These are some frequently asked questions about fiscal sponsorship that have come up over the years. Remember, these are generalized answers. Your project’s fiscal sponsorship grant agreement may contain specific provisions that are a little different. In all cases, the Agreement is the binding document. Please do not hesitate to call us if you have any questions about how the fiscal sponsorship arrangement works.
After we apply for fiscal sponsorship, how long does the review/approval process take?
The Board makes fiscal sponsorship decisions on a quarterly basis, so the overall process from the time we receive your complete application until a decision by our board may take about 3 months.
How does the fiscal sponsorship relationship work?
The project solicits grants, gifts, or contributions to Rose Foundation, earmarked for the Foundation’s restricted fund for this project.
How should donors make out the check?
Checks should be made payable to “Rose Foundation – Your Project” so that it is clear that they are specifically earmarked for your project’s restricted fund. You can either have people send the checks to you, and then forward them to the Foundation, or have checks sent directly to Rose. Do not endorse or countersign the checks!
Does this mean we are a nonprofit?
Receiving fiscal sponsorship from Rose Foundation does not make your project a nonprofit charity. The project will still be liable for its own tax reporting. Consult with a CPA to determine what type of tax filings may be appropriate.
How much does fiscal sponsorship cost?
An administrative charge of 7% of donations shall be deducted by Rose Foundation to help share sponsorship costs amongst all the projects and to defray the Foundation’s direct costs of administering your project’s sponsorship. The fee for administering governmental grants and contracts is 10%. We have to charge a higher fee for those funding sources because significantly greater administration and reporting is required. Beyond these charges, there are no other annual, maintenance or other special fees charged.
How often does Rose Foundation disburse fiscal sponsorship grants?
As funders make donations earmarked for the project to Rose Foundation, the contributions are placed in the Foundation’s restricted fund for the project. In cases where the Foundation is receiving numerous small donations on behalf of a project, Rose will generally consolidate the contributions in its project-specific restricted fund and award lump-sum grants once per month, generally on or about the 1st of each month. In instances where a large contribution is received for the support of the project, the Foundation will typically award sufficient funding to cover 3 to 6 months operations. Upon receipt of the project’s quarterly report, some or all of the balance of funds remaining will be released to the project. At its discretion, Rose Foundation may elect to maintain a positive balance in its restricted fund for the project.
Why do I have to send information to Rose Foundation?
Your project needs to send information to Rose Foundation about its activities because Rose Foundation has assumed liabilities to the IRS about the charitable nature of your activities. Rose Foundation has to maintain records that document its oversight ensuring that your project is furthering the Foundation’s own charitable mission and purpose. The only way that Rose Foundation can maintain those records is if you keep us appraised of your activities. Additionally, your project must document its activities to Rose as you would for any other funder. Typically, Rose Foundation may retain a positive balance in its restricted project fund pending receipt and acceptance of appropriate reports.
What reports or materials do I have to send to Rose? How often?
The project must provide Rose with advance copies of all fundraising solicitations for pre-approval. The project must also prepare reports for funders and the cost of any reports or other compliance measures required by funding sources are borne by the project. The project must submit a quarterly narrative and financial report that summarizes program activities and describes income and expenditures. The project should also submit an annual report that encapsulates activities for the entire year. In addition, the project should always send copies of any major work products or widely disseminated materials. Remember, in many instances, you may be required to receive Rose Foundation’s pre-approval before distributing these materials.
Here is a typical list of materials that should be sent to Rose Foundation:
- Quarterly reports that detail activities and expenses for the quarter.
- Organized Annual Reports which summarize activities and expenses for the year.
- Copies of any fundraising solicitations, including all grant requests and reports to funders.
- Brochures, Action Alerts and other flyers.
- Copies of major policy memos, comments to administrative bodies, etc.
- Internal governing documents, including but not limited to: roster of officers, roster of Steering or Advisory Committees, operating bylaws or charter, and a complete and filed IRS Form SS-4. If you change your governance process or anything else, (for example, any change in your project’s tax or legal status, or executive staff) send us the amended version.
Is fiscal sponsorship forever?
No. We will typically renew the terms of the grant agreement as needed. This provides an opportunity to modify the agreement if necessary to accommodate your project’s growth.
What happens if major changes occur with my project during the year?
If the project wants to initiate any significant activities that are not described in your original sponsorship application, we need to amend the sponsorship agreement to include these activities. As long as the new activities are still within Rose Foundation’s charitable scope, this should not be a problem. However, please remember that under the agreement, Rose Foundation reserves the right, if the project’s conduct jeopardizes Rose Foundation’s legal or tax status, to withhold, withdraw, or demand immediate return of grant funds, and to expend such funds as to accomplish the purposes of the project as nearly as possible within Rose Foundation’s sole judgment. This is a legal requirement in order for the Foundation to maintain its own charitable standing.
Can my project lobby? What is lobbying?
Various activities can fall under the catchall term “lobbying.” Many of these activities are actually 100% OK for a charity and are not considered “lobbying” in the legal sense – you can avoid confusion by properly calling these activities education and advocacy. Generally, it depends on whom you are talking to and what you are asking them to do.
501(c)(3) organizations may legally engage in limited amounts of certain types of lobbying. However, Rose Foundation’s policy is that fiscal sponsorship projects may not lobby at all without the Foundation’s expressed advance permission. This is reflected in your Fiscal Sponsorship Grant Agreement, which states “fiscal sponsorship grants from the Rose Foundation may not be used in any attempt to influence legislation within the meaning of IRS Code 501(c)(3).” Any violation shall result in immediate termination of the sponsorship relationship, and may require return of past funds granted to the project. Generally, you are on safe ground contacting appointed officials, because these officials are not elected and are not legislators. Contact of this type is not lobbying as defined by the IRS, and you do not need to seek Rose Foundation’s pre-approval before initiating such contact. Contacting elected officials is permissible, within limits specified by the IRS. Any involvement in campaigns for public office is strictly forbidden.
Here are some general guidelines and examples:
- Contact with appointed officials: Most contact with an administrative agency, such as the Board of Forestry, Air District or Water Board is fully permitted and is not “lobbying”, although people commonly (and mistakenly) use that term to describe that kind of activity. However, if you ask these appointed officials to take a position or action about pending legislation you would cross the line into “real” lobbying and the Rose Foundation’s advance permission would be required. A common area of confusion is when an elected body, such as a city council, also serves as an administrative agency, i.e. as a redevelopment agency. In these circumstances, care must be taken to ensure that all of your communications relate to the administrative function, not the legislative. Practically speaking, however, this may be hard to do. In these instances, communicate with Rose Foundation for guidance before initiating contact with the officials or agencies involved.
- Contact with elected officials: Ask Rose Foundation before you initiate contact with elected officials: Talking with elected officials is not necessarily lobbying. For example, you can meet with a legislator to provide background context or current information about your issue. You may ask the legislator to contact an administrative agency to express an opinion. You can even work with a legislator on model legislation, respond to questions about the potential effects a particular bill may have on your issue, or provide various kinds of technical assistance upon written request from a legislative committee chair – although this last type of contact should be screened with Rose first. However, advocating a position on specific legislation is lobbying. Your project may not advocate positions on actual legislation without the express advance consent of Rose Foundation.
- Involvement in political campaigns for public office: Any project sponsored by Rose Foundation shall not participate or intervene in any political campaign on behalf of, or in opposition to, any candidate for public office. Even simple endorsements of candidates is prohibited. No exceptions are possible. Involvement in electoral campaigns is completely illegal for charitable organizations. Don’t even think about it. Any involvement in political campaigns for public office will result in immediate termination of the fiscal sponsorship.
Who owns the project’s work products?
The project owns all of its work products. Any tangible or intangible property, including copyrights, obtained or created by the project are the sole property of the project.
May the project apply to the Rose Foundation for grants?
Yes. Fiscal sponsorship projects may compete for grants on an equal footing with any other entity. However, one of the primary purposes of the fiscal sponsorship relationship is to facilitate the project’s ability to attract funds from other sources besides Rose.
Does fiscal sponsorship make my project a 501(c)(3) charity?
No. In extending fiscal sponsorship, Rose Foundation has determined that the work your project is performing will further the Foundation’s charitable mission. Therefore, Rose has set up a special restricted fund for the support of your project, and donors may make tax-deductible contributions to Rose Foundation for the support of your project. Since your project is acting under the “charitable umbrella” of Rose Foundation, we need to be sticklers about record keeping. Rose Foundation needs to be able to justify your project’s actions as furthering the Foundation’s own charitable purposes.
What tax forms do I need to file?
The project is responsible for reporting its fiscal sponsorship grant income and expenses on the appropriate IRS and state tax forms. The correct form your project needs will depend on your project’s specific legal status (unincorporated association, sole proprietorship, partnership, etc.), and Rose Foundation strongly urges all projects to seek the expert advice of a CPA or tax attorney. You must also file the appropriate employer taxes, and provide wage and payment statements for employees and contractors, etc. If you need a referral to a CPA and/or tax attorney, please contact the Rose Foundation.
Is my project a part of the Rose Foundation?
The project is a separate legal entity and is not an agent or legal representative of Rose Foundation. That is why the project is responsible for its own tax filings. The project owns its own work products and equipment. Project staff do not work for Rose. Project correspondence should not be on Rose letterhead. The project is a part of the Rose Foundation only in the sense that any grantee is part of the Foundation which provides enabling support. Collectively, all the projects to which the Rose Foundation makes grants comprise a significant part of the Foundation’s overall program. In that sense, your project is part of the overall mosaic which is Rose.
How do I express the relationship to funders and others?
Your project is an independent entity, acting under the fiscal sponsorship of Rose Foundation. After you notify Rose of the funding source(s) you intend to approach, and at the appropriate time in the application process, Rose will prepare a letter to the funder confirming the sponsorship and provide any other information they require. Generally, this type of information is sent along with a full proposal, and not with initial inquiries.
Don’t wait until the last minute to tell us you need the letter or other materials for the funder you are approaching with a full proposal. We request at least one week advance notice before your submittal deadline. Send us a copy of the funder’s specific instructions so we can prepare exactly what they need. Remember, when a funder asks for your organization’s budget, financial statement, Board of Directors, or other materials – what they really want is your information, not the Rose Foundation’s. Create some project letterhead, sign up a prestigious list of individuals to serve as a Board of Advisors, think through your own budget, write a brochure or flyer that describes your project and how people can get involved. These are the steps that help reflect your project vision as a living reality.
How does my project apply for fiscal sponsorship?
First, review Rose Foundation’s mission and goals to see if they are compatible with your project’s long-term plans and goals. Next, carefully review the description of Rose’s fiscal sponsorship program. Look at other fiscal sponsors as well – there are real differences between programs and you need to seek a sponsor that is a good fit for your project.
After you determine that Rose is a good fit for you and you want to apply, download the fiscal sponsorship application and review the questions. We receive applications from all types of groups: large and small, established groups and start-up organizations. Therefore some of the questions may or may not apply to your group. Once you have reviewed the application, please fill it out and submit it by mail or e-mail, along with any required attachments. At this stage, you may wish to send us a short email outlining your project and requesting a consultation. We will respond within two weeks of receiving your application or consultation request. If you submitted a full application, we will schedule a time to discuss your project in detail. If you sent a short email requesting consultation, we will schedule a more informal conversation to explore the potential of submitting a fiscal sponsorship application.
Are there any geographic limits on projects that Rose sponsors?
For the most part, Rose only sponsors projects that are located or doing work in California.
