What does it mean for the Effing Foundation to be the fiscal sponsor of a grantee?

While you don't have to be a 501(c)(3) organization OR have a fiscal sponsorship in order to apply for a grant, if you're selected to receive a grant, the Effing Foundation will become your fiscal sponsor. What does that mean?

If you aren't applying for a grant as part of a 501(c)(3) organization or as part of a group that has a 501(c)(3) organization as your fiscal sponsor, in order to receive funds from the Effing Foundation, you'll have to sign a fiscal sponsorship agreement with us. 

The fiscal sponsorship agreement says a couple of things:

  1. The Effing Foundation will do the fiscal oversight of the funds you have through us. That means that you'll have to follow our disbursement procedures to request money, whether that's paying you directly as a stipend or as reimbursement for expenses for your work (which has tax implications), or whether that's buying equipment for you or paying contractors on your behalf. That basically means that we have to have invoices or receipts for everything so that we can prove to the IRS that your funds are actually going towards charitable causes (in our case, sex-positive art/education.)
  2. We don't own any of your intellectual property. You keep the copyright to everything you make using our help.
  3. If you want to raise more money from donors (and give them tax deductions), you can do that! The money has to come to us first, and we will keep 5% of the funds we receive to cover our administrative costs. (The industry standard rate for fiscal sponsorship is about 10%.) This doesn't apply to your grant funds: it would be a pretty jerk move if we said we wanted to keep 5% of that! Our 5% fee only applies to any extra money you raise through us so that donors can get tax deductions.
  4. In order to make the guarantee to the IRS that our donors' dollars are only supporting charitable causes, the fiscal sponsorship agreement says that our Board has the final say on how funds are used. That sounds really scary! But that's the only way that we can make these grants and keep the IRS happy. The good news is that the Foundation tries to stay as hands-off as possible: we recognize that you know your own work the best. You're welcome to reach out to any of our grantees, or ask us for an introduction, if you want to hear directly from them what it's like to work with us.

You can absolutely apply for a grant and ask for things like funds to help get incorporated or apply for 501(c)(3) status. But because we'll become your fiscal sponsor if you get a grant, you also don't have to rush to incorporate. You can choose to use grant funds to help get your work going and then possibly become your own non-profit later.