Fiscal Sponsors and Baltimore’s Grassroots Organizations

Posted April 1, 2022
By the Annie E. Casey Foundation
The image depicts a young Black woman with natural hair, wearing a black and white polka-dot dress. She appears to be in an office setting, and is smiling while talking to two other individuals, whose backs are to the viewer.

A new report exam­ines the chal­lenges faced by orga­ni­za­tions in Bal­ti­more with­out 501(c)(3) tax-exempt sta­tus — par­tic­u­lar­ly those led by peo­ple of col­or — and shares steps that fun­ders can take to bet­ter sup­port them and the fis­cal spon­sors they rely on.

Map­ping Baltimore’s Fis­cal Spon­sor­ship Land­scape, fund­ed by the Annie E. Casey Foun­da­tion and Open Soci­ety Insti­tute-Bal­ti­more, shares insights gleaned from 27 inter­views with rep­re­sen­ta­tives of local grass­roots groups and social entre­pre­neurs. Authors Jon­a­lyn Den­linger and Eri­ka Seth Davies say they inten­tion­al­ly pri­or­i­tized indi­vid­u­als of col­or for these inter­views because their val­ue, and the key roles they play in the local fis­cal spon­sor­ship land­scape, are often ignored.

When we dis­cuss fis­cal spon­sor­ship in Bal­ti­more, it’s impor­tant that local lead­ers and orga­ni­za­tions with strong ties to the com­mu­ni­ty are cen­tered in those con­ver­sa­tions,” says Tal­ib Horne, direc­tor of Casey’s Bal­ti­more Civic Site. Though these indi­vid­u­als and groups are in the best posi­tion to under­stand the needs of com­mu­ni­ties of col­or, they are often under­val­ued as part­ners for change.”

The report high­lights sev­er­al bar­ri­ers faced by Bal­ti­more-based groups, includ­ing lack of invest­ment, lim­it­ed resources and stag­nant local infrastructure.

What Are Fis­cal Sponsors?

Sim­ply put, fis­cal spon­sors are non­prof­it orga­ni­za­tions that lend their 501(c)(3) tax-exempt sta­tus to an indi­vid­ual or project. They act as an inter­me­di­ary between fun­ders — such as indi­vid­ual phil­an­thropists, pri­vate foun­da­tions or gov­ern­ment enti­ties — and groups or indi­vid­u­als work­ing for com­mu­ni­ty change. Spon­sors can also pro­vide over­sight, man­age finances and per­form oth­er duties as required to facil­i­tate the exchange of funds.

Fis­cal Spon­sor­ships in Baltimore

Accord­ing to the report, fis­cal spon­sors and the orga­ni­za­tions they sup­port in Bal­ti­more and oth­er cities across the coun­try often must con­tend with long­stand­ing insti­tu­tion­al prob­lems, such as bias in access to cap­i­tal, ingrained sys­temic racism and inequitable pow­er struc­tures. What’s more, spon­sors and grass­roots groups must remain account­able to their fund­ing part­ners and the com­mu­ni­ties they serve while often oper­at­ing with lim­it­ed resources and infrastructure. 

Togeth­er, these chal­lenges place stress on already overex­tend­ed and under­fund­ed social enterprises.

Key Take­aways from Map­ping Baltimore’s Fis­cal Spon­sor­ship Landscape

Build­ing on their inter­views as well as exist­ing research, the report’s authors share sev­er­al key insights about the fis­cal spon­sor­ship land­scape in Baltimore:

  1. As a mid­dle­man between fun­ders and spon­sored orga­ni­za­tions, fis­cal spon­sors shoul­der much of the finan­cial and account­abil­i­ty respon­si­bil­i­ty in these relationships.
  2. Baltimore’s fis­cal spon­sor­ship infra­struc­ture is under­fund­ed, with spon­sors often strug­gling to per­form their duties and meet the needs of their partners.
  3. Each part­ner in a fis­cal spon­sor­ship rela­tion­ship has unique needs, bud­gets and challenges.
  4. The demand for fis­cal spon­sors cur­rent­ly exceeds the num­ber of spon­sors avail­able, wors­en­ing exist­ing issues with­in phil­an­thropy and the non­prof­it com­mu­ni­ty — such as lack of racial equi­ty and the poten­tial for unsus­tain­able or uneth­i­cal busi­ness practices.
  5. To flour­ish, Baltimore’s fis­cal spon­sor­ships must be reimag­ined to serve the needs of all stakeholders.

Rec­om­men­da­tions to Strength­en Grass­roots Orga­ni­za­tions in Baltimore

In addi­tion to their find­ings, the authors share sev­er­al rec­om­men­da­tions to bet­ter sup­port grass­roots orga­ni­za­tions and their part­ners. These include:

  • help spon­sors access the resources and infra­struc­ture sup­port they need by pro­vid­ing gen­er­al oper­at­ing grants or invest­ing in cash reserves; 
  • grow the pool of avail­able spon­sors in Bal­ti­more by cre­at­ing or attract­ing new fis­cal organizations;
  • build a coop­er­a­tive net­work of spon­sors to encour­age col­lab­o­ra­tion, part­ner­ship and flow of cap­i­tal and; 
  • con­sid­er direct­ly invest­ing in orga­ni­za­tions or indi­vid­u­als with­out non­prof­it sta­tus by explor­ing ways to invest in peo­ple and projects that bypass tra­di­tion­al fis­cal spon­sor­ship relationships.

To ensure that peo­ple of col­or and the orga­ni­za­tions they lead can con­tin­ue serv­ing Bal­ti­more, the city’s exist­ing sys­tems and philoso­phies on fis­cal spon­sor­ship must be rethought, the report’s authors write. With sta­ble, thriv­ing spon­sor­ships in place, each par­ty in a fis­cal spon­sor­ship rela­tion­ship can align with key nation­al best prac­tices” and even set new stan­dards for how urban com­mu­ni­ties invest in grass­roots efforts led by peo­ple of color.

Learn More About Casey’s Sup­port of Entre­pre­neurs of Color

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