We hear frequently - mostly from nonprofits that aren’t sponsors, the financial services and funding communities - the perception (or conviction) that fiscal sponsorship is somehow more risky than stand-alone nonprofit operations. We hear the fiscal sponsorship field saying the opposite, or at least pointing out the lack of nuanced understanding of fiscal sponsorship behind such an opinion.

Fiscal sponsors, in fact, can be risk mitigators, but under certain circumstances can become risk producing or compounding. As the spectrum of risks that our sector faces grows (environmental disaster, cyber security, political attacks, social unrest, financial and funding fragility, etc.) fiscal sponsors need to be sure that they are strongly leaning toward risk mitigating in all respects. For example, we often hear sponsors tout economies/power of scale and “safety in numbers”, which can mitigate risk, but an extensive portfolio can also produce concentration risk–one major failure can impact many projects. How do we strike a balance?

Finally, as nonprofits face unprecedented times with multiple risk factors we need to talk about collective and participatory risk management, wherein sponsors can lean into intentional, mission-focused risks with their projects and make community decisions. 

We invite you to discuss how fiscal sponsors can provide safety for projects, engage in collective conversations, and mitigate risks.

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