 I'm excited. Thank you so much for joining us. I cannot believe it's already half past. I'm excited for another episode of the nonprofit show. Always grateful to extend our gratitude and deep appreciation to our presenting sponsors. You see their logos in front of you on the screen and these organizations really believe in the work you do. They are in your corner across the nation and right behind you lifting you up to support your mission. So go find them online. Give them a like. Love some follow and just say, hey, thanks for being there for me. And of course, I want to tell Julia Patrick. Thanks for being there for me. Julia created this wonderful series of episodes, the nonprofit show. Julia is the CEO of the American Nonprofit Academy. If you haven't checked out that website, do because there is so much amazing insightful resources, even national news you can find on the American Nonprofit Academy. That's how I wake up, scrolling the American Nonprofit Academy. And I'm Jared Ransom, nonprofit nerd CEO of the Raven Group and thrilled to be here as your co-host. Also thrilled to introduce all of you and have the honor to welcome Andrew Shulman, CEO of Shulman Consulting. And I shared, if you joined us for the Chitty Chat Chat, Andrew and I have known each other professionally for quite a few years now. Maybe actually like double handfuls of years. It's been a while. And I'm just so honored, Andrew, one, to know that you are in this sector doing what you do. And then equally honored to have you, your voice, your expertise on, to share with everyone today on the nonprofit show. So welcome. Thank you. Thank you so much for having me. I'm excited to be here. Absolutely. You know, it's such a great topic. And I love that you come to us as an expert and a consultant in the space so that you have some, what, of an agnostic approach. And this is, so this is really cool. You're not just saying come with me and join my group. You're giving us a much bigger, I like to say the umbrella approach. So fiscal sponsorship. Okay, question number one. What the heck is it? It's a great place to start, Julia. So a fiscal sponsor is essentially an existing nonprofit. Usually we're talking about 5123s. Although sometimes we're talking about 5124s or even other C numbers. But it's an organization that essentially takes either an existing organization or a new organization under its wing and provides back office services, usually in exchange for some percentage of the funds raised by that project. And also that project gets to make use of the existing organization's tax status. So their employer identification number, their 5123 status. So it's essentially a way for usually a smaller, new organization, although not always, to start sort of their journey as a nonprofit without going down the path of incorporating, going to the IRS, doing all the filings, to worrying about all the HR, worrying about all the legal, the insurance, you know, all that fun stuff. And being able to just focus on usually the mission, the work, and the fundraising for that work. So I always say, if those two things are not what you want to do, then you shouldn't be in fiscal sponsorship. You probably shouldn't be a nonprofit. But fiscal sponsorship really allows people who don't come with that management background, that finance background, that filing and IRS and all that kind of stuff, which most people don't get in a nonprofit to run payroll, to sign insurance contracts. Allows them to really focus on the work and the support for that work and let other people who know what they're doing, who do it every day, sort of handle all the back office. Is fiscal sponsorship ever done across state lines? Or so, for example, do you find that they're normally going to hold to a region or to a state? Yeah, that's a good question. So there's lots of different kinds of fiscal sponsorship. There's lots of different kinds of fiscal sponsors. And part of the issue with this field is that we've shoehorned a lot of different things into under one name, which the name actually doesn't even describe what it is. So a lot of people here at fiscal sponsors, they think of like, oh, it's a fund bear, it's a foundation, we're going to provide you a grant. It's none of those things. But to answer your question, there are some that are focused on a region, some organizations. There are some that are focused on a specific sort of area of service. So it might be environment or health or veterans affairs. And then there are those that are agnostic in both categories. So you might find a sponsor that works with projects that are across all 50 states that do everything from kids focus things to pet focus things to environment to whatever. So there's really a range. Those are sort of the two like axes of things that we look at. Interesting. Interesting. So then you've mentioned a word at a term. And I'd love for you to also maybe explain a little bit more about this because you've used the word project. And I hear this a lot with fiscal, fiscally sponsored projects, you know, we, we have a project. And I'm wondering, is that what is that like a specific action or mission that needs to be accomplished as a time sensitive or what does that look like? So fiscally sponsored project is really a general term. That is, you know, if you think about there's two participants in a fiscal sponsor relationship, there's the sponsor, which is the existing 511c3, let's say organization. And then there's the project, which is usually the one that comes, you know, underneath is going under the umbrella, if you will. And so it, you know, it's a synonym for nonprofit organization. I mean, some people say, well, I'm an organization, I have a nonprofit, you know, there might be other fiscal sponsorship, they might not write, it could be sort of a very specific way of talking about that. But there, you know, you sort of hit on an interesting point, though, Julia, that fiscal sponsorship is good for a lot of things. It's not good for everything, but it's good for a lot of things. And in addition to sort of a, you know, let's say a standard nonprofit organization, if such a thing exists, it's also good for things that are maybe time delineated, that have an endpoint, or that are, you know, I see a fair number of seasonal projects. So things, if you do a charity, or some sort of concert every year, every summer, to benefit, you know, some group of organizations in their community or whatnot. And you're not really active the whole year around, it's really just a few months. That's a really good candidate for fiscal sponsorship, usually, because why do you want to have to keep up with all of your, you know, your accountant and your lawyer and your insurance and all this stuff all around the year, if you really are just only active for a few months. So there's lots of sort of different things that end up under fiscal sponsorship that I think are really well suited for that, rather than trying to go the traditional route. I love that you explained it that way, Andrew. And I'm gonna, I'm gonna be a little bit more bold to say what I've seen in the sector. We often see nonprofits that have one program, right? They do one thing, in which case it might be the project of the organization. So similarly, like a music festival, let's let's use your example, right? Maybe you do one thing, well, that's actually could be considered a project and not a nonprofit. So to your point, right, instead of carrying all of these insurance and the day to day activities and the cost of day to day activities, it might be worth considering a fiscal sponsored project for your organization. I know Andrew, so many organizations, I use the analogy that they're constantly pushing this boulder up a hill, right? They're constantly pushing and they're, they're tired, they're exhausted. And it's like, have you considered making your life easier by partnering with a fiscal sponsor? Because this is an opportunity and something very viable and worth considering in our sector. Yeah, no, I agree 100%. I mean, I think, you know, we've been talking about and sort of the traditional fiscal sponsorship conversation happens around new organizations that are starting that haven't yet gone through the IRS process. But, you know, given the last year and sort of all the things that have happened in the nonprofit world, even before COVID, you know, the thing that drew me to this, this area of nonprofit is that there is a lot of, of excess, right, of things, the small organizations, we know there's a ton of small organizations out there. And do they really all need to understand how to do, you know, accounting, finance, legal, payroll, whatever? No, right, if you're an all volunteer organization, or if you're a even a one or two person organization that has, you know, a budget that's $50,000, $100,000, you know, if you could pay eight, even 10% of that, right, to somebody to get all of these services and take that all off your plate, wouldn't that make your life easier, wouldn't that allow you to devote more time and energy to the mission and the change that you're trying to make? You know, that's that's the thing that I really like about it is sort of the removal of excess and just sort of making it a lot easier. You know, not to mention even things like when you get to employee benefits and when you get to things like insurance, right, if you're part of a fiscal sponsor that has 200 employees, right, they get a lot better rates than you do as a three person organization. Exactly, exactly. And so there's there's also a lot of cost savings in there too. I love that. There's benefits. Yeah, there's benefits. You alluded, you know, maybe you pay 10%. Is there a cost fee, a structure with fiscal sponsorship? Right on cue, Julia, how much fiscal sponsorship charge? What should we expect in this category? Yeah, so as you might expect, there's a range of possibilities here. You know, I will say that at least 90% of sponsors, if not more, they will they do their charges based on the money that you bring in. So it's about what how much you fundraise. You know, and there's there we haven't really talked about this, but there's there's really two types of well known and most often used versions of fiscal sponsorship. So the one that we've really been talking about mostly is what's known as comprehensive fiscal sponsorship or model a by some people. And that for that, you're usually going to run in the most of them are in sort of the eight to 12% range. Some you might find a little bit lower, some are might be a little bit higher, depending on the kind of services they offer and the kind of work that they're doing. There's also a model C, which is we don't have a ton of time, so I don't get too deep into it. But it's, it's, it's a version that puts a little bit more of the administrative burden back on the project. And it's, it's usually as a lesser fee, but also you end up spending more because you have to get your own insurance and payroll and those kinds of things. So it's sort of like an intermediate version. Yeah. Wow. And over the cost of time, or over the cost, the, the, the cost benefit analysis, if you look at this, do you see organizations that are like, yeah, this works for like the first five years, or it can work in perpetuity. I mean, do you see that there's a point where it just doesn't make any sense? Yeah, I mean, you know, there's no blanket number, right? Everyone always wants to know that's the first question I get from people who are under fiscal sponsorship who are thinking about leaving. They say, okay, what's the magic number of the size of the budget when we need to leave? And, you know, you can always run the numbers, you can always figure out, okay, if we're a million dollar organization and we're paying 10%, you know, that $100,000, right, could we, could we get all these services for less? You know, the answer might be yes, the answer might be no, right, depends on sort of what your organization does, how many, how many staff you're going to need to hire to do this work, you know, what the services cost in your area of the country, all those kinds of things. But, you know, I've worked with organizations that are five, six, seven, eight, 10 million dollar organizations that are under fiscal sponsorship. And for different reasons, it makes sense for them to stay. And now for some, it may make sense to leave after, you know, after 500,000 or they're at a million, or, you know, so again, the numbers, it's not the end all be all. But the thing that I always look for when I talk to organizations and ask about is, you know, you started under fiscal sponsorship for a reason. And if it was for the reasons that we've talked about where it's, you know, less administrative work, you know, ability to focus on these things, I would say aside from the growth of the organization, like what has changed in your organization? Have you hired anyone that's going to do the admin stuff, the, you know, the back office stuff? Or is it going to be the single employee who's still there, you know, the EV or the two people who are there, you know, because it's a lot of work to take on. And so there's the sort of hard costs. And then there's the soft costs of, you know, all the space in your brain that you haven't had to worry about any of these things. Now you do. Well, and I think you need to think long term, right, if this individual or individuals is there and they're willing to take it on for how long, right? Are we talking now in three years, we're back to the drawing considering, you know, oh my gosh, we don't have these rules involved. So I think that's gosh, there's a lot to think about there. I'm curious, Andrew, I certainly don't mean to back you into a corner. How many organizations take advantage of fiscal sponsorship? Do we know? I don't. That's not something that I'm aware of. Yeah, you know, it's interesting. There's no, there's no like national, there's a directory of fiscal sponsors, which we'll get to in a second. But there's no, you know, if you become a fiscal sponsor, there's no like box you have to check or letter you have to send or form you have to fill out and send it to the government. And so there's a lot of organizations that do this under the radar, right? And it might be for a project here for six months, and then they stop or they pick up someone over here, or maybe they have two or three. And so for those organizations, like we really have no idea, you know, and someone who wants to help those organizations, like I'll tell you, that's my biggest marketing challenge, right? It's finding organizations that don't know they're doing fiscal sponsorship or don't talk about it. Then there are the organizations out there who are doing it as their mission, right? And we know there's about there's probably about two to 300 of those that do all kinds of different types of fiscal sponsorship for different types of groups. And we know through some research that there's probably about six or 7000 projects under those that we know about. So if we my sort of estimation is probably that there's like 20,000 projects out there, even the ones that are sort of hiding in the in plain sight. So it's pretty small. I mean, if you look at the total number of nonprofits that are started every year and that exist in the country, it's pretty small. Do you ever see organizations that navigate away from their original structure and move into fiscal sponsorship? But let's say, you know, the the lifecycle of that organization dictates that they don't need that big thing. Can they move in that other direction? Yeah, 100%. 100%. In those cases, the barriers are usually more about people and personalities and egos of, you know, we created this thing, we're going to sort of give up, you know, people get really attached to an employer identification number, which is very strange to say and think about, but like, you know, having to give that up and say like, okay, now we're part of this organization, they say, oh, well, we don't want to do that. So, you know, but it's often in the best interest, you know, if your organization has been around for a while, and, you know, suddenly the ground sort of shifts under your feet and funding priorities move in different places. And that you need to really shrink your organization might make sense for you to go under fiscal sponsor. I love that you said there's a really humorous way we get really, you know, I forget what you said exactly is because I just caught me off guard but we get really, you know, tied to our EIA numbers. Yeah, I love it. I really do. Now, I was on a forum and chances are you were on it as well. I didn't see you comment, but I did see someone on, you know, the variety of forums that you and I follow in the non-profit sector, Andrew, and someone had made a comment that they are currently with a faith-based organization, a church, a congregation. And that actually was limiting their fundraising and efforts and initiatives because as most of you may know or not know, some organizations will absolutely fund faith-based and some will absolutely not. So it really does kind of, you know, put a divisive wedge in between, are we faith-based? Are we not? And then what's the pros and the cons because they exist on both sides. So this organization said, we think it's in our best interest to remove our affiliation with the church, with the congregation, so that it would then open up the ability to fundraise from non-faith-based funders, right, that will support that specifically. And they were looking at a fiscal sponsor and I loved that. I was like, this is perfect. This is exactly when you are an established program or project, you're pulling away from the organization in which you were tied to their EIN, right, and now you actually see a benefit that you can continue your project and your program, but under another umbrella, which would actually open up the ability for additional funds. Yeah, no, totally. And that's, you know, I see a lot of that, not just from, you know, religious organizations or organizations that are housed at religious institutions, but a lot of sponsors that do this, not as their mission, but as sort of what I call a side gig. They offer fiscal sponsorship to people in their community. And they don't want to do, you know, they don't want to allow those projects to hire staff. They don't want to allow those projects to do certain things because it makes their lives a lot more common. Okay, and quite frankly, it's not their mission to sort of incubate these projects. You know, a lot of them call me and say, our fiscal sponsor won't let us do this or the place where we started won't let us do this. It's time for us to go get our own 5-1-2-3. And, you know, they might be a $40,000 a year organization. They might be, you know, very small. They might really not be ready. And so it gives me a lot of pride when I can say to them, you know what? You actually should move to a different fiscal sponsor, one that does this as their mission, ones that offer all these services that you won't be restricted from hiring people. You won't be restricted from offering benefits. You won't be restricted from getting donations from certain, you know, certain funders. And it's like the, you know, this like light goes on above their head and they're like, this exists. Like I had no idea how it was possible. And so, you know, take something that they thought was going to be this slog to get a 5-1-2-3 and all this stuff that they were trying to avoid at the beginning and allow them to say, you know what? You're not there yet. It's okay. There's another path. That's why I say this really is the best kept secret. Like it's not talked about often. This is our dedicated episode on the topic, Andrew. So this is, you know, it is a best kept secret in our sector and it's got such viable, you know, strengths to it. I just think it's wonderful to consider. Yeah, I do too. Yeah. I mean, it's funny that you say that. I mean, there's a lot of people within the fiscal sponsor community. So one of the things I do is I host a weekly Zoom with between 15 and 30 fiscal sponsors every week. This started sort of, you know, similar to what you all are doing, started during the pandemic as a way to help people get together and sort of build community and understand they're not alone. Other people are going through the same issues and sort of talk through, okay, how do we solve some of these problems? One of the problems that we've had in fiscal sponsorship forever is that people don't know about us, right? Or not enough of the people who could really greatly benefit from this, really know that it's there and how it works. And so that's something that we're constantly working on and trying to figure out how to improve. And it's such a niche market. It really is. So it's I'm glad to know that that's something that came out of the pandemic. We always like to share a little bit of those silver linings, you know, yes, it's been really hard and we were talking in our chitty chat chat. It's been a year. We have been in this pandemic, you know, a little over a year or no, almost a year, sorry, correct that. And so to know that that came out of it, I can imagine as a silver lining for everyone that joins you on this conversations. Definitely. It's amazing, you know, it's hard to believe that our time is almost up and I could talk to you about this for so much. But I don't want to leave this episode of the nonprofit show without asking. So if this is such a great thing, and this is such a wonderful thing, how do we find one? Like where do we go? And to get ourselves engaged in this? Whether we're coming in or going out of a regular structure? Right, right. So I mentioned before, there is a directory. There's a website called fiscalsponsoredirectory.org. That's the address. So that is a place where you could definitely go and you can see those 200 to 300 organizations that have self self reported that they're doing this. And some of them are doing it, you know, they have some of the biggest fiscal sponsors in the country have three and four and five and 600 projects underneath them. And some of the ones in the directory only have, you know, one or two, which is totally fine. But it's a good starting place. I will also say that, you know, a lot of people look, you know, go to that site and they're like totally overwhelmed. And you know, even if you can look at it by state, you can look at it by, you know, area of focus, still a lot to go through. So if you're thinking about sort of in your local area, I always, I always give people a few other suggestions as well. So one is if there is a nonprofit, like a nonprofit center that does, you know, teaching and learning and technical assistance kinds of things, that's a good place to start and don't ask if they know of anybody who's doing fiscal sponsorship. Community foundations are also a good place to go and ask. Some of them actually do fiscal sponsorship themselves. If not, they probably know people who do just because they're funding things and they're sort of in connection. In some communities, United Ways do fiscal sponsorship, depending on the kind of work that you're doing. I did not know that. You did neither. Yeah. Wow. It's not a blanket thing across. It depends on the individual chapter. But those are three other places to go to ask who's doing this in my community, right? Because that's where you want to start. Wow. Amazing. Well, it's such a great topic. And I think that, you know, we have this new generation, millennials and the Zers that are so engaged in public service in this concept of philanthropy. We're seeing major universities offer education about this, not just one-offs, but actual degreed, you know, fields of study. So I just feel like the whole aspect of the sector is on a trajectory to really grow. And, you know, you can't argue with passion, but you can argue with management. And you know what I'm saying? And so, man, I just love the concept of this. I just think it opens up so many more doors for people that want to do good. You know, they want to do really something of import. And yet they weren't trained, as you mentioned, right off the bat, you know, to figure out insurance and HR and all this other stuff. Yeah, no, it's true. And there's a whole, which you didn't even touch on, there's a whole equity part of this too, in sort of opening the door for more people to get involved and to start organizations and make these changes without having all these barriers in front of them to allow more people to participate in making change. Great point. Yeah, thank you for that point. Yeah, really good point. Well, I think that we're going to have to revisit this topic. I mean, we've had over 240 shows. And as Jared mentioned, you know, we've, we bring this in and we chat about it. We've never actually had an expert in. So we're really excited that you would take time and spend with us. Again, I'm Julia Patrick. I've been joined by the nonprofit nerd herself, Jared Ransom. And we have been so excited to have Andrew Shulman on with us. Shulman consulting, he's got a lot of really interesting articles and ideas about how this all works, how it might work for you. And so check it out, because I think one of the cool things is that sometimes we need a guide to help us through different parts of our service. And I don't know that that to me is is kind of how I see you is guiding us in. So shulman consulting.com, really an amazing opportunity. Wow, great way to kick off Monday. Don't you think, Jared? Wonderful way. Yes. And I want to make sure that we pull up Andrew's slide decks so that anyone can reach out to Andrew. I'm so glad to know that you're out here again in this niche market. I often refer individuals to you, Andrew, because it is not in my will house. And I'm like, if you want to talk fiscal sponsor, you need to contract contact and contract Andrew. So shulman consulting.com. Absolutely. So glad to have you have you here to talk about this. It's just wonderful. And I have a feeling, Julia, we're going to get some asked and answered questions about this. So we might be back in touch, Andrew. Great. I could talk about this for days. So happy to. That's when you're doing the right thing, right? Exactly. Right career. Well, it's really cool. And like I said, you know, we need in this sector all the help we can get. We generally don't need help with our passion, but we need help with how to implement that passion. So fiscal sponsorship is the way to go for so many of us. And Andrew, what a pleasure. And as I said to Jared, what a great way for us to kick off not only the week, but the month. And it's been a rock and roll and ride for us for the past 12 months. And we are coming up on our first year anniversary. And so I think this has been a great topic for us to broach. Hey, everybody. Again, I'm Julia Patrick with The Nonprofit Show. Again, like I said, joined by Jared Ransom. And we end every episode with this mantra. Stay well so you can do well. Join us back here tomorrow.