What is a fiscal sponsor? When someone wants to give money to your documentary project, who do they make the check out to? You personally? Your production company? Or is there a better option?
Unless you're Michael Moore and expecting to make millions in profits from your documentary, you are more than likely embarking on a non-profit endeavor.
Instead of investment capital (for-profit), you will be seeking out donations (non-profit). It is preferable to offer donors the option of a tax deductible donation/gift. In order for the donor to receive a tax deduction, the gift must be made in the name of a non-profit 501©3 organization.
You can either 1) create your own non-profit or 2) partner with an existing non-profit.
The only time you might want to consider creating your own non-profit is if you anticipate producing more than two or three documentaries. Otherwise it's probably not worth the hassle. (You have to create a board of directors, submit articles of incorporation, submit annual financial statements and sometimes you have to get permits for fundraising. Application and preparation fees can range from a few hundred dollars to $1500 depending on the type of non-profit you are creating and it can take many months for the application to go through.)
My personal recommendation is to find an existing non-profit organization to be your fiscal sponsor.
What is a fiscal sponsor? A fiscal sponsor is a 501©3 registered non-profit organization that agrees to “sponsor” or represent your documentary project.
They agree, in a sense, to become the project's parent or guardian. As your fiscal sponsor they accept and process donations on your behalf and then transfer the money to you.
It's optimal to have a fiscal sponsor
for several key reasons.
As a general rule, fiscal sponsors will charge a 5-10% management fee on all the donations that come in for your project. That covers staff time to handle all the paperwork and manage your account. You may even be able to negotiate other perks.
Carol Dean of From The Heart Productions says that as part of her fiscal sponsorship program, she provides filmmakers financial advice, guidance on fundraising trailers and help with proposal packages.
Examples of other organizations that
specialize in being fiscal sponsors for filmmakers:
As long as an organization is a registered 501©3 non-profit organization, they can be a fiscal sponsor. Be picky who you choose. And realize that the smaller the organization, the easier it will be for you to create a partnership (especially if this is your first project).
A common strategy for finding a fiscal sponsor is to pinpoint a non-profit that is aligned with the subject of your documentary. For example, if you are doing a documentary on the Civil Rights, you might try to find a non-profit that is focused on Civil Rights issues. With this strategy, the non-profit may or may not charge a management fee because your documentary will directly support their mission.
The organization can also be a great resource for providing potential leads for funding within the Civil Rights community.
For a comprehensive list of fiscal sponsors: Fiscal Sponsor Directory.
Ellen Schneider, former executive producer of PBS's P.O.V., is the founder of an organization called Active Voice. She recognizes that there are some touchy issues when it comes to filmmakers and funders.
“Who owns the rights if I give you money?”
“Can I see rough cuts of the film?”
Schneider says filmmakers and funders MUST have a clear understanding about the process before a partnership is formed and money exchanges hands. This issue also applies to fiscal sponsors.
Active Voice created “The Prenups” and identified three key areas that must be resolved before a filmmaker and funder should “tie the knot”:
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