A new report commissioned by the Annie E. Casey Foundation and OSI-Baltimore provides context and insight into the fiscal sponsorship landscape in Baltimore and the barriers that block investment in BIPOC leaders and innovation. The report, “Mapping Baltimore’s Fiscal Leadership Landscape,” is an important step towards bolstering Baltimore’s fiscal sponsorship infrastructure as a way to increase funding equity and unlock the full potential of Baltimore’s BIPOC leaders and organizations.
Many of the most effective grassroots, community-oriented organizations in Baltimore choose to engage with a fiscal sponsor, either because they are not registered with the IRS as 501c3 non-profits or for a wide range of other reasons. Fiscal sponsors are 501c3-registered organizations that manage responsibility for other organizations’ grant dollars in exchange for a fee. Ideally, fiscal sponsors reduce the administrative strain on small organizations and allow them to focus on their core work. But without sufficient fiscal sponsorship infrastructure, the system can create a burden for grassroots organizations, making it more difficult for them to access capital and maximize their potential. This was brought into sharp relief last year when one of Baltimore’s largest fiscal sponsors, Strong City Baltimore, ended its fiscal sponsorship work after several local organizations questioned its accounting practices.
The report’s authors, Jonalyn Denlinger of J. Denlinger Consulting and Erika Seth Davies of the Racial Equity Asset Lab, tapped existing research and conducted more than two dozen interviews with stakeholders, including fiscally sponsored organizations, fiscal sponsors, public and private funders, and national thought leaders on fiscal sponsorship. They arrived at five key takeaways:
- The role of a fiscal sponsor is crucial to the ecosystem
- Infrastructure is essential but under-resourced across the ecosystem
- Complexity and capacity of organizations impacts the ecosystem
- Lack of options and choice creates challenges in the ecosystem
- The ecosystem is fragmented and causes harm
The report also includes short-, medium-, and long-term recommendations, including having funders pay fiscal sponsorship fees, building the capacity of fiscal sponsors, expanding the fiscal sponsor pool, revising grant disbursement policies, and leveraging impact investing strategies to invest directly in people and projects without the need for fiscal sponsors.
“The recommendations that came out of this project offer Baltimore an opportunity for the ecosystem to stabilize, expand, grow, and redefine itself in the coming months and years,” Denlinger and Davies write in the report’s conclusion. “They also provide a pathway for Baltimore to align with key national best practices and possibly set a new standard nationally for urban communities expressing a commitment to investment in BIPOC organizations and social entrepreneurs.”
Davies and Denlinger will present their findings to funders at a Maryland Philanthropy Network forum on April 28th.