In the 5.13.26 team meeting we discussed the possibility of having a nonprofit focused on NPPatch versus seeking fiscal sponsorship via another organization. I need to do more research on the pros and cons of each, but parking here to let the community weigh in:
What are the benefits and drawbacks of having a dedicated 501(c)3 organization vs. a fiscally sponsored organization? What seems like a better fit for NPPatch and why?
Given that Brandon has an already-recognized nonprofit that has a very (very) generic set of bylaws and that isn’t really being used, I think we should just take that over and start moving.
Personally, I don’t see any particular benefit to having a fiscally sponsored (second) organization. Based on what Brandon said in the Zoom yesterday, someone would have to do the legwork of reinvigorating Nonprofit Collaborative anyway. To do that specifically for the purpose of fiscally sponsoring NPPatch as a project seems like double work.
If NPPatch wanted to get fiscally sponsored by someone else, we’d have to do some legwork of our own. I don’t know those steps, but there has to be some burden. So, again, it seems easier to just repurpose Nonprofit Collaborative.
I tend to agree with @mkolodner - assuming we can use the existing structure of Nonprofit Collaborative, and ensure that the bylaws reflect how we would like to operate (and board member elections, etc) - I know Sarah Pilzer will have thoughts - then I say let’s just use Nonprofit Collaborative. Especially since there aren’t really “other” operations at the moment, so a fiscal sponsorship feels like another set of steps, when truly, we would be the only “program” of the nonprofit. The only hesitation I have is if Brandon does, in fact, want to use the nonprofit collaborative for more than just NPP, in which case I’m okay with being a fiscally sponsored program.
Agreed. Y’all convinced me during the call that in this case it makes more sense to shift The Nonprofit Collaborative’s primary focus to supporting the NPP given that there currently isn’t really anything else going on for them (us?). Though as @mbaizman alluded to, if we choose to go the route of using The Nonprofit Collaborative as our dedicated 501(c)3, there are still conversations to be had about leadership/governance at that entity.
@dospromptman mentioned during the call that just having a 501(c)3 doesn’t inherently protect the community’s interest in NPP never being sold, dissolved, or otherwise taken away. We will have to consider carefully how we write any bylaw amendments and/or change the structure of the 501(c)3 to achieve that goal.
If at some point, we realize that NPP does need to be for-profit (e.g. to be listed on the AppAgentExchange) we can look into a Perpetual Purpose Trust structure. But for now, nonprofit seems to me to be the way to go.
Agreed. Sounds good. Just need to sort out Nonprofit Collective governance to be NPP folks and maybe add a DBA as NPPatch so there aren’t issues with bank and other official accounts.
I agree with that direction, especially with Brandon’s offer. Sounds like there is enough expertise in the room to handle being a c3 of our own.
Just to state it out loud - which may already have been said on the call - there are some things we could be missing out on without fiscal sponsorship (depending on the relationship), such as not having administrative support, not having a team who can very efficiently make sure we’re filing what we need to, have the right documents, etc. When money comes into play, they could make that easier by managing finances and ensuring those funds are distributed correctly.
Based on my understanding of where we are (skilled, experienced with nonprofits, low dollar amounts, some amount of donation infrastructure already in place), I don’t think those are particularly compelling. The most compelling thing for me would be to exist among other projects doing related work, but that’s not a guarantee.
Thank you, @gregl, for clearly articulating that benefit of fiscal sponsorship! Brandon told us that as it is now, The Nonprofit Collaborative does not have staff or capacity to provide those services so it would definitely be up to us to take on governance/management of that org. @mbaizman mentioned Third Sector New England which might be a good option if we want to hand off more of the admin tasks to a different group of people, however, that comes with an associated cost (we’re not sure how much).
I think you’re right that for the time being we’ll be able to manage this in-house so to speak, but it’s good to consider how much capacity we really have for admin as volunteers.
Hi Folks - Eugene Chan here. New to NPPatch, New to the discourse. Been in the ecosystem for about 20 years. I was going to consult with EFF about the benefits of fiscal sponsorship vs c3 formation to get more of a legal best practice, especially around the idea of liability exposure. Would anyone object to me doing that and/or want to join in on en email conversation? If there’s enough interest, I’d like to contact them later this month. I don’t want to slow anything down or hash anything that has already been decided by this team.
Hi @eugevon welcome and thanks for checking in with the group! I would say let’s involve @BrandonMead since technically it’s his nonprofit that we’d be either fiscally sponsored by or “taking over” with this project. I’d lvoe to be on the email chain as well, and maybe @mkolodner and @charisevl would likely too. OH and @spilzer and @gregl too!
Thanks for the heads-up @mbaizman!
I’m not familiar with EFF but am all for getting a third-party opinion so everyone can make a more informed decision. Here are a couple resources related to fiscal sponsorship that other nonprofit founders have found helpful in the past. In general, NPPatch is at stage that I would usually suggest is a great potential fit for a Fiscal Sponsorship relationship (even if just temporarily), but if self 501c3 registration is inevitable, going straight to the long-term fit also comes with benefits. Likewise, different Fiscal Sponsor organizations offer significantly different pros/cons so which 501c3 to partner with for that sponsorship also makes a big difference and is certainly worthy of due diligence.
Regarding liability exposure, it’s been a few years since my nonprofit law class but a few basics to put out there: 1) most 501(c)3s are corporations which mitigates a decent amount of liability and 2) volunteer liability laws also exist to limit liability. Both of these would follow the 501c3 whether that is via self-incorporation or fiscal sponsorship. I’d also recommend some specific insurance coverages if/when NPPatch gets to a certain size; however, at this stage with volunteers only, that additional coverage may be considered a bit excessive for the current exposure. Though this is my personal/professional opinion, though I am not an attorney and I encourage consulting with a third-party legal advisor if available.
Lastly, I recently was made aware of another well established Salesforce adjacent organization that may be in need of a new 501c3 home. It looks like I’ll be advising them next week about options. Since I don’t yet know if NPPatch would like to utilize Nonprofit Collaborative in some capacity, I planned on mentioning it may or may not be available to help this other organization. The additional partnership and resources of another organization being part of Nonprofit Collaborative may be beneficial to NPPatch or it may not fit what the governance desired. We can continue discussing what would be most beneficial for this group and if another community organization’s partnership would contribute or dilute what’s best for NPPatch. Just wanted to mention it as a possibility for now and hope we have a chance to continue this discussion soon.
Thanks, Brandon! I’m leaning toward moving forward with making Nonprofit Collective the home of NPPatch. If you can share info about the other organization on our next call, I’m happy to think through whether it makes sense to join forces. I’ll pitch some times to talk next week.
Absolutely! @mbaizman @BrandonMead that all makes sense. Having a home sooner rather than later is good idea. I suggested EFF as they help with other open source projects of different sizes and complexities related to governance. I’ll reach out to see who might be a good contact person.
Glad we’re making progress.