Fiscal Sponsorship Is Growing. Let's Make Sure We Grow It Right.

The growing interest in fiscal sponsorship is good news for nonprofits and communities. But doing it well requires more than good intentions.

Something is shifting in the Wisconsin nonprofit ecosystem - and honestly, in the broader social sector. More organizations are asking about fiscal sponsorship. Funders are starting to understand it. Community leaders are realizing they don't have to spend years building nonprofit infrastructure before they can start doing the work.

That's genuinely exciting. Fiscal sponsorship, when it's done right, is one of the most powerful tools available for getting community-driven work off the ground quickly, efficiently, and sustainably. It allows emerging initiatives to tap into an established organization's legal status, financial systems, and operational infrastructure - without having to reinvent the wheel.

But here's what keeps us up at night: not everyone jumping into fiscal sponsorship - as a sponsor or a sponsored partner - is ready for what it actually requires.

The hard truth: fiscal sponsorship isn't a shortcut. It's a serious legal and financial relationship. When it's built on a shaky foundation, it can hard the very initiatives and communities it's meant to support.

Why Everyone's Talking About Fiscal Sponsorship Right Now

For a long time, fiscal sponsorship existed on the margins - understood mostly by foundation insiders and a handful of sector specialists. If you weren't already networked into the right circles, you might never have heard the term, much less understood what it could do for you. That's changing. A few factors are driving this:

• The cost and complexity of starting a nonprofit has become harder to ignore. Filing fees, legal costs, board recruitment, audit requirements - it adds up fast, often before an organization has proven its model or built a funding base.

• Funders are increasingly open to supporting fiscally sponsored projects. Many are explicitly updating their eligibility criteria to include them, recognizing that EIN-only requirements were a structural barrier to community-led work.

• The pandemic-era explosion of mutual aid and rapid-response organizing showed what's possible when communities don't wait for formal nonprofit status to start acting. Many of those groups are now looking for a more stable home.

• Platforms like Mazlo have made it easier for fiscal sponsors to manage partners transparently, with real-time financial dashboards, project-level accounting, and reporting that funders and partners can actually use.

  
  

All of this is good. The infrastructure exists. The appetite is there. The sector is maturing.

The problem is that interest has outpaced readiness - on both sides of the relationship.

What "Doing It Right" Actually Looks Like

At Embolden WI, we've spent years building the operational infrastructure to do fiscal sponsorship well. That means clear legal agreements, dedicated financial systems with project-level accounting, defined compliance responsibilities, intentional partner onboarding, and ongoing support for the initiatives in our program.

It also means being honest about what fiscal sponsorship is - and what it isn't.

Fiscal sponsorship is not:

• A pass-through arrangement where the sponsor takes a fee and steps back

• A rubber stamp that makes any project instantly fundable

• A short-term fix for an organization that isn't ready to do the work

• Something you can set up over a weekend with a boilerplate contract you found online

Fiscal sponsorship is:

• A genuine fiduciary relationship - the sponsor bears legal and financial responsibility for the project

• An ongoing operational commitment that requires real systems, real capacity, and real accountability

• A relationship that works best when both parties are prepared, aligned, and honest about expectations

• A structure that, when built well, can dramatically accelerate community impact

The Risks of Getting It Wrong

We're not trying to be alarmist. But we'd be doing a disservice to the field if we didn't name what happens when fiscal sponsorship is done carelessly.

For sponsored partners, the risks include entering an agreement without understanding what they're signing, losing access to funds they raised because the relationship broke down, working with a sponsor that lacks the capacity to actually support them, and discovering too late that the contract they signed doesn't protect them.

For organizations launching sponsorship programs, the risks are just as real: taking on projects without adequate financial systems, making promises about services they can't deliver, exposing themselves to legal liability because agreements weren't properly structured, and damaging their own organizational reputation - and the trust of their donors - when things go sideways.

The communities served by these initiatives? They get caught in the middle.

How Do You Know If You're Ready?

This is the question we keep hearing from organizations that want to launch a fiscal sponsorship program. And it's the right question to be asking.

Readiness isn't just about having a 501(c)(3) designation. It's about having the legal clarity, financial infrastructure, organizational capacity, governance structures, and risk management practices that fiscal sponsorship actually requires.

We built a Fiscal Sponsorship Readiness Quiz specifically to help organizations assess where they stand before they commit. It's not a gotcha - it's a genuine diagnostic tool that looks at the factors that determine whether a program will be built to last.

The quiz evaluates five core areas:

• Legal & organizational foundation - Do you have the standing and structural clarity to serve as a fiduciary?

• Financial systems & infrastructure - Can you manage project-level accounting, reporting, and fund custody responsibly?

• Organizational capacity - Do you have the staff, time, and operational bandwidth to support sponsored partners?

• Governance & accountability - Are your board and policies equipped for the added responsibility?

• Risk management - Are you prepared to handle conflicts, compliance issues, and relationship breakdowns?

At the end, you'll land in one of three tiers:

Tier	What it means	Next Step
Launch Ready	Your foundations are solid. You have what it takes to launch a program built to last.	Start building - and build it right.
Getting There	You're making real progress. A few key gaps to close before you're ready to take on partners.	Targeted work now protects you later.
Keep Building	You're not there yet - and that's okay. Better to know now than after you've made commitments.	Build the foundation before the program.

Take Our Fiscal Sponsorship Readiness Quiz

The Bottom Line

The surge of interest in fiscal sponsorship is a sign of a sector that's maturing and a community of leaders who want to get to work. We're here for it.

But the best thing we can do - for sponsored partners, for communities, and for the field - is make sure that when fiscal sponsorship programs launch, they're built to actually work. That means honest self-assessment, real infrastructure, and a commitment to doing this right.

Because the initiatives fiscal sponsorship is meant to support? They deserve a foundation that holds.

The Difference We Choose at Embolden WI

What you do makes a difference.

And you have to decide what kind of difference you want to make.

At Embolden WI,

we decided.

We decided we are not here to whisper around power.

We are here to shift it.

We inform.

We involve.

We inspire.

Because policy should happen with people —not to them.

Desmond Tutu said,“There comes a point where we need to stop just pulling people out of the river. We need to go upstream and find out why they’re falling in.”

So we go upstream.

Upstream where systems are written.

Upstream where budgets are drafted.

Upstream where decisions are made about who thrives and who treads water.

We are not in the business of handing out life jackets forever.

We are cultivating conditions where fewer people are pushed into the river in the first place.

And here’s something that should stop us in our tracks:

In Wisconsin, less than 7% of adults can name their State Senator and State Assembly Representative.

Seven percent.

Democracy cannot breathe if people don’t know who speaks for them.

So we build bridges.

Between neighbors and their elected leaders.

Between lived experience and legislative language.

Between community voice and policy text.

We inform people.

We help them find their representatives.

We teach them how to speak up.

And we insist that those in power listen.

We do not just amplify voices.

We wire them directly into the system.

And we know something else:

Too many mission-driven leaders are buried in paperwork

when they should be building movements.

So we remove the burden.

Through fiscal sponsorship,

we hold the compliance,

the contracts,

the reporting,

the backend weight —

so community leaders can carry the vision.

We are the steady drumbeat of change.

Not flashy.

Not frantic.

Steady.

Rooted in radical imagination.

Grounded in shared power.

Committed to a Wisconsin where people don’t just survive systems —

they shape them.

Because what we do makes a difference.

And we at Embolden WI have decided exactly what kind of difference we want to make.

Please consider making an invest today to support, sustain, and strengthen the difference Embolden WI makes - https://www.thebigshare.org/organizations/emboldenwi

Fiscal Sponsorship: A New Way to Organize, Advocate & Amplify Change

Learn how you can support Embolden WI's fiscal sponsorship program

Did you know there are over 1.8 million nonprofit organizations registered in the US?

There are so many incredible community members out there right now who are holding the ideas and answers to our greatest challenges. Those closest to the problems are closest to the solutions, but we have failed to create the conditions in which these change act uninhibited on their vision and mission.

Many aspiring community leaders are commended for their vision and encouraged to take action. However, taking action requires funding, and traditionally, this has been achieved through creating a nonprofit. Consequently, individuals undertake the challenging task of applying to the IRS for 501c3 status which can take 9-12 months if approved. Even after establishing a nonprofit and starting to raise funds in the highly competitive grant and donor market, costs quickly add up. A mandatory annual audit costs approximately $30,000, and nonprofit insurance expenses rack up $10,000 or more. Providing health coverage and benefits for employees is often unaffordable, and the necessary technology to remain efficient and competitive exceeds the overhead budget.

For years, we have hindered community-driven transformation by forcing change makers to shoulder extensive administrative and financial burdens to receive funding, preventing them from focusing on their mission-driven work.

In the Powerful & Proximate report, readers are asked, "What kind of transformative change is possible for our communities when grassroots organizations are supported adequately and appropriately, regardless of nonprofit status?" At a moment in history when we need to center community, rapidly respond, and ensure those closest to the problems are closest to the opportunity, we don't have time to play the traditional "nonprofit industrial complex" game.

How do we cope? It may sound surprising, but starting a nonprofit isn’t the only way forward. Fiscal sponsorship offers the administrative backbone and infrastructure change makers need to focus on their mission. Fiscal sponsors ideally act as necessary connective tissue between grassroots organizations and funding sources. They create a path to rapid deployment of resources and a more equitable and accessible way for leaders of all kinds to access nonprofit infrastructure and get to work. It's time to challenge the status quo and lean into a powerful way to connect community with the resources they need to succeed.

The demand for nonprofits to act as crucial agents of change is higher than ever, yet implementing mission-critical initiatives has become more difficult. We are burdened with excessive responsibility and insufficient support. More and more, fiscal sponsors are seen as a path to rapid deployment of resources and a more equitable and accessible way for leaders of all kinds to access nonprofit infrastructure and get to work.

Fiscal sponsors ideally act as necessary connective tissue between grassroots organizations and funding sources. They present an important opportunity to elevate and effectively support grassroots organizations while honoring their vision for sustainability and remaining responsive to where they are in their growth. - Powerful & Proximate report

Fiscal Sponsorship 101

• Fiscal sponsorship is when a nonprofit organization (sponsor) partners with community to offer the opportunity to operate under its tax-exempt status enabling the partner to focus on its mission while the sponsor manages administrative tasks and compliance.

• Fiscal sponsorship is a common mechanism used in the nonprofit sector that enables individuals and organizations to start new programs without establishing a new, separate nonprofit organization.

• When implemented properly, fiscal sponsorship offers the potential for efficiency, collaboration, and resource optimization.

Fiscal sponsors are sometimes described as:

• management commons

• administrative backbones

• intermediaries

• incubators

• a hub

What we love is what fiscal sponsors really do. Here are some of my favorite ways some fellow fiscal sponsors describe their services:

• "a nonprofit organization that provides financial and operational infrastructure so our partners can focus on their missions." - Evergreen Social Impact

• "we support leaders, create efficiencies, and foster innovation" - Colorado Nonprofit Development Center

• "we work with organizations to face barriers, like access to resources and capacity, by ensuring they have the support they need; financial, human, and more, to operationalize their work." - TSNE

Why Fiscal Sponsorship Matters More Than Ever

• Since January of 2025, the Trump Administration has waged the most significant assault on the nonprofit sector we’ve ever seen.

• In addition, the nonprofit sector is facing increased competition and stricter regulations, the core challenges of fundraising, compliance, and operational management.

• Fiscal sponsors (or intermediary organizations) like Embolden WI provide financial and operational infrastructure so our community partners can focus on their missions.

• While the field of fiscal sponsorship is growing rapidly, fiscal sponsors are underutilized or not properly leveraged to uplift and activate grassroots organizations and the community-based power they hold.

With over 20 years of nonprofit management and nonprofit advocacy experience, Embolden WI provides our partners with required and necessary administrative resources, enabling them to better focus on fulfilling their missions, building organizational capacity, and improving our communities.

We have a powerful and urgent opportunity to lean into the fiscal sponsorship space to meet this moment in history. Those closest to the problems are closest to the solutions, but these communities need and deserve access to trusted infrastructure and "red tape expertise" to eliminate the administrative burdens that prevent community-led transformation.

Embolden WI already offers fiscal sponsorship to these amazing partners and many others are reaching out to see fiscal sponsor support. Link here to learn more about our fiscal sponsorship program.

We at Embolden WI are embracing a mindset of continuous improvement, collaboration, and courage.

What can you do to help? Support the infrastructure that makes it all work. At this moment we hope you'll consider making an investment to help us meet the full promise of our fiscal sponsorship program. To lead in this space, we need to hire a Director of Fiscal Sponsorship as soon as possible. The Director of Fiscal Sponsorship is the point of contact for our fiscally sponsored partners, helping them navigate charitable requirements and bring their ideas to their full potential.

Donate Now to Invest in our Fiscal Sponsorship Program

Listen to Embolden WI's Executive Director explain the power, impact, and potential of fiscal sponsorship in Wisconsin

Fiscal sponsorship, when mission- and values-aligned, can serve as vital connective tissue for closing this gap and supporting grassroots organizations, which hold tremendous community power and have the relevant proximity necessary to solve important social issues—if only they were equipped with resources that support their full activation. - Powerful & Proximate Report

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Interested in learning more about the power and potential of fiscal sponsorship? Check out these resources:

• Powerful & Proximate - Fueling the Dreams of Grassroots Organizations Through Fiscal Sponsorship (Evolve Consulting)

• The Fiscal Sponsorship Model: A Growing Trend in the Nonprofit Sector (Dorothy A. Johnson Center for Philanthropy)

• Intermediary organizations are vital and funders need to increase funding going to them - Vu Le

• 2023 Fiscal Sponsor Field Scan Survey Report (Social Impact Commons)

History of fiscal sponsorship

The practice of fiscal sponsorship dates back to 1959 but the field really started to develop in the 1990's. The early 2000's saw an increasing interest in fiscal sponsorship from philanthropy and nonprofit leaders, largely in response to urgent calls for social justice and increasing threats to civil society and the health of our planet.

In November 2023, Social Impact Commons and the National Network of Fiscal Sponsors released the first major comprehensive scan of fiscal sponsorship in seventeen years. Their report, Fiscal Sponsor Field Scan 2023, found that “three times as many sponsorship programs were created in the last 20 years than were created in the 40 years prior to 2000." The field scan provides detailed information on more than 100 fiscal sponsors who collectively administer over 12,000 charitable projects with 18,000 employees or contractors.