Making the Case - Challenges Facing Shared Impact Models for Fiscal Sponsors
Not everything that counts can be counted, and not everything that can be counted counts.
-- William Bruce Cameron
Whose impact are we talking about?
Why do we need a shared fiscal sponsor-specific impact model? Answer: in addition to tracking your own success there is a value to common case making, whether advocating to current and future projects, board members, or donors/funders. The fiscal sponsorship field has yet to develop a common data model or any shared impact metrics that would allow us to communicate the impact and advocate as a field to policy makers, funders, and the public writ large. We would argue this is one of the main contributors to the persistent obscurity of our work and continued skepticism about its virtues and value. For our field to grow and flourish, this needs to change.
When asked to describe their impact, fiscal sponsors look to the diversity of their projects and find numerous examples of success. This project provided housing to 300 low-income families last year. That project welcomed 1,000 underserved families to their first theatre experience this year alone! Inspiring stories abound.
But can fiscal sponsors claim the impacts of our projects? Do these anecdotes and case studies describe the impact of the fiscal sponsor or the impact of its programs or projects? The answer is yes, both...and no, not really. It’s complicated.
There is a question of bragging rights.
Our many project success stories do, of course, tell a valid story about impact. But following the conventions of the field, fiscal sponsors are co-managers with their projects. There is a division of labor and responsibility, and along with that, bragging rights. Let’s look at this issue of who “owns” mission-related impact from a few different angles.
What the lawyers and tax experts might say: “You’re ultimately responsible and liable for the projects you sponsor, so your impact as a sponsor is the impact of your projects.” Since the sponsor is liable and responsible from a fiduciary standpoint for the charitable activity of its projects, the attendant impacts “belong” to the sponsor--perhaps even more so than the project. This is the strange balancing act of fiscal sponsorship: we want our projects to have some autonomy (in letter and spirit), but at the end of the day (and especially for Model A folks) the sponsor holds ultimate responsibility and authority.
From an Internal Revenue Code standpoint fiscal sponsorship services (back office supports) by themselves are not considered charitable activities. In fact, services such as accounting, are considered commercial in nature. Thus fiscal sponsorship services alone are not the reason for your tax exemption. Rather, it is the charitable purposes of the projects you support that permit your 501(c)(3) status. Therefore, like the legal/fiduciary argument above, the impacts of our projects must ultimately be claimed by the sponsor to be a viable public charity. A fiscal sponsor is nothing (and likely not tax-exempt) without its projects, if fiscal sponsorship is the sole focus of your organization.
What project leadership might say: “As our fiscal sponsor, you’re essential to supporting and enabling our work, but these impacts belong to my project.” Project leaders, in particular founders, may (and do, in our experience) hesitate to share credit with their sponsor. While there is no concept of ownership (in the private sense) in the nonprofit arena, nonprofit leaders and teams understandably develop a strong emotional identity connection to their work. This often leads to a sense of authorship, pride, and concern over agency with regard to their work and mission, and impacts. So while the sponsor plays a critical role in enabling the project to do its work, there may be some hesitancy from projects to share the limelight. This may be particularly true for sponsors where there are significant race and identity divides between sponsor leadership and project leadership.
What your staff and board might say: “Without our support these projects would not be able to operate, so we celebrating their impact together.” Sponsor staff and board always have a more detailed and extensive understanding of what it takes to provide a strong backbone to nonprofits. So, we would expect sponsors to feel no hesitancy in claiming project impacts. But given the frequent gulf in understanding between the front-of-house and its work (the project) and the back-of-house, we also have to keep in mind that this sense of ownership may not be shared by your projects.
What funders and donors might say: “Our funding went to support your Miraculous Social Good Project, based on the case its leaders presented, and we view the outcomes and outputs as theirs, not yours as fiscal sponsor.” Fiscal sponsors get this a lot from donors and funders, who emotionally (and mission-wise) connect with the project and tend to see sponsors as critical, but more mission-agnostic parts of the equation--vital behind-the-scenes, but not on the front line. (This is also the way many sponsors intentionally position themselves, so there is some validity to this perspective. There is also a persistent (and overly generalized) view of sponsors by funders as “mission surrogates” or transitional housing for charitable projects on their way to become independent (read, “real”) organizations. These perceptions might cause some project funders to look askance at sponsors staking claim to project impacts.
There is the challenge of aggregating collective impacts among diverse projects.
If you are home to lots of different projects, you are likely to have just many different models and metrics for impact—as many models as you have projects. Perhaps the greatest challenge to any sponsor (let alone the field of fiscal sponsors) summarizing or aggregating the impacts of its projects is the sheer diversity of missions, models, and theories of change that find a home in fiscal sponsorship’s broad embrace. Even for a sponsor with very specific field focus, such as water conservation, arts and culture, or addiction recovery, there are likely (we hope!) to be different approaches to solving such complex problems, as well as different desired outcomes. So, how could you roll this up into one impact metric or model?
There is the growing challenge of human-centric vs. institution-centric impact models.
Reflecting the dramatic shift toward freelance work models away from traditional corporate and institutional models, the question becomes increasingly urgent: what metrics are we tracking? Are we gathering metrics that describe the work of individual change makers and social good entrepreneurs, or are we describing the work of organizations and institutions? In other words, should we be tracking the impacts of individuals acting for social good, or institutionalized versions of the same (that tend to “dehumanize” the activity)?
Fiscal sponsors allow either to be possible, and with the Age of the Institution seeming to be on the wane, this question becomes paramount. It is true that organizations are constituted of people, but to measure an organization’s impact vs. the individual and collective impacts of the specific humans that make up that institution are two different things--two different ways of framing what might be the same ultimate impact. The framing matters. How many of the nearly 900,000 organizations operating below $500,000 annually are just a nonprofit corporate “store fronts” formed to enable the work of a particular person or small group? (Probably all of them are, to some degree.) And for those small organizations, which is more likely to endure, the “organization/brand” or the person behind it? I would bet on the latter. So, might we get a better picture of long-term impact tracking the work of the individuals that make up our sector instead of the transient storefronts they occupy? Perhaps, but our sector has not even begun to grapple with this fundamental and looming structural question, precipitated by the tectonic changes we are experiencing in how work is done.
Finally, there is the challenge of “sex appeal” - that is, for your metrics and impacts.
The charitable sector has always been plagued by Sally Struthers Syndrome. If you’re of a certain age (and if you’re not, hop on YouTube) you might recall Sally Struthers’s ad campaigns for Save the Children from the 1980s. Her repeated line--always following a cut-away to images of starving children, mostly of color--was, “For just pennies a day, you can save a starving child.” This campaign (and approach in general) has since garnered much deserved criticism by nonprofit practitioners for reducing complex and catastrophic problems to middle-class noblesse oblige and the White Savior Complex. But so much charitable work still gravitates to direct human impact statements when it comes to making the case. If donors and funders can feel the pain they are alleviating, all the better.
In the above context, fiscal sponsorship feels awkward and unsexy. (Sponsor raises hand: “But we do the accounting that helps to save those children’s lives!”) Funders and donors acknowledge the need for, but generally don’t like to fund “overhead”, thanks to the many myths and pejorative images that have been painted by the charity watchdog industry. (These are thankfully being redressed today by such initiatives as the Overhead Project.) Still, it is generally far more attractive and compelling to talk about the impacts of projects than the technical, legal, and financial support at the core of fiscal sponsorship.
How can we address the above challenges and build a shared impact model for the field?
The above issues make defining and tracking collective impact, both quantitative and qualitative, for the fiscal sponsorship field complex, to say the least. In closing we offer a few provocations that are inspiring and informing our thinking about a common impact model for the field of fiscal sponsorship.
What if we move the focus of our measurement from the institution to the most fundamental denominator: the individual doing the work?
In a world in which individual change makers are driving impact alongside old-line (and new-line) institutions, the one “common denominator” is the individual human doing the work. If we were to take the work of individuals as our focus and determinant of metrics, we would be able (for instance) to compare the impacts of an organization against those of a single change maker--apples to apples--working on the same problem or in the same field. Given where things are going, this might have great advantages over the institutional focus of impact metrics that prevails in our sector today.
What if we move the “location” of impact from the project-to-beneficiary relationship up to the sponsor-to-project relationship?
Finding common ground among the impact metrics for projects under a given sponsor may be an exercise in impossibility. But the nature of relationship and kinds of supports offered by fiscal sponsors to their projects tend to be relatively common from sponsor to sponsor, as well as mission or field agnostic. Accounting is accounting, HR is HR, regardless of the field of work in question. So what if we were to focus on measuring the impacts of the sponsor-to-project relationship in all of its dimensions as our chief scope of impact, leaving the specific project impacts to be as diverse as the visions we support?
With these two moves, we may come one step closer to defining a Common Data Model and Shared Theory of Change/Impact for the fiscal sponsorship field. And if we, as a community of practice, can work to define this Shared Impact Model, the resulting impact that would have on our field and the nonprofit sector in general would likely be profound.
Who’s up for the challenge?