Aside from a Jewish link, the nonprofit AgriGate, which connects Israelis with information on China’s agritech market, seems to have little in common with the Jewish Meditation Center of Brooklyn. And neither would seem to have much in common with Gather the Jews, a group that facilitates Jewish social and educational gatherings in Washington, D.C.
But though all operate as independent not-for-profit groups in disparate locales, all three also lack recognition from the Internal Revenue Service as tax-exempt charities. Instead, they have turned to fiscal sponsors — other groups that have established status as IRS-recognized charities — to whom donors make tax deductible contributions that go to these groups.
It’s an increasingly popular option for startups facing the challenges of launching a sustainable not-for-profit organization in the current economic climate. The organizations that take them on ease their transition into the not-for-profit world. But it’s also a strategy that is subject to few regulations.
“It’s a way for a program to get the funding they need without putting in place a whole fiscal or legal infrastructure that might not make sense when it’s at an early, embryonic stage,” said Andrés Spokoiny, President and CEO of the Jewish Funders Network. “The fiscal sponsor won’t necessarily be hands-on in the development of the program.”
Meeting IRS requirements for tax-exempt public charities can pose challenges even for older, established not-for-profit organizations. Recently, the Zionist Organization of America lost its tax-exempt status after not filing 990 forms to the IRS for three consecutive years. Storahtelling, a smaller not-for-profit that formed in 1999, was penalized for the same infraction in 2011. Hazon, a group devoted to Jewish environmental causes, now accepts tax-deductible donations on Storahtelling’s behalf as the latter organization works toward once again obtaining legal status as a public charity.
Hazon, which shares office space with the Forward in New York, also sponsors four other Jewish not-for-profit organizations: the Jewish Farm School, Wilderness Torah, Green Movement Amutah and Pushing the Envelope Farm. These organizations are all in their nascent stages and rely on Hazon for backoffice services as they grow toward becoming independent, IRS-recognized public charities, or 501(c)(3)s, as they are called, after the provision in the tax code that deals with their status.
Other Jewish groups that have recently increased the roster of not-for-profits they are sponsoring include Jumpstart, in Los Angeles, and Reboot and FJC, in New York.
Joshua Avedon, chief operations officer and director of Jumpstart, a fiscal sponsor of about a dozen Jewish groups in the United States and abroad, said there are two common models of fiscal sponsorship: a full-service option, in which the sponsoring group provides the fledgling group with comprehensive back office services, such as human resources and legal and payroll support, and a more limited charitable donor model, in which the sponsor’s main priority is to accept tax-exempt donations on the other group’s behalf.