What is a fiscal sponsorship and an incubator program?

A fiscal sponsorship is when an organization sponsors project by individuals or groups who hope to create programs or projects but do not have the 501(c)3 status needed to be a tax exempt organization. The sponsoring organization (in this case, the Light House Project) houses these groups under LHP’s nonprofit status so that these individuals can focus on their ideas and missions rather than on how to go about starting their own nonprofit, as well as make their program immediately eligible for tax exempt donations and soliciting grants. The resulting programs are what we call our incubator programs.

Why does the Light House Project have an incubator program?

The Light House Project’s mission is to empower Muslim youth by giving them resources, a nurturing environment, and a voice to be able to pursue their passions and to do good in the community. By creating incubator programs that are led by and/or are for Muslim youth, we are achieving our mission. The work of these incubator programs allows the Light House Project expand its services and programs and ultimately spread its mission of empowering Muslim youth.

Why should a group or individual seek a fiscal sponsorship from the Light House Project?

Many people do not realize the amount of work and knowledge it takes to start a nonprofit organization. There is the business side of starting a nonprofit (accounting, finances, etc) and the legal side (liability, tax exempt status, etc). That work has already been done when the Light House Project was created, therefore LHP is able to help new start-ups sidestep that part of the process until they are on their feet, helping make changes happen in our community in a more efficient way.  In order for an incubator program to have the ability to focus solely on their mission and their work, it can use the LHP to take care of the legal work, the accounting and banking, and allow them to use their tax exempt status to collect donations from their supporters. In addition, being housed under the Light House Project brand gives a start up organization credibility and exposure in the community. The LHP also helps guide the incubator program in helping achieve its goals through the resources that would be available to them.

In what ways does an incubator program benefit from a fiscal sponsorship from the Light House Project?

  • Side stepping the set up process of a nonprofit organization
  • Being able to collect donations that are tax-exempt without gaining their own tax exempt status
  • Accounting and banking services
  • Guidance from an experienced board
  • Credibility of being under the Light House Project name, as well as exposure in the community
  • Office and meeting space at the Light House Project building
  • Ability to solicit grants which can only be done with a nonprofit status

How does the Light House Project benefit by being a fiscal sponsorship?

  • Expand our services and programs
  • Spread our mission of empowering Muslim youth

Are there any costs to becoming an incubator program under the Light House Project?

Being housed under the Light House Project means the LHP is taking on administrative and legal work associated with a tax exempt nonprofit. Therefore, LHP will take a small fee of 5% of the incubator program’s income to cover these administrative costs.

What does an incubator program have to do once it is fiscally sponsored?

  • Lead a project or program that aligns with the Light House Project’s mission
  • Track all expenses connected with the program
  • Submit a progress report on December 1 and June 1 of each year
  • Spend funds only for the program and in accordance with the budget submitted to the Light House Project
  • Comply with requirements and restrictions imposed by donors and the government

What does the Light House Project do for an incubator program?

  • Set up a bank account for the program under the LHP account to allow the incubator to accept donations and allow them to spend from their own account
  • Accounting services and bookkeeping
  • Give exposure in the community by speaking of incubator programs and their work at the annual fundraiser
  • Promote incubator programs events and projects
  • Offer guidance and support when needed
  • Provide office and meeting space
  • Due to the tax exempt status gained under LHP, the incubator is eligible for grants to support their project