Thinking About Fiscal Sponsorship: The Form 990 Black Hole

Thinking About Fiscal Sponsorship (full series)
Purpose and Politics | Pop Ups and Perpetuity
The Form 990 Black Hole | Potential Reforms

The Form 990 Black Hole

To understand the lack of transparency surrounding fiscal sponsorship, it is necessary to understand IRS Form 990. This is an annual return that most nonprofits are required to file with the IRS, and it provides considerable detail about the filing nonprofit’s financials, leadership, activities, and more. It is generally the most comprehensive source of information about a given tax-exempt organization’s operations and budget. Most nonprofits file the standard Form 990 (or a simpler variation called Form 990-EZ), while private foundations file the substantively different Form 990-PF. Although they are released on a somewhat delayed timetable, Form 990s are available to the public.

Form 990 typically contains almost no information about fiscal sponsorship. Sponsors are not required to report on their fiscal sponsorship activities or disclose any details about their projects, while the projects themselves do not file their own forms because they do not have their own tax-exempt status. Some nonprofits occasionally provide limited information about their fiscal sponsorship activities on Form 990, while others (such as Tides) list their projects online, but such ad hoc disclosures are neither required, comprehensive, nor particularly detailed.

This opacity can also extend to grantmakers, which might only report grants as having been made to a fiscal sponsor, without disclosing if the money was earmarked for a specific project. For example, in 2022 the Susan Thompson Buffett Foundation reported making numerous grants to major left-of-center fiscal sponsors such as the Hopewell Fund, the New Venture Fund, the Tides Center, and NEO Philanthropy on its Form 990-PF. Yet all these grants—and most others the foundation made that year—were simply described as having been made for “project support.” From its annual disclosures, it is impossible to determine whether the Susan Thompson Buffett Foundation designated any of this money for a specific fiscally sponsored project.

Contrast this with the Hewlett Foundation’s Form 990-PF from that same year, in which the foundation specified exactly which projects its grants were earmarked to support at each of those same fiscal sponsors. For example, it reported funding the Hopewell Fund’s Resources for Abortion Delivery project, the New Venture Fund’s Communities for Just Schools Fund project, the Tides Center’s Lawyering Project, and NEO Philanthropy’s Abortion Access Front project.

Many large private foundations provide a level of grant detail similar to Hewlett, but not all. Nondisclosure of grants to fiscally sponsored projects appears relatively more common at those nonprofits that file the standard Form 990 and its corresponding Schedule I, wherein domestic grants made by the filing nonprofit are to be itemized. Reporting practices vary considerably. For example, in 2022 Rockefeller Philanthropy Advisors simply reported that it gave money to the fiscal sponsor Social and Environmental Entrepreneurs for unspecified “general” purposes.

Compare that to the disclosures filed by Borealis Philanthropy that year, which explained that the group’s grant(s) to Social and Environmental Entrepreneurs were “to support the work of fiscally sponsored projects,” without identifying which projects.

Finally, compare those two examples with the Form 990 filed by the San Francisco Foundation in 2023, which is a near-exemplar of grantmaking transparency. Its Schedule I details precisely which fiscally sponsored projects that its grants to Social and Environmental Entrepreneurs supported:

Elsewhere, the San Francisco Foundation specified that its grants to the New Venture Fund supported projects such as the Trusted Elections Fund and All Above All, its grants to the Hopewell Fund supported Galvanize USA, and its grants to NEO Philanthropy helped fund the We Testify. It’s not perfect—the share of grant money allocated to each project is not specified, for instance—but this level of grants disclosure on Form 990 makes fiscal sponsorship funding considerably less “dark.”

In the next installment, one possible reform is to require nonprofits to report grants to any fiscally sponsored projects on an updated Form 990.