In the world of social enterprise, people are trying out all sorts of approaches to funding and structuring their ventures.
A case in point is limited fiscal sponsorship.
I recently wrote about Boston-based Fresh Truck, which runs a mobile market that stops in low-income areas plagued by food deserts. A Benefit Corp., it also works through Third Sector New England, which is a nonprofit operating as something called a fiscal sponsor. TSNE can accept charitable contributions to support Fresh Truck's mission and then, basically, contract with the company to do work that furthers the goals of both groups.
Fiscal sponsorship, as it turns out, is hardly new. TSNE has been around since 1959. But its work with social enterprises is new. "Fiscal sponsors are evolving their practices to explore ways to support great ideas that benefit the greater good," says Josh Sattely, compliance and legal affairs specialist at TSNE, which works with projects and programs focusing on education reform, economic inequality and heath equity, among other areas.
Originally, TSNE started offering a program called comprehensive fiscal sponsorship. That means it carries out an organization's back office, human resources, accounting and other administrative and management functions and is the contracting party for contracts with vendors. The program's employees technically are employed by TSNE. It's all about allowing the client to focus on its core mission.
More recently, however, it introduced another type of activity. More limited in scope and still in the experimental stage, it allows TSNE to administer a grant and then make sure the recipient is doing the things it's contractually supposed to do with the money. The client is a separate legal entity responsible for managing its own tax reporting, compliance and liability issues. So far TSNE has tried this out with 15 organizations. For now, many are short-term projects, but that could change.
"We are learning a lot about what it takes to work with innovative companies and social entrepreneurs and hope to continue testing this model on new ventures," says Sattely. He emphasizes that these efforts are still in their infancy.
TSNE is not the only such group out there. The National Network of Fiscal Sponsors, an organization co-founded by TSNE, has 36 members. About half practice some form of the more-limited model. .
And social enterprises are testing out a variety of other structures, as well, challenging traditional notions of what it means to be for -profit or nonprofit and adopting new approaches. For example, there's the L3C, a type of mission-oriented LLC that, advocates hope, can attract foundation investment.
"People are experimenting with all sorts of structures that can help enhance social change," says Sattely. "This is another tool in the arsenal of social good."
