The Sustainable Economies Law Center (SELC) has been interviewing other worker self-directed nonprofits (WSDNs) and found that a substantial number of them are fiscally sponsored by other organizations. "Fiscal sponsorship" usually refers to an arrangement where an organization becomes a "project" under anther nonprofit organization's umbrella, rather than operating as an independent nonprofit. Our observation gave us a key insight: Being fiscally sponsored allows new organizations to avoid the "seeds of hierarchy" that are often planted when the new organization must hire specialized administrative staff.
By coming under the umbrella of a larger nonprofit that can handle many of the required administrative tasks (bookkeeping, accounting, tax filing, insurance, payroll, legal compliance, and donation processing), the staff of a nonprofit can focus on their programmatic work. Over time, staff may learn to handle those administrative functions themselves and eventually take them over in order to become an independent nonprofit. However, avoiding the creation of a class of experts or technocrats from the get-go can make room for more equitable relations to develop among workers. Here's a short video discussing this:
A WSDN that is or plans to be fiscally sponsored by another nonprofit should have a clear agreement with the sponsor organization about how decisions will be made about the sponsored project. It's very common for a fiscal sponsorship agreement to empower a single individual to make decisions about the project, which can also plant the seeds of hierarchy. For a WSDN, we recommend that the agreement be signed by all workers who are participating in the governance of the project. In addition, the agreement should be clear about basic procedures for how that group of staff make decisions about the project, so that the Board of Directors of the fiscal sponsor can feel confident that the project is being managed carefully and that all staff are accountable to others.
With many fiscal sponsorship arrangements, each fiscally sponsored project may also have its own steering committee, functioning as a largely autonomous governing body, but ultimately overseen by the Board of Directors of the fiscal sponsor. Because a steering committee is not legally a Board of Directors, there is greater flexibility in the design and composition of the steering committee, as seen in the case of Movement Generation.
Movement Generation considers their status as a fiscally sponsored program of the Movement Strategies Center “an incredible asset.”
Movement Generation began with a volunteer steering committee and two staff. As they received more funding, they brought members of their steering committee into the organization as paid staff. As a fiscally sponsored project with flexibility in the design of its steering committee, Movement Generation could have people serve on the steering committee even after they were hired as staff. This ensured that the political direction of the organization was set primarily by the collective doing the work. They continue to have non-staff serve on the steering committee as well to ensure a canopy view of the broader landscape when making long-range planning decisions.
Movement Generation particularly values the administrative support that its fiscal sponsor provides. This allows Movement Generation staff to spend more of their time on strategy and programming. It also allows them to focus entirely on hiring people that make unique contributions to their shared vision, instead of prioritizing administrative experience in their hiring decisions.
It is important to note that Movement Generation cited the full alignment between its mission and the mission of its sponsor as a huge contributing factor to the value. All sponsors are different and it is important for a project seeking fiscal sponsorship to have a clear understanding of a potential sponsor’s mission and available support systems.