taxes on the funds as they are considered grant income.
What Type of Artists Can Raise Money with Model C Fiscal Sponsorship?
Model C is great for projects that are short-term and/or have smaller teams. This is also ideal for people who want full control over the execution of their work, regardless of how large the project is. This allows for more independence but comes with more administrative burden.
Some questions to ask yourself if you’re considering this model:
- Do you want to fully own your artistic work and project?
- Are you prepared to handle your own administration including tracking your project’s finances?
- Do you prefer more independence in how you work?
Do I need fiscal sponsorship for my artistic project?
Fiscal sponsorship is like a hammer — it’s the perfect tool if your problem is a nail. If you want to offer a tax deduction to potential donors, apply for grants, or run a crowdfunding campaign, then fiscal sponsorship could be for you.
It’s also a relationship: each fiscal sponsor is different and it’s worth it to do some due diligence to confirm the right fit. You can check out our Introduction to Fiscal Sponsorship webinar to learn more.
Here are some basic questions to ask yourself that will better determine if fiscal sponsorship is the right tool for you. Click the image for more information.
Is fiscal sponsorship the right choice to fund my artistic work?
Fiscal sponsorship can be a great way for artists to access donations and grants to fund their creative projects. Successful fiscal sponsorship relationships have allowed artists to grow their projects, expand their audience and even start their own nonprofits. Fiscal sponsorship in any model can give you the time to develop both your project and your fundraising skills while you figure out your next steps.
Fractured Atlas can fiscally-sponsor artists, their projects, and their organizations because our mission is to empower artists to create a more agile and resilient cultural ecosystem.
We do what we do to help you do what you do.
For more information about fiscal sponsorship in general, check out our “Introduction to Fiscal Sponsorship” webinar.
About Courtney Harge
Courtney Harge is a producer, director, and professional arts administrator originally from Saginaw, MI. She is the Founder and Artistic Director of Colloquy Collective, a theater company based out of Bedford-Stuyvesant, Brooklyn. She has worked for the Elaine Kaufman Cultural Center, Theater for the New City, The Public Theater, Gibney Dance, and, most recently, the New York Foundation for the Arts with a focus on institutional fundraising, crowdfunding, and fiscal sponsorship. She holds a Masters of Professional Studies, with Distinction, in Arts and Cultural Management from Pratt Institute and a Bachelors of Fine Arts with Honors from the University of Michigan in Theater Performance. Her credo (#HustlingKeepsYouSexy) is not merely a hashtag; it’s a way of life.