What is fiscal hosting? A guide for funders
As funders committed to driving social change, you often encounter passionate, effective grassroots groups and community projects making a real difference. However, many of these groups lack formal legal registration, creating barriers to receiving direct funding. How can you support this vital work while ensuring accountability and managing risk? This is where fiscal hosting comes in.
What is Fiscal Hosting?
At its heart, fiscal hosting (sometimes called fiscal sponsorship) is about partnership. A legally registered organisation, like The Social Change Nest, provides the stable structure – the ‘nest’ – to hold funds on behalf of unincorporated groups, movements, or community projects.
We handle the financial administration and compliance, allowing them to access funding opportunities and focus their energy on their mission. It’s not about taking over, but providing the supportive infrastructure needed to thrive.
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How Does Fiscal Hosting Benefit Funders?
Integrating fiscal hosting into your funding strategy can unlock significant advantages:
- Expand Your Reach
Reach impactful grassroots movements, community initiatives, and social projects that may currently be ineligible for direct funding due to their lack of formal structure. Fiscal hosting bridges this gap, connecting you with innovation at the community level. - Streamline Grant Management & Reduce Risk
The fiscal host takes on the administrative responsibilities associated with grant management. They can sign grant agreements on behalf of the group and manage the financial administration, ensuring funds are used appropriately and reported on correctly. This reduces your administrative burden and mitigates the risks associated with funding unincorporated entities. - Ensure Accountability and Transparency
Reputable fiscal hosts provide robust systems for financial oversight. For instance, at The Social Change Nest (SCN), we offer options like Open Collective for transparent budget management or detailed transaction logs for grant-managed projects. This ensures clear accountability for how funds are spent. - Support Capacity Building
Fiscal hosts often do more than just manage money. They provide guidance and support to help groups develop their own governance and operational capacity, strengthening their long-term sustainability and increasing the impact of your funding.
How Does it Work in Practice?
While fiscal hosting arrangements vary, when you fund a group through a host like The Social Change Nest, especially when a formal grant agreement is involved, the process typically includes:
- An initial conversation takes place to understand the needs of the funder and the group, ensuring fiscal hosting is the right approach.
- We conducts due diligence, reviews the grant agreement details, signs the agreement with you (the funder), and the group signs a service agreement with SCN.
- You transfer the grant funds to us as the legal recipient.
- We hold the funds securely and manages payouts according to the grant terms.
- We help grant holders with financial reporting, such as transaction logs showing grant spend-down, as agreed with the funder.
The group maintains its focus on project delivery, while we handle the back-office administration and compliance.
Infrastructure Fee
Providing the robust infrastructure for managing formal grant agreements (including due diligence, agreement signing, fund management, reporting support, etc.) requires resources. For this specific service within fiscal hosting, we apply a 7% fee based on the grant value. Funders often recognise this value and cover the fee, we recommend discussing this possibility.
Partnering for Greater Impact
The Social Change Nest was founded in 2020 specifically to strengthen civil society by providing this crucial infrastructure. We’ve already helped over 600 groups unlock more than £23m in funding across diverse areas like social justice, climate action, and community wellbeing. By removing administrative hurdles, we empower changemakers to focus on what they do best.
If you’d like to explore how fiscal hosting could enhance your funding strategy, please get in touch or find a time to chat with a member of our team.
