Fiscal Sponsorship 101: Alternative Financing Method for Your Next Project

What if you could tap into funding typically reserved for non-profits—without having to start one yourself? Join CFA co-founders Indeana Underhill and Haeleigh Royall on the latest episode of the Cinematography for Actors podcast as they break down the ins and outs of fiscal sponsorship and what it means for filmmakers.

We’ll chat about how fiscal sponsorship can open doors to tax-deductible donations and grants, the challenges of setting up your own charity, and why teaming up with a 501c3 like CFA can make all the difference. Plus, we’ll dive into the key elements of a fiscal sponsorship agreement and why it’s such a powerful tool for securing grants.

We’ll also walk you through how to qualify for fiscal sponsorship with CFA, from the eligibility requirements to the application process. You’ll get practical tips on building online donation pages, leveraging CFA’s industry network, and keeping strong relationships with donors. We’ll even touch on how to balance donations with equity funding and what it takes to wrap up your project with a fiscal sponsor.

Visit our website to learn more!
https://www.cinematographyforactors.com/fiscal-sponsorship-program

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Visit wemakemovies.org/insurance and use code CFA23 on your intake form for 10% off your quote.

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Transcript

Introduction to Fiscal Sponsorship and Funding

Speaker 1 0:00

A lot of people have donors, but they also have investors, yes. So with fiscal sponsorship, can they fund their film using both donations and equity?

Speaker 2 0:11

Yes, so you as a filmmaker are a for-profit entity. We as a charity are not. We will only process charitable contributions or donations where there is an incentive, where people aren't going to get a payback or percentage of net proceeds or revenue. This is the Cinematography for Actors podcast.

Speaker 1 0:34

More than a podcast. Cinematography for Actors is a vibrant community devoted to bridging the gap between talent and crew. Each week, our show offers transparent, insightful conversations with industry leaders. We unveil the magic behind the scenes, from candid discussions about unique filmmaking processes to in-depth technical exploration. Join us in unraveling the intricacies of filmmaking, one episode at a time. It's more than just cameras and lenses we aim to inspire, educate and empower as we peel back the curtain on the art of effective storytelling. Now on to the episode.

Speaker 2 1:09

Hi everyone, and welcome back to another CFA video of some sort. I think this is also going to be a podcast episode, just because then you can consume this material in any which way you choose, whether through our video channels or through our podcast. I am Indy Ann Underhill, one of the co-founders of CFA, and I'm joined by my other co-founder, hayley Royal. That's me, yay. And we're here at CFA Studio in Los Feliz, california, to talk about fiscal sponsorship, which is the newest addition to our 501c3 charity that CFA now is.

Speaker 1 1:40

So, welcome to a talk on fiscal sponsorship we teased this a few months back, but now we are fully ready. We're here With our handbook, with our fiscal sponsorship handbook, and we're ready to talk through it with you.

Speaker 2 1:54

Yes, okay, something really cool that happened that a lot of people missed was that we did a panel on fiscal sponsorship at Holly Shorts this year. So I think now more than ever, we're excited to dive in, because on that panel it was Haley and I, but we also had our treasurer Gabbo, and we also had Michael um from uh, who is a financial advisor and is in in amazing in so many ways. So let's dive into what fiscal sponsorship is one-on-one Um, because I think there are a lot of filmmakers that don't know that this isn't even an option.

Speaker 1 2:24

That's what we learned at Holly Shorts. There were so many people who joined our panel and had no idea that it was even a thing Like the questions afterward. You know, we didn't want to go too light, but there were so many people who came up to us after the panel and said what even is this Like? I didn't even know this existed and wanted to set up meetings just to talk about that. It's a possibility. So we think that it'll be a really cool thing to introduce this as a possibility to people who don't even know what it is and then tell you about our process and how our process will differ from other organizations out there that can offer fiscal sponsorship and how it's going to benefit you. Uh, building, building your product.

Speaker 2 3:08

So fiscal sponsorship in a nutshell, and we're going to follow our handbook a little because, um, you can email us for this or you can access it on our website under resources, um, but we're going to follow this quite closely so that you can follow along if you have it with you. If not, you can reference it later. Um, let's open it up, hayley, one of the things that's most important is to understand what physical sponsorship is, obviously. So I would put this under alternative financing methods. That's what we put it under for Holly Shorts, and what that means is that now you are able to access tax-deductible donations and grants funding that normally can only be accepted by a charity because, as a filmmaker, your project or your production company or community you're building can now go under us as an umbrella for a short term. So it's a defined contract with a beginning date and an end date, so that anytime within your contract terms you can accept tax-deductible donations for your project.

Speaker 1 4:02

Which means you don't have to incorporate your own 501c3. Yes, because, although it's possible, if you're doing a short-term project like a film, it sometimes can take up to a year and a half to get a 501c3 approved. So it just isn't tenable for a lot of projects. So it's better to find a fiscal sponsor so that you can accept those tax-deductible donations and grants.

Speaker 2 4:29

Yeah, absolutely. And one of the most horrible things about this process for filmmakers if you were to start your own charity is the amount of legal and financial burden that you would have at the end of the year. So instead, your fiscal sponsor handles that, which is great. Yeah, there's a lot of compliance, a lot of compliance.

Speaker 2 4:49

So your fiscal sponsor this is we're saying your, because obviously CFA can be your fiscal sponsor and you can apply for our website. However, I don't want this to just be about CFA. This should be education and context for you as a filmmaker, and so that's why we wanted to do an overview and so let's dive in. Yeah, what?

Speaker 1 5:08

are the things that you can expect to receive with fiscal sponsorship, tax deductible contributions.

Speaker 2 5:15

So now, people who are instead of donating to a specific charity that they have in mind, they can also donate to your film, which is now a charity.

Speaker 2 5:25

Under a 501c3 organization like CFA, you can apply for grants, the majority of grants there are some outliers, but the majority of grants actually have you required, you're required to have a fiscal sponsor and you need a letter of support, and so your fiscal sponsor can act as that letter of support and the umbrella in which you accept grant money. The thing to realize and we're going to dive into funding, but the thing to realize is that the pool of money that's being donated has to be addressed to that charity in order for it to be accepted as tax deductible. So if your film was called I have a Cat you know I love cats If it's called I have a cat and you need to raise $40,000, the $40,000 you raise has to actually be addressed to your fiscal sponsor. That then gets dispersed into your account separately. So your fiscal sponsor or us, we act as the middle person in that transaction, as long as you meet our mission. And what is our mission, haley?

Speaker 1 6:24

Our mission is empowering underrepresented and emerging filmmakers.

Speaker 2 6:29

Exactly so. If you are in the category of emerging or underrepresented, or both, then you are eligible to submit your project through an application process, and that varies based off of the missions of different fiscal sponsors, obviously, but that's something you want to check on their website, but that's ours.

Speaker 1 6:48

We have an application fee, as all other fiscal sponsors All almost all, all the ones that we've seen have an application fee. That comes with their application process. That comes with their application process Because part of the ethos of CFA is making things more accessible and making that barrier to entry lower our application fee. It will be about half of what you'll see out there. I also wanted to talk about the things that you can expect to get through fiscal sponsorship with us. In particular, every organization has different things that will come along with your fiscal sponsorship. Some can do, you know, mentoring, or there are networking events that they'll throw specifically for the people they're sponsoring, or events and training and things like that. For with us, what happens is you will end up with a purpose-built webpage that is a donation page, so it'll be connected to the donor box and people will be able to click on a link that you send them, see your page and everything about your film and then just donate through that page instead of having to send them to many different places. So it's a lot like if you were crowdfunding you would just put a link out. It's very similar, yeah, and makes it makes it easy, and we built that for you, so that kind of takes some of that work off of your plate. And then I wanted to take a minute to talk about the things that you can expect through fiscal sponsorship with us specifically.

Benefits and Requirements of Fiscal Sponsorship

Speaker 1 8:19

Like I said, there are a lot of organizations that have a lot to offer. You can get things that come with your fiscal sponsorship that range from a mentorship meeting or big networking events that are just for the sponsees. For us, since we're a smaller organization, we offer a more tailored approach to what you need. We can take on fewer projects at a time, so it means that you're going to be working directly with Indy and myself. What you can do through fiscal sponsorship with us, like all fiscal sponsors, is apply for the grants that you wouldn't be able to apply for without a 501c3 supporting you, and you can receive tax-deductible donations. That's true for all fiscal sponsors.

Speaker 1 9:15

You'll be able to fund your project through a customized online donation page. That is something that we build for you here at CFA. It's a page just like if you were crowdfunding. You would build a page through, you know, like Seed&Spark or GoFundMe, and then you would put that link out there and have people go there to donate. It's a lot like that, except it's not crowdfunding, it's. Any of your donors will be able to go to that page. It'll have information about your project and a donation button that is linked to your donor box that is specific for your project. We built that for you so that takes some of that work off of your plate.

Speaker 1 9:54

You will gain access to our network of industry professionals and resources. So if you needed to reach out to us and ask if we knew a sound mixer or if we had a relationship with a certain rental company, being sponsored by us means that we can will know you personally, because we're such a small organization and we're working so closely with each of your projects. We'll know what you need and who you need to be in contact with. So some of those things you won't even need to come to us for first. We'll be able to just connect you because we know what's up. You'll also benefit from sustained support throughout the project lifecycle, like I said, because we know what's up. You'll also benefit from sustained support throughout the project lifecycle, like I said, because we're going to be here with you from the beginning of pre-production until we close out the project with you as a team.

Speaker 1 10:56

Now I'm going to walk you through the application process for us. It varies everywhere. Every organization has their own way. You can look on their websites to find out. Ours is also available to read through on the website, but while I'm sitting here with you, I'll talk about it with you. So the types of projects that are eligible are organizations, communities, film projects, which include documentaries, feature films and short films that fit within our mission. Our mission is quite broad and that's because we want to make sure that things are accessible for our community. So we are working to empower underrepresented and emerging filmmakers. So if you fall into that category, your project probably fits.

Speaker 2 11:47

So I'm back, but she's right, it's broad and it's great because it means we can help the most amount of filmmaking teams. And we love most of you, I'm just kidding. We love all of you, so it's great that we can help everyone. We have some exciting news. Cfa has teamed up with we Make Movies to get you a discount on production management services, including access to comprehensive production insurance and workers comp for your next shoot. Visit WeMakeMoviesorg, slash insurance and use code CFA23 on your intake form for 10% off your quote.

Speaker 1 12:23

Yeah, projects that align with our mission and values are the projects that we can accept. And because every application is reviewed personally by Indiana and myself, we get to know your project inside and out and we know exactly how it aligns with our mission.

Speaker 2 12:36

And what's great about it is because it's I call it boutique, because we're tiny and we're growing, but we're able to handle a lot with our amazing team.

Speaker 2 12:45

But the best part is when we're reading through your projects, we know who you might want to be connected with.

Speaker 2 12:50

So when you come to us wanting a sound designer, or if you haven't thought about something we might be like, have you reached out to this person who did a film similar? Or they had a festival plan for this horror that was similar? We love being involved and we love being able to facilitate those connections, in addition to the charitable donations going into your account. So that's what's just so fun about being able to be fiscal sponsors for these projects. Yeah, the minimum amount to apply for our fiscal sponsor program and this varies so you want to check this on the websites of other fiscal sponsors but the minimum rate that we need you to raise for budget is $10,000. And that's because there's a lot of admin and legal setup required in order to facilitate those donations, and so anything below $10,000, it's not really worthwhile for either you or for us to facilitate that transaction and, in addition, you need to have a pretty feasible plan on how you're going to shoot it, how you're going to distribute it and how you're marketing that.

Speaker 1 13:44

All of that's obviously covered in the application when we review it so, once you apply, what happens is you send your application to us or any organization, and then that application will be reviewed.

Speaker 2 14:00

One thing to mention is a lot of our teams apply with pre-production in mind, and so they haven't actually shot yet. However, we do have a few projects that are in current production, looking to raise for a second round, or are in post because they need additional funding for VFX or color or festival distribution or some sort of strategy in post festival distribution or some sort of strategy in post.

Speaker 1 14:23

So then, once you finish your application process, if all of the detailed plans and things are met and we decide it's a great project for us to take on, you will get an acceptance email. It'll be exciting.

Speaker 2 14:36

So your acceptance email covers the financial agreement, so the fiscal sponsorship agreement that you'll have to sign. You'll have to sign up to our member portal in order to access a blank W-9, the fiscal sponsorship handbook and all of the forms, like disbursement of funds requests, as well as setting up our bank account linked to yours. And all of the other forms that need to be filled out will be based off of our website portal that you'll have access to. Now, depending on the type of project you applied with, you'll have a specific ID that we allocate that you'll be used for all of the future communication and the disbursement of funds, so that'll be your project ID specifically.

Speaker 2 15:13

Now, the biggest thing is, once we accept a project, we then have to set up all of the methods in which your funders or donors can donate and contribute to your project.

Speaker 2 15:25

So once you receive those documents, we then go into setting it up on our end, so that makes all of the actual financial obligation on us a lot easier to send out to your prospective donors so they can donate through checks, ach transfers, online donations, stock contributions which is a really interesting one as well as matching gifts. A lot of that information is available on our website on how that can be done and within our handbooks you can look further into that. But there's a variety of ways that people can donate. I think stock is the most interesting. We haven't seen it done yet, so I'm very excited about that. But if you think about it, it's a way of having people who have been sitting on a stock for a very long time and don't want to pay taxes on the profit they've made actually donating that to you, and then we convert that and cash out on the day we receive it so that we're not playing the market or anything like that.

Speaker 2 16:18

Yeah, I think that's important to say yeah, and we actually do it through DonorBox. So, yes, we are responsible for the intake of your donations and providing donation receipts above $250. That's just because of tax code. Anything below $250, we don't require. You don't require a donation receipt for that donor. So anything above $250 is provided a receipt and then we go that goes into our account and then you can disperse your funds in however many increments you'd like once you request it. Beyond what we're responsible for as the middle person there in the intermediary, you're responsible, obviously, for setting up your crowdfunding, reaching out to your private network. We do not solicit donations for you. We are just the carrier and the method in which we can accept them for you. So just keep that in mind. And that's pretty standard for all fiscal sponsors.

Speaker 2 17:12

One of the biggest things you need to keep in mind when applying for fiscal sponsorship is the percentage they take out of your donations. The standard rate is 5% to 7%. Cfa Institute is on the 5% level. Anything above or below that, I believe, should be a little iffy, especially when it's in the above 7%. We have a lot of FAQs in our handbook, and that's because there's a lot of things that you need to know when starting as a fiscal sponsor and sponsoree, and one of the things I want to make clear is that, for the purposes of CFA Institute, any charitable contributions must be from US-based or US or donors with taxable income in the States. That's really important. So you could be in Canada or you could be in the UK, but your donor has to have US taxable income, as we are a US charity, american charity, in 501c3. So it wouldn't be tax deductible if it's. I'm Canadian originally, so if it was Canadian income only, they wouldn't be able to file that at the end of the year because we're not currently a Canadian entity, right?

Speaker 1 18:17

Yes, and I wanted to talk a little bit about, um, why you can't just accept a donation from someone you know like. Of course, anyone can give you money and if they're like, oh, I don't care about this money, I don't need it back, that's fine. But in order for them to write it off on their taxes, they need to have the donation receipt that is provided to them by a fiscal sponsor that has the EIN of a 501c3 on it, or else it doesn't count as a charitable donation. So that's why it's necessary that you have a 501c3 supporting you, or your own 501c3 to accept tax deductible donations.

Speaker 2 19:00

Yeah, and one of the things you want to look at when applying for fiscal sponsorship to many programs or interviewing is asking their turnaround time from application to possible acceptance, because that'll vary based on the scale of the corporation or the company. So we say around 7 to 10 business days, because as we get busier, I imagine that that's just going to go up. However, currently we're experiencing like a one to five day turnaround for setting up projects, which is great. One of the questions we always get is what is the best time of year that I should be filming or funding, at least for my project, and does it make a difference when I'm asking for charitable contributions? This would obviously depend donor to donor and project to project. However, one of the things you need to keep in mind is tax season and when that is so in April, and know when that fiscal year ends for each donor specifically, and also if you're going to be applying for an individual specific donor or a company, because they both fall on different calendars for when taxes are due for them.

Maximizing Contributions and Closing Accounts

Speaker 1 20:01

Different fiscal calendars. There's also the idea there are a lot of organizations that solicit donations in a development period around the holidays. There is a lot of holiday gift giving from people who are generally giving money to charity. So it is a person-to-person basis, of course, but I think you are more likely to run into someone who's like oh, I already gave away all my gifts during the holidays, so earlier in the year you may be able to get in there and get some of that gift before they give it to their favorite charity.

Speaker 2 20:45

Yeah. And on the opposite side of that you can argue I think you know playing devil's advocate that at the end, closest to when they're doing taxes, they might find that they didn't give away all of their the ability for the charitable contributions based off of their household income and their percentage they're able to donate.

Speaker 1 21:00

So, like February is a good time to sweep up the leftovers, sure, yeah.

Speaker 2 21:06

But I would say, like have, the most important thing about our industry, regardless of fiscal sponsorship, is having long term relationships with people and not just asking for one off.

Speaker 2 21:15

So I think having check ins, like knowing I'm going to if I was going into production, you know, in November, having that check in as early as possible, knowing I'm going into November and checking in being like, hey, I'm going to start, you know, fundraising soon.

Speaker 2 21:29

I'm going to have a fiscal sponsor. That means that you can have a charity, like a tax deductible write-off, so please keep me in mind and maybe, like reserve some funds that would be awesome because I know you were interested in supporting me and then a few months later, when you have it set up with your fiscal sponsor, you can go back to them and say, hey, I'm ready, I have fiscal sponsorship. Can you do an online donation of X amount to support my project? So I think those annual check-ins or those quarterly check-ins are a really great way of not only building your relationship up as a filmmaker and throughout your career, but it keeps you on track to be accountable for what your projects are doing and not just, and also it makes you look more professional, because you're on it and you know your deadlines and your production schedules also that that donor will be thinking of you because they're seeing what you're doing a lot so they'll be keeping you in mind when they're making other donations.

Speaker 1 22:18

Correct, a lot of people have donors, but they also have investors, yes, yes. So with fiscal sponsorship, can they fund their film using both donations and equity.

Speaker 2 22:32

Yes. So you as a filmmaker are a for-profit entity. We as a charity are not. We will not take equity, we will not take investment and process that. We will only process charitable contributions or donations where there is an incentive, where people aren't going to get a payback or percentage of net proceeds or revenue. So that means, yes, you as your own person and team and filmmaking production company, whether it's an LLC, an S-corp or a C-corp, you can solicit equity, investment and deal with the cap table over there. We will only deal with charitable contributions. So we don't accept them.

Speaker 1 23:13

But yes, you as a filmmaker are able to do both equity and donor, and we don't even need to know or want to know about your equity investment. Yeah, we won't handle it just because we're a charity, so a lot of people also are considering having a fiscal sponsor and also crowdfunding, which is something you can do. There are rules around it and there are percentages around it that you should consider, because, depending on how much you're expecting to raise, it may change your decision.

Speaker 2 23:45

Yeah. So in addition to our 5% fee or a fiscal sponsor fee, whatever they set it as you're obviously paying to the crowdfunding platform, so you just want to keep in mind how much of that percentage of your budget is going to other platforms. Obviously, we act as an online donation portal, so if it's because you're worried about a method in which you're accepting donations, your fiscal sponsor should be able to handle all of those things, because that's what you're signing on to. Crowdfunding is a really great thing in order to just promote your website and your film and if you have a goal to reach, or you want to give something in return and send out newsletters to everybody that sign up and are your crowdfunders. But it's just something to consider because of the large amount of your budget that you're saying that you're going to be giving away. Also, fair market value is something that you need to keep in mind If you're saying you're going to give someone something tangible or a value back.

Speaker 1 24:41

Like a poster or a keychain or a DVD.

Speaker 2 24:45

Yeah, or a Blu-ray I should say, I guess DVD Then you have to deduct the cost of that good off of the donation, so you're not actually getting the full donation amount. So that's just something to keep in mind and that's called fair market value.

Speaker 1 25:01

So if you're like, if you donate $10, you get this enamel pin, but if the enamel pin, if the fair market value of that enamel pin is $2, then they only get a donation receipt for $8.

Speaker 2 25:14

Correct and we don't issue donation receipts unless they're $250. So if you say, for $250 donors or $500 donors, you're going to give them a ticket to the premiere and a DVD and a t-shirt and all of that costs you around $100, $125. You have to subtract that $100 or $125 off of the full donation in order to then claim that donation. So keep that in mind, don't forget. Yeah, fair market value and that's what's tax deductible at the end of the day.

Speaker 1 25:46

So at the end of your project you do have to end your relationship with us Not really. You can always be part of our community. We will want that. But there is going to be a formal closure of the project with us. There's a form on the website that you'll fill out. We'll kind of go through everything that happened and make sure that the reports are in line and make sure that all the taxes that need to be handled on our end, all the forms on our end, that everything's ready to go, and then we say goodbye and we close your account.

Speaker 2 26:20

Closing your account in closing your account.

Speaker 1 26:23

In closing your account, any funds that are left over are given to you as well. So if you came in under budget or you raised a little more, um, we still will only keep that five percent.

Speaker 2 26:35

You will receive all of the funds that you raise above yeah, and for any questions you can reach out to us at contact at cinematographyforactorscom, and you can also look on our website. Thanks everyone, thanks for Thanks for joining us. Bye.

Speaker 3 26:47

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