This is the first in a series about how to fund your feature, video, web series or short.
Funding an independent project is always a challenge. This time we will focus on fiscal sponsorship, how it works and how it might be the right fit for your project.
What is fiscal sponsorship?
A fiscal sponsorship is an arrangement in which a 501(c)(3) organization (the fiscal sponsor) offers its legal and tax-exempt status to another group for a project related to the mission of the nonprofit organization (thanks to the Cullinane Law Group for this concise definition). In the United States, nonprofit organizations must work under specific criteria (i.e. charitable, educational, religious) in order to be exempt from federal taxes under the 501(c)(3) section of the U.S. tax code – thus why some organizations are referred to by that obscure number. For a nonprofit to be legally established, it needs to set up its criteria for operating and obtain approval from the IRS and the state’s corporate filing office. Then the organization can offer fiscal sponsorship to projects that fall under its mission. This can be very helpful when raising money from donations to your project.
Helpfully, Candid (formerly the Foundation Center) is an excellent resource for all things nonprofit. You can search for information about millions of U.S. nonprofit organizations through Guidestar, and for grant opportunities through the Foundation Directory Online (FDO). They also offer training events and teach fundraising skills through Candid Learning with in-person and online seminars.
Additionally, there is a nonprofit that offers a directory of fiscal sponsors nationwide – FiscalSponsorDirectory.org. You can search for fiscal sponsors under your “service category” such as Media, Arts & Culture, LGBTQ, Social Justice and Advocacy, etc.
To compare different nonprofits’ fiscal sponsorship guidelines, go to their website for specific information. Once you find a nonprofit that fits your criteria, you’ll need to complete an application and pay an application fee and/or membership fee to the organization. Once you are accepted, the nonprofit’s tax exemption status can be extended to any donor for your project. Once your film’s supporter donates to the nonprofit organization, they will receive a tax-deduction letter that can be used when that donor completes their income taxes for the year.
Nonprofits usually deduct a 5-10% administration fee from any donated monies. Once a donation is received by the non-profit, you can then request the money (sans admin fee) according to the organization’s accounting process. Keep in mind that if the organization requires you to be a member while utilizing their fiscal sponsorship, you’ll need to renew the membership fee annually if your project continues to obtain donations after the first year.
From the Heart Productions is one of the oldest organizations focused on supporting independent filmmakers through annual production grants, seminars, blog posts and free funding classes. Executive Director Carole Dean believes that “education is the most important part of a nonprofit’s responsibility to a filmmaker” and her organization provides excellent information helpful to lots of creators.
Several years ago I used IFP for a short film project I produced. It was very advantageous for us to raise money from supporters who wanted a tax deduction for their generosity. For certain donors the availability of a tax deduction can a tremendous motivator for financial support of your project.
Below is a short list of organizations (alphabetically) that offer fiscal sponsorship to film projects specifically:
In my next post in this series I will discuss In-kind donations and how you can use them to help fund your project.