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Fiscal Sponsorship: Symbiosis in Action

July 13, 2011

A guest post by Annie Schmidt

Symbiosis literally means “together life.”   However, there are lots of ways to live together.  In the spectrum of symbiotic relationships, some are win-win (mutualism) and some are win-lose (parasitism).  Here are a few fun symbiotic examples (from the win-win end of the scale):

  1. Lichen.  Lichen is a composite of algae and fungi.  Fungi provide the conditions for life and the necessary growing environment (shelter, moisture) and alga photosynthesize, providing food for the fungi.
  2. The hermit crab and the sea anemone.  The hermit crab and the sea anemone live together to protect each other from predators and have access to nutrients.  The sea anemone perches on the outside of the hermit crabs shell, providing protection, while the hermit crab provides valuable nutrients to the anemone.
  3. The ostrich and the zebra.  Ostriches have poor hearing and zebras have poor eyesight.  So they hang out together to warn each other of approaching predators.  Symbiosis through communication keeps them both safe.

So what is more symbiotic than fiscal sponsorship?  One organization accepts and manages funds for another.  Generally, the sponsoring organization is compensated with a percentage of grant revenue (in our case, around 10%).  It sounds simple and is clearly a win-win, right?  Not so fast…

When a sponsoring organization accepts funds, they also accept legal and financial responsibilities for the sponsored program.  That part of the deal is often overlooked.  Fiscally sponsored organizations or programs connected to a fiscal sponsor for the sake of grant eligibility or 501 (c) (3) status, without quality interaction with their hosts, place everyone at risk.  Instead of a quality symbiotic relationship, the fiscal sponsor and sponsoree merely coexist.  It would be like the sea anemone and the hermit crab standing next to each other and unattached.  As long as nobody moves, everyone is safe.  As soon as there is action, you have a situation where someone is likely to get eaten!

At its best, symbiosis is mutualistic and provides benefits to both organisms (or, in the non-profit world, organizations). At its worst, well, symbiosis is parasitic.  A parasite feeds at the expense of the host until the host is harmed.  Think Giardia.  Or roundworm.  Or the movie “Alien .”  When parasitism is bad, it is really bad.

This parasite eats the tongue of its host.

Now don’t misunderstand where this analogy is going; not all sponsored programs are parasites that will suck the blood out of a host.  And not all fiscal sponsors will leech so much time/money/energy from a sponsored program that the sponsoree is harmed.   My point is only that symbiosis (and fiscal sponsorship) can become parasitic.

This year, the Chumstick Wildfire Stewardship Coalition has been talking about sustainability, carrying capacity, evolution, and growth.  We have also been talking about fiscal sponsorship.  As a fiscally sponsored organization, partnership with our sponsor is critical.  Recent upheavals inside of our current sponsor, as well as our growth, have affected our relationship at a fundamental level.  It has forced us to examine our options: stay with our current sponsor, find a new sponsor, or become our own 501 (c) (3).

As we examined our options for fiscal sponsorship, a few lessons emerged from the ecological world:

  1. Attach like the sea anemone.  Don’t just stand next to each other.  Attach (with a written agreement) and move together (by participating in each others’ financial and legal decision making process).  No one wants to get eaten.
  2. Communicate like the ostrich and zebra.  Participate in the relationship.  Talk to each other often and pay attention to your shared environment.  Share your strengths and compensate for each others’ weaknesses.  Communication is in everyone’s best interest.
  3. Grow together like lichen.  Think about our lichen: as the alga grows, the fungus grows to enclose it.  As programs grow, the fiscal sponsor should grow.  Grow together, so nobody is left without shelter or food.
  4. Don’t be a parasite, part 1:  Be healthy and demand health.   When looking for a fiscal sponsor, or considering a potential program for sponsorship, make sure you are both healthy.  Parasites love weakness.  Is the sponsor sustainable?  How long have they been in business?  Have they ever hosted another program?  Do they have processes in place for communication and decision making?  Does the potential program make sense?  Is the potential program capable of completing its objectives without financial or program support from the sponsor?
  5. Don’t be a parasite, part 2: Be picky.  Parasites are opportunists.  Don’t just take the first warm body filled with blood that comes along.  Look for a sponsor or program that is a good fit for you.
  6. Keep examining your relationship. In the case of some mycorrhizae, which grow inside tree roots, they are occasionally completely absorbed.  The tree allows the mycorrhizae to exist for a time, while the mycorrhizae provide minerals to the tree and the tree provides carbohydrates to the mycorrhizae.  Sometimes though, the tree absorbs the minerals AND the mycorrhizae.   No more sponsored program, just the sponsoring organization.  Relationships that start out as mutually beneficial can change to parasitism… or worse. Don’t be afraid to communicate if you are starting to feel uncomfortable.
  7. Sometimes it is time to move on.   Remember our friend the hermit crab?  Its relationship with the sea anemone is not the only symbiotic thing it has going.  Hermit crabs live in discarded shells from other organisms.   As the hermit crab grows, it occasionally needs to discard the old shell and find a bigger one.  Sometimes as non-profits grow, they need to move on from the shelter provided by a fiscal sponsor and pursue shelter as their own 501 (c) (3).

So what is the Chumstick Wildfire Stewardship going to do?  We are still determining that!  However, regardless of our ultimate choice (old fiscal sponsor, new fiscal sponsor, own 501 (c) (3)), we are committed to avoiding the pitfalls of parasitism!

Author’s Note:  There are lots of great fiscal sponsorship resources available.  The NFF has posted some of them here.  To learn more about symbiosis and parasites, check out these links:

  4. (10 Most Terrifying Parasites Ever)

Annie Schmidt is the Director of the Chumstick Wildfire Stewardship Coalition.  She loves writing about non-profit ecology, though she finds parasites extraordinarily creepy.

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