Fiscal Sponsorship: What It Is and How YOUR Production Company can Benefit
Have you ever heard of fiscal sponsorship? It's a term that is becoming more and more popular in the nonprofit world and the world of film production. You may be wondering, what is it exactly?
Fiscal sponsorship occurs when a nonprofit sponsors a for-profit company financially. This ability to "sponsor" a company is granted by the IRS to a nonprofit 501(c)3 organization. This fiscal sponsorship can be beneficial for both parties involved. A sponsored for-profit company, including: Producers; Directors; Film investors; and Production Companies, can apply for and get financial support, AND the donors can get a tax deduction for their financial support. That sounds like a win-win scenario to us. Keep reading to learn more about fiscal sponsorship and how to benefit from it!
What is fiscal sponsorship?
It's when a non-profit organization, like Ascension Media Partners, agrees to sponsor a for-profit company by providing financial support as allowed by the IRS and granted to 501(c)3 nonprofit organizations formed under the regulations of the IRS. This can happen in many different ways but the most common is through tax-deductible contributions from donors.
Fiscal sponsorship is a formal arrangement in which a 501(c)3 nonprofit agrees to provide financial and legal oversight for a project or program. The project or program is usually created by an individual or group that does not have 501(c)3 status. This does NOT mean the Fiscal Sponsor has legal or financial control over the project. The Fiscal Sponsor, generally does NOT take control of your project. You maintain financial decision making, artistic control, and full "ownership" of the project.
Why would I need fiscal sponsorship?
There are many reasons why someone might need fiscal sponsorship. For example, let's say you're an independent filmmaker who wants to produce a feature film. You could create your own production company, but then you would be responsible for raising all the money yourself and dealing with all the financial paperwork. Or, you could find a fiscal sponsor.
The fiscal sponsor would become the official 501(c)3 (tax-exempt) entity behind your project. This would make it easier for you to raise money, because donors could make tax-deductible contributions to your project through the fiscal sponsor.
What is a 501(c)3 nonprofit?
To see the details of what a 501(c)3 is according to the IRS see here. Generally speaking, a 501(c)3 nonprofit is a corporation, organization or an individual that has been approved by the IRS to receive tax-deductible contributions. The general organization of most nonprofits are for religious, charitable, scientific, literary, or educational purposes.
Can Production Companies use fiscal sponsorship to pay for their feature film?
We are glad you asked because the answer is YES! Any production company can use the fiscal sponsorship process to finance their film project (this includes documentaries, music videos, informational forms of media, and media production of all types and sizes).
Fiscal sponsorship is a great way for production companies to get the financial support they need to produce a feature film. By partnering with a fiscal sponsor, production companies can receive tax-deductible contributions from donors, grants, and even government agencies. This can be a huge benefit for productions that are struggling to find traditional accredited investor funding.
There are benefits for both the sponsor and the production company.
The fiscal sponsor takes on a lot of the financial risk for the project. They also provide stability and credibility to the project, which can attract more investors. And because they are a non-profit organization, they may be able to access grants and other funding sources that would not be available to a for-profit company. The benefit to the fiscal sponsor is to be a part of projects and processes that support the missions and goals of a nonprofit fiscal sponsor. For example:
Ascension Media Partners website states they are, "Empowering storytellers to produce Christ-centered media to bring a legacy of hope to the world."
For the production company, fiscal sponsorship can provide access to resources and networks that they might not otherwise have. Financing a film in today's world is nearly impossible. Investors are always looking for new and better ways to make money BUT they also recognize the fact that a "tax deduction" is a wise "investment” also! A fiscal sponsorship can also help an executive producer of a film raise money through tax-deductible contributions from donors. And, as we all know, if the project is successful, it can lead to increased visibility and opportunities for future projects!
There are many benefits of fiscal sponsorship. Some of these benefits include:
You can solicit tax-deductible contributions from individuals and grant makers;
You may be able to apply for grants that require 501(c)3 status;
You can receive in-kind donations of goods and services;
You can enter into contracts that may require 501(c)3 status; and
Your fiscal sponsor can provide you with recommendations, mentorship, expert advice and a network you may not have access to alone.
What should I keep in mind when seeking a fiscal sponsor?
There are many other benefits to fiscal sponsorship, but there are also some things to keep in mind before entering into this type of relationship. First, it's important to make sure that the fiscal sponsor is a 501(c)(3) nonprofit organization. This designation will allow donors to take advantage of tax deductions when they contribute money to your production company. It's also important to make sure that the fiscal sponsor has a good reputation and is financially stable. You don't want to partner with an organization that is in financial trouble or that has a bad reputation.
Pro Tip: Do some research and talk to other production companies that have fiscal sponsors before you decide whether or not fiscal sponsorship is right for your company. If you do decide to go this route, fiscal sponsorship can be a great way to get the financial support you need to produce your next feature film!
How do I find a fiscal sponsor?
There are many ways to find a fiscal sponsor. You could ask your friends or colleagues if they know of any fiscal sponsors. You could also search online for fiscal sponsors. Once you have found some potential fiscal sponsors, you should reach out to them and see if they would be a good fit for your project. WE RECOMMEND ASCENSION MEDIA PARTNERS as your fiscal sponsor. You can see their information here: ASCENSION MEDIA PARTNERS APPLICATION
Ascension Media Partners is a fiscal sponsor that provides production companies with the resources and networks they need to produce their projects. They have a team of experts who can provide you with advice and mentorship, and they have a network of mentors you can tap into. If you're looking for fiscal sponsorship, we highly recommend Ascension Media Partners!
Fiscal sponsorship allows donors of a production company to take advantage of tax deductions when they contribute money. This type of relationship can be beneficial for both parties involved, but it’s important to make sure the fiscal sponsor:
Is a 501(c)(3) nonprofit organization;
Has a good reputation; and
Is financially stable.
LEARN WHAT INVESTORS ARE THINKING WHEN THEY INVEST IN A FILM OR MOVIE.
What are the next steps?
Now that you know more about fiscal sponsorship, you might be wondering what the next steps are. If you're interested in finding a fiscal sponsor for your project, there are a few things you should do:
Research different fiscal sponsors and find one that is a good fit for your project;
Reach out to the fiscal sponsor and introduce yourself; and
Submit an application to the fiscal sponsor.
If you have any questions about fiscal sponsorship, please feel free to reach out to us and we would be happy to chat with you. Thanks for reading!
Chair, Board of Directors
Ascension Media Partners