United Charitable Programs as a Fiscal Sponsor Provides Financial Discipline, Transparency, and Accountability
UCP's professional standards of operations can ease concerns of nonprofit fiscal sponsorship in the philanthropic world.
Falls Church, VA, February 14, 2012 --(PR.com)-- Recent news in the nonprofit press about the reported collapse of International Humanities Center (IHCenter), a fiscal sponsor organization based in California, has raised real concerns in the philanthropic world (See The Nonprofit Quarterly, "Vanishing Act: Activist Groups Say Donations Disappeared with Fiscal Sponsor," Feb. 3, 2012, http://bit.ly/zmzxdU).
According to the article, some of the projects sponsored by IHCenter received correspondence from IHCenter indicating that it was unable to make disbursements in response to their check requests for money to cover current project expenses. Donations made to IHCenter, restricted to the purposes of certain charitable projects, were not available when needed by the projects. While the full story and the future of IHCenter may not be clear right now, many are asking, “What due diligence can be done when choosing a fiscal sponsor to prevent this from happening?”
UCP, along with its legal counsel, Greg Colvin (author of Fiscal Sponsorship: 6 Ways To Do It Right – the leading text in the field of fiscal sponsorship), have devised and adopted several precautions:
1. UCP clearly states in the fiscal sponsorship agreement, in writing to donors, and on IRS Form 990, that UCP treats funds received for the purposes of a project as restricted under the charitable trust doctrine. UCP can obtain unrestricted funds by charging administrative fees, but otherwise the funds dedicated to the purposes of one project may not be used to pay the expenses of another, or to pay UCP’s overhead.
2. UCP has internal financial controls that would prevent any one person from invading project funds. Since UCP, like many fiscal sponsors, centralizes check-writing authority for all projects in a few top managers, major disbursements require a second signature and a second pair of eyes.
3. The Board of Directors receives frequent financial statements showing the condition of UCP’s unrestricted general fund, to make sure that reserve requirements are met and that there is no improper “borrowing” from project funds.
4. Transparency. Project managers have immediate online access to financial statements showing the real-time condition of their project fund. The project’s fund accounting always shows cash on hand in excess of incurred expenses.
5. UCP never advances general funds to its sponsored projects. If the cash in the project fund isn't sufficient to meet its payroll or other costs, employees will need to be laid off and project expenses curtailed. Reliance on grants receivable, loans, and pledges is risky business. UCP ensures that its administrative fee structure can cover the costs of financial audits, controversies, full insurance coverage, and other elements of risk management.
6. The National Network of Fiscal Sponsors (NNFS) has published guidelines for best practices. These are a valuable resource for all concerned to determine whether a sponsor’s program is up to the industry standard. UCP adheres to all of the tenets set forth by NNFS.
United Charitable Programs is dedicated to managing all of its fiscally-sponsored projects with integrity. Its Board of Directors recently confirmed its restricted fund policy, honoring the intentions of project managers and donors.
UCP, like other national prominent fiscal sponsors in the field, believes that financial discipline, transparency, and accountability are the keys to supporting the good works of those serving their communities across the nation and across the globe.
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For more information about fiscal sponsorship of charitable programs, please visit www.unitedcharitableprograms.org. United Charitable Programs (UCP) is a 501(c)(3) nonprofit fiscal sponsor of active charitable programs. Our mission is to empower people to help others by fiscally sponsoring targeted charitable programs that effect positive change through charitable, educational, scientific, or religious actions worldwide. Our programs vary in size, budget and scope, but all share the desire to make a difference in the lives of others.
According to the article, some of the projects sponsored by IHCenter received correspondence from IHCenter indicating that it was unable to make disbursements in response to their check requests for money to cover current project expenses. Donations made to IHCenter, restricted to the purposes of certain charitable projects, were not available when needed by the projects. While the full story and the future of IHCenter may not be clear right now, many are asking, “What due diligence can be done when choosing a fiscal sponsor to prevent this from happening?”
UCP, along with its legal counsel, Greg Colvin (author of Fiscal Sponsorship: 6 Ways To Do It Right – the leading text in the field of fiscal sponsorship), have devised and adopted several precautions:
1. UCP clearly states in the fiscal sponsorship agreement, in writing to donors, and on IRS Form 990, that UCP treats funds received for the purposes of a project as restricted under the charitable trust doctrine. UCP can obtain unrestricted funds by charging administrative fees, but otherwise the funds dedicated to the purposes of one project may not be used to pay the expenses of another, or to pay UCP’s overhead.
2. UCP has internal financial controls that would prevent any one person from invading project funds. Since UCP, like many fiscal sponsors, centralizes check-writing authority for all projects in a few top managers, major disbursements require a second signature and a second pair of eyes.
3. The Board of Directors receives frequent financial statements showing the condition of UCP’s unrestricted general fund, to make sure that reserve requirements are met and that there is no improper “borrowing” from project funds.
4. Transparency. Project managers have immediate online access to financial statements showing the real-time condition of their project fund. The project’s fund accounting always shows cash on hand in excess of incurred expenses.
5. UCP never advances general funds to its sponsored projects. If the cash in the project fund isn't sufficient to meet its payroll or other costs, employees will need to be laid off and project expenses curtailed. Reliance on grants receivable, loans, and pledges is risky business. UCP ensures that its administrative fee structure can cover the costs of financial audits, controversies, full insurance coverage, and other elements of risk management.
6. The National Network of Fiscal Sponsors (NNFS) has published guidelines for best practices. These are a valuable resource for all concerned to determine whether a sponsor’s program is up to the industry standard. UCP adheres to all of the tenets set forth by NNFS.
United Charitable Programs is dedicated to managing all of its fiscally-sponsored projects with integrity. Its Board of Directors recently confirmed its restricted fund policy, honoring the intentions of project managers and donors.
UCP, like other national prominent fiscal sponsors in the field, believes that financial discipline, transparency, and accountability are the keys to supporting the good works of those serving their communities across the nation and across the globe.
###
For more information about fiscal sponsorship of charitable programs, please visit www.unitedcharitableprograms.org. United Charitable Programs (UCP) is a 501(c)(3) nonprofit fiscal sponsor of active charitable programs. Our mission is to empower people to help others by fiscally sponsoring targeted charitable programs that effect positive change through charitable, educational, scientific, or religious actions worldwide. Our programs vary in size, budget and scope, but all share the desire to make a difference in the lives of others.
Contact
United Charitable Programs
Julie Houk
703-536-8708
www.unitedcharitableprograms.org
Julie Houk
703-536-8708
www.unitedcharitableprograms.org
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