The Fiscal Sponsorship Red Herring

I've been watching some friends and colleagues wrestle recently with whether to spin off an existing public interest project into either an independent non-governmental, charitable entity, or move the project to another larger non-profit to have it "fiscally sponsored." The basic idea behind fiscal sponsorship is that you convince another entity that has better back office support to accept funds on your behalf and manage your human resources and administrative support. A good example of this in my universe is the International Budget Partnership (IBP), an incredibly influential and effective international non-government organization (NGO) that to this day remains a project of the Center on Budget and Policy Priorities in Washington, DC. IBP has a massive reputation but actually doesn't exist legally. Yup, strange.

Proponents of fiscal sponsorship argue that it's easier for a start-up NGO to be sponsored as compared with striking out on its own. Cost and unfamiliarity with the necessary processes to incorporate and manage back office services are cited as evidence, particularly for small social start-ups.

But I think that fear is a bit of a red herring and is inhibiting some groups from going independent when it otherwise makes complete sense. I thought I'd tick off what it took to start Global Integrity in both time and cost to prove that you don't need to be a serial social entrepreneur to start your own independent NGO.

1. The lawyers. It's true that you'll ned some legal help in incorporating your NGO and qualifying for charitable status, regardless of the country. This seems scary and expensive at first blush. But in my experience (creating Global Integrity and the Global Integrity Trust in South Africa, a separate legal entity) it's fairly easy to find good, affordable lawyers who know what they are doing. In both cases we spent no more than US$4,000 on legal bills and it took us no more than a few days to locate NGO-specialist attorneys in both Washington and Cape Town simply by asking around. Once you find the right lawyers, they take care of the rest, having incorporated thousands of NGOs over the years. You just fill out a ton of forms. Budget about three months for the whole process.
2. The accountants. Another fear is that keeping the books is scary, hard, and risk-laden. I agree that accounting is a fairly dim practice, but it's not that hard and there are loads of bookkeepers and controllers specializing in NGO accounting. Nor is it expensive. Most start-up NGOs probably don't need a bookkeeper coming to the office more than once a month, and even if you are paying US$75/hour at the high end that's not going to break the bank. There are even entire firms specializing in placing non-profit accountants with NGOs on a part-time and ad hoc basis.
3. The HR/Admin stuff. A third category of concern for those weighing incorporation versus fiscal sponsorship is the mess that is back office operations: insurance, human resource issues, rent, and technology. But it is increasingly easy to outsource the majority of these functions. At Global Integrity, our myriad of insurance policies are handled and adjusted by an independent insurance broker with yearly check-ins. You can always find template employee manuals to crib from, and payroll can now be managed online and on the cheap through a variety of automated payroll providers (I once famously processed biweekly payroll from my hotel room in Nuku'alofa, Tonga). The advent of cloud-based computing has often rendered the need for an "IT guy" obsolete.

Is setting up an international NGO easy? No. Is it impossible? Certainly not. Is it worth paying an umbrella fiscal sponsor like the Tides Center 15% of your total revenue each year just to manage your payroll and insurance? Heck no. Social entrepreneurs would do well to think twice before embracing the fiscal sponsorship model.

Why I Don't Read Anything

I often remark publicly that I never have time to read anything of substance, even in my own field of practice, and certainly don't have the time to read dense, peer-reviewed academic work. I probably read about one academic paper a year, and most of that "reading" is skimming. This is half my fault (not making time for important reading) and half the authors' fault (I don't want to read 15 introductory pages of lit review and rehashing what others have already written). But at some point the daily schedule itself truly gets in the way of any serious reading -- or even thinking -- about the issues we work on. That's a problem and it worries me. Without wanting to come off as a martyr, here was my day today (1/12/2012):

6:00 am - Wake up after 5.5 hours of sleep 7:20 am - On bus into city, working for 45 minutes on laptop to clear out overnight email 8:30 am - At office; forget to dial into Foglamp staff call 8:40 am - Remember to dial into Foglamp staff call; rush call to make 9:00 am call 9:00 am - Call with Israeli and Croatian governments on Open Government Partnership 9:40 am - Get off OGP call, stare at more email, say hi to two colleagues returning from weeks overseas 10:00 am - Leave office to begin touring potential office space for envisioned "Transparency Hub-DC" with two other NGOs and real estate brokers. Inbox = 5 messages. 12:30 pm - After seeing six offices in two hours, do quick rehash and post-mortem on sidewalk at Farragut Square 12:45 pm - Grab cab to go see Affinity Lab up on U Street (for "Hub" inspiration purposes). Look at iPhone: 114 new messages in various inboxes. What. The. Hell. 2:00 pm - Leave Affinity Lab to go back to office. 2:15 pm - Order bibimbap for lunch at hole-in-the-wall across the street from office; begin killing off the 100+ emails on iPhone 2:30 pm - Say hi to colleagues, kill more email, wolf down bibimbap & Diet Coke 3:00 pm - Meet with USAID colleagues 4:00 pm - Email now down to manageable queue; respond to a few of the important ones 4:30 pm - Jump on call with Public Radio International and Center for Public Integrity to strategize about upcoming release of the State Integrity Investigation. 5:15 pm - Leave office to catch bus home; dial back into call on iPhone 5:45 pm - Call ends on bus; laptop opened to fight more email 6:15 pm - Take car to repair shop to fix flat tire; back on email in waiting area (thank you Mobile Citizen and 4G service from CLEAR) 7:30 pm - start writing this blog post 8:00 pm - (hopefully) leave tire shop, go home, give toddler bath and bed time routine 9:00 pm - (hopefully) TBD dinner. Debrief with wonderful wife on her day. 10:30 pm - (hopefully) sleep

Again, the point here is not that I'm any more important or special than other folks; it's when are any of us supposed to read anything of consequence? I'd welcome ideas and strategies for solving this!

How To Avoid Being a Toolish Program Officer

I've had the misfortune of raising several million dollars in charitable funding during the past few years for Global Integrity. Non-profit fundraising is, to put it generously, a challenging task. Less generous descriptors including "soul sucking," "infuriating," and "demoralizing." But there's no point in whining about, because if you don't want to fundraise, don't start a non-profit. Get a job working for The Man instead; the Man will fundraise for you. Over the years I've had both the immense pleasure and extreme agony of working with a wide range of program officers at a variety of charitable foundations, multilateral institutions, and other private donors. I use "program officer" here to refer generally to anyone at the working level within a donor organization who controls, in whole or in part, whether non-profits get funded.

In working with both the great program officers and the hideous ones, I've witnessed a bit about what works and what doesn't when it comes to being an effective, above-average program officer. Or, to quote this post's title, at least how program officers can avoid being tools.

Top 3 Ways to Avoid Being a Toolish Program Officer

Be responsive and accessible. Even if the "response" is "Go away, I will never fund you in a thousand years," nothing insults a social entrepreneur or non-profit manager more than being face palmed by a program officer who refuses to answer simple queries or introductions. On the flip side, this attitude is so common amongst program officers that those that are responsive (even if the answer is negative) become instant legends and create thousands of fan boys and girls. This isn't trivial; these more responsive program officers end up sourcing better investments down the road because social entrepreneurs know they can come to them with ideas in a mutually respectful context.

Example: in late-2011 a colleague that runs a much larger and more well-known non-profit in my space made the very generous introduction to a large foundation with which Global Integrity had never had a relationship. Despite the personal introduction from this highly-esteemed grantee of the foundation, and repeated follow-ups by me, I literally never got a single word of reply acknowledging the introduction (never mind a courtesy 10-minute phone call or Skype chat). That is Being a Tool 101.

Be explicit with who really makes the decisions in your organization. Pretending that you the program officer, and only you, have the power to make funding decisions when in fact four of your bosses and your board have to agree, is misleading and erodes trust with your grantees. Being explicit about where decision making authority lies within the donor organization, and how best to navigate internal politics, helps align your interests with those of the prospective grantee. Smart program officers often enlist to help of their prospective grantees in working the internal politics of the organization, aligning their interests with the grantee's.

Contribute to the ideation process. Social entrepreneurs like nothing less than dead wood program officers who contribute nothing to their proposals and ideas. Paper pushing program officers should be replaced by Google Forms, immediately. The best program officers are the ones with enough confidence to work intensively with their prospective grantees to make their ideas better, not the ones who know how to fill out proposal templates the fastest.

Why I did this

This little website wasn't intended to be an exercise in self-indulgent narcissism but rather a tool of convenience: a hub of sorts for my various digital identities, as thin as they might be. Hopefully it's a place where folks can learn a little more about me and be directed to much deeper sources of insight and content than my brain. If you need to, good ways of contacting me are via the Global Integrity offices; you can also email me at nathaniel {at} integrilicio.us.