What is fiscal hosting?

Fiscal hosting, or fiscal sponsorship, is where a legally registered organisation (the host, or sponsor) holds and manages funds on behalf of someone else. By doing so they take fiscal responsibility (and often legal responsibility) for what happens with those funds.

In the United States, people typically say ‘fiscal sponsorship’; in other parts of the world, ‘fiscal host’ seems to be more common. We at interalia generally say ‘fiscal hosting’.

Formal fiscal hosting/sponsorship organisations are currently most common in the US but are also present in other regions of the world – for example, here’s a directory of African fiscal hosts. Because we often get approached by people who aren’t familiar with fiscal hosting, here are some commonly asked questions.

Why use a fiscal host?

There are many reasons why you might want to use a fiscal host, including:

Why might you not want to use a fiscal host?

1. If the operational needs of your project or initiative are extremely specific and you can’t find a fiscal host who meets those needs (eg. staff need to be employed in specific countries)

2. If you have operational or financial expertise on your staff, and/or the ability to outsource the specific financial services you need.

3. If you’re big enough as a project or team that it makes more financial sense to hire someone to take care of these services on your team, than to pay an overhead to a fiscal host.

What do fiscal hosts actually do?

It depends on the specific fiscal host (and there are many!). Typically, they offer administrative support and financial oversight and management, meaning that groups can focus on their core social change mission instead of focusing on the operations side of running an organisation.

You can learn more about the services interalia is offering here (link to services on site).

What can I expect when I enter into a fiscal hosting arrangement?

You’ll enter into a MoU with your fiscal host which sets out the terms of your arrangement.

If your are interested what that MoU looks like for interalia, don’t hesitate to reach out to us: hello@interalia.host.

What happens if I’m not happy with the services I’m receiving from my fiscal host?

This is one of the trickiest questions we came across in our research while setting up interalia. There seem to be a few options available:

We also heard of philanthropic foundations who make explicit agreements with fiscal hosts and/or with grantees, to give them a bigger say in holding fiscal hosts accountable for the services they provide.

At interalia we’ve established a complaints handling policy as well as a whistleblowing policy. Both offer detailed guidance about who you can contact within the organisation when problems arise. For both complaints and whistleblowing we are working with external counsels that can be contacted should internal mechanism fail to work.

What happens if I want to leave a fiscal hosting arrangement?

This should, ideally, be set out clearly by the fiscal host and/or in the MoU you signed at the beginning of the partnership. Oftentimes the reason to leave a fiscal host is a spin-out, meaning the creation of a project’s own legal entity. At interalia, we’re happy to support you in getting set up with your own organisation.

What does fiscal hosting cost?

Fiscal hosts typically charge anything from 6%-20% overhead. The amount they charge generally correlates with the level of involvement and time they make available for providing extra support – for example, with a low overhead cost, fiscal hosts might not be able to help with specific administrative or bureaucratic questions that go beyond their standard services. As Rayya El Zein writes about in her report ‘A Delicate Dance’ – the business models of fiscal hosts affect a great deal in terms of power and accountability.

At interalia, we’ve decided to charge 10% for now, and we are lucky to receive grant funding to supplement our staff costs and infrastructure. It has been well-documented that small fiscal hosts cannot cover their costs solely through overhead, though, which is why we’re also considering other business models for the future. There are a lot of ‘hidden costs’ in fiscal sponsorship: for example consulting with lawyers; ensuring high operational and digital security; introduction talks with people which don’t necessarily lead to project income; time taken to contribute to proposals which aren’t successful; keeping up to date with non-profit law and associated political changes; technical infrastructure costs; staff costs internally; and more.