Editor’s Note: Today’s post is by Dr. Katherine Skinner and Ms. Christina Drummond. Katherine is the Executive Director of the Educopia Institute, which she helped to found in 2006 to empower collaborative communities to create, share, and preserve knowledge. In this role, she has assisted dozens of communities in developing or refining their organizational frameworks, governance structures, and economic models to optimize their impact and their sustainability, as chronicled in Educopia’s Community Cultivation Field Guide (2018). Christina has built a career helping efforts scale their operational capacity. In addition to advising on the sunsetting of the Digital Preservation Network (DPN), and acting as lead facilitator for the It Takes a Village: Open Source Software Models of Collaboration & Sustainability project, she previously served as Director of Strategic Initiatives for Educopia from 2015-2017, and currently serves as the founding Executive Director of the OA Book Data Trust, a global effort to establish trusted mechanisms that facilitate the ethical, direct data exchange, aggregation and benchmarking of open and proprietary book usage data.
Home is behind, the world ahead,
And there are many paths to tread
Through shadows to the edge of night,
Until the stars are all alight.
Then world behind and home ahead,
We’ll wander back to home and bed.
-From “A Walking Song” (JRR Tolkien, The Fellowship of the Ring)
The quest for home is a familiar theme in mythology and literature. For some storied adventurers, a beloved home becomes unreachable during a challenging transition and the hero(ine) struggles to return to that safe haven (The Wizard of Oz, The Lord of the Rings, etc.). Others flee from constrictive environments and their adventures lead them to new homes (like in Harry Potter, Rapunzel, etc.). Still others build homes with varying levels of sophistication to ultimately find strength and safety in a community home instead of in isolation (e.g., The Three Little Pigs).
Grant-funded research efforts often begin under the auspices of an academic institution or a nonprofit organization. In exchange for “overhead,” the institution provides a comprehensive home base for project operations, including support for the research team’s HR, finance, compliance, legal, IT, and marketing needs. Once the pilot initiative demonstrates success, it needs to transition to a more sustainable arrangement to support ongoing growth, often beyond its initial “nest”. The project leaders — who usually hold faculty or staff appointments with other duties — must simultaneously maintain a project team, grow their product or service, publish and present, and cultivate community support. For example, a project transitioning outside of its university’s Sponsored Projects office must identify a new “sponsor” to act as its fiscal home or decide to become a fully independent legal entity — thereby taking on the full gamut of legal, reporting, and administrative burdens that are part of the invisible, “soft” infrastructure charged as overhead. Perhaps these challenges are why the pathway from grant-funded project to a sustainable operation is known as the “Valley of Death,” rife with large numbers of ideas and programs that didn’t survive the crossing.
If a program is to be operated over a long time span, it often is desirable to establish an independent nonprofit organization… For a temporary project, or one for which a long-term need is not yet assured, it may be inappropriate, even wasteful, to construct a new nonprofit organization, even though the intended product or service fits the legal definition of “nonprofit.” In such cases, a fiscal sponsorship arrangement with an existing nonprofit organization may be established to attain an effective base for operations (Gregory Colvin, Fiscal Sponsorship – 6 Ways To Do It Right).
The tasks faced during this quest for home are not for the faint of heart. Projects seeking sustainability require programmatic independence, operational scaffolding, and leaders must build out agile teams with complementary skill sets. No single solution fits all needs, and there are many administrative and hosting models to choose between. The promise and perils of the varied options are confusing, even for seasoned players, and trust is easily shaken. Recent musings on some of these options (Anderson; Poynder; Clarke & Esposito) have raised concerns over fiscal agency that were familiar in the 1980s and that belie the existence of today’s nuanced fiscal sponsorship models. Common in nonprofit arts and humanities circles are many sponsorship models that have been vetted by legal experts and foundations working to bridge the valley of death for community-supporting efforts (Colvin).
So, what are these options, and how might a project leader safely explore them? Below, we briefly map some of today’s most common models, relating what each is, what it requires, what benefits it presents, and what challenges it may pose. In spotlighting the variance within fiscal sponsorship pathways and models, we aim to aid the uninitiated project leads on their quests for programmatic homes as well as experienced travelers who may be considering a new model.
Home options (in order of increasing independence)
1. Don’t leave; stay with the parents – The original academic or nonprofit home
Many projects consider leaving the nest only to decide that staying put with institutional support is the best option given their level of (project) maturity or purpose. Efforts such as HathiTrust (University of Michigan), Library Publishing Coalition (Educopia), Academic Preservation Trust (University of Virginia), and Public Knowledge Project (Simon Fraser University) provide long-standing hosting arrangement examples that have endured over the past decade.
Those considering this model should formalize multi-year agreements with their host. We also strongly recommend that those embracing this path cultivate a broad set of internal champions on the nonprofit’s board or in the university’s administration who can advocate for continued institutional support across leadership changes and retirements. The benefits of this approach often include access to sponsored projects offices or their equivalent to assist with grant submissions and accounting, and to development offices or experienced fundraisers that can assist with donor cultivation. In some cases, institutions provide significant local funding and/or staff time and front a broad range of sunk costs. Risks to this approach include limitations on revenue generation options, operational and governance procedures (including community governance), and engagement with third party service providers, as projects on this path remain bound to the parent institution’s policies and core mission. It can also be difficult for these projects to fully document and understand their embedded costs, which can have dire repercussions if local support is withdrawn at any point.
2. Get adopted – Finding a new academic or nonprofit host
Affiliating with a new mission-aligned nonprofit or academic host can allow a project to disambiguate from its original parent institution’s identity and practices, while maintaining nonprofit status, establishing a more independent reputation, and gaining access to new business scaffolding that is likely to include familiar types of expertise in fundraising, communications, and community engagement. With solid mission and strategic alignment, a project’s relationship with a new academic or nonprofit host can closely resemble its former hosting relationship. Such projects will have to comply with the host organization’s policies and procedures, and remain aligned with their host’s mission, strategies and priorities. Examples of such relationships include the National Digital Stewardship Alliance (founded under the NDIIPP program of the Library of Congress, now hosted by DLF/CLIR); NERL (founded under Yale University, now hosted by CRL); ArchivesSpace (founded under academic libraries as two separate tools, Archon and Archivists Toolkit and combined into ArchivesSpace, now hosted by LYRASIS); MetaArchive Cooperative (founded under Emory University, now hosted by Educopia); and Software Preservation Network (founded under Cal Poly Tech and University of Texas – Austin, now hosted by Educopia).
Sometimes, projects leverage administrative resources by becoming programs within an existing nonprofit membership organization, thereby gaining direct access to consortial members as potential service users while reducing administrative overhead through shared services like invoicing, marketing, and communications. Risks associated with this approach may include user confusion over the program’s identity, competition with other member-based organizations with the same host, and managing evolving technical, strategic, and fundraising roadmaps should they diverge from the host organization’s own priorities. Other risks come from not fully understanding or documenting the relationship between the program and its host, including how the arrangement can be dissolved (and what belongs to each entity if this happens).
Finding a new academic or nonprofit host is not always straightforward or predictable. While a Request for Proposals (RFP) process can help a project team to document its needs and expectations, this approach will miss out on academic and nonprofit hosts that could be great partners but that either do not see the RFP or lack the bandwidth to respond. Direct communications with academic or nonprofit entities that serve as hosts to other programs may be the most successful way to find or forge a potential match. Community-led efforts must take care to stay transparent with members about any host solicitation or selection process to maintain trust among their key stakeholders.
When considering a possible academic or nonprofit host, project leaders should closely study the expectations and ensure their project can live within “house rules” (e.g., administrative costs, salary scales, project budget expectations, IP, accounting methods). Project leaders should especially clarify: a) grant submission processes, including whether they can approach funders directly and what happens if more than one hosted program of the organization wants to respond to the same grant solicitation or RFP, and b) exit strategies should the project’s directions diverge from the host’s mission and project leadership wishes to move on to another home.
Having project champions among the host organization’s leadership can help both with navigating processes and negotiations; yet project leaders must continuously track how their project fits within the strategic vision, mission, and priorities of any new host. As with “the original academic or nonprofit home,” the better the documentation around the arrangement, the safer the project and its host will be.
3. Find a dorm or apartment – The fiscal sponsor
In group-living arrangements, residents avoid the ongoing uncertainties associated with homeownership by letting a central office manage ongoing maintenance and repairs. Similarly, over the past two decades, specialized nonprofit organizations have emerged with missions focused on assisting efforts with the administrative and legal aspects of running a program. These fiscal sponsors provide shared back-office services to project teams that are most often structured so that each project’s community members must drive governance and strategy. Projects that work well with fiscal sponsors typically want to maintain control over strategy rather than ceding it (legally) to a nonprofit host. They also either don’t have or want the financial or staff capacity to justify independent legal incorporation.
Project leaders should research the requirements of fiscal sponsors much as they would research potential funding agencies and foundations, as some only work with projects in a given geographic region or mission area. The National Network of Fiscal Sponsor’s Member Directory provides a useful place to start. Services offered may vary, but commonly include accounting, legal, and human resources related to operations. Projects should be prepared to apply and go through a competitive review process to join a fiscal sponsor, setting aside 3-9 months to provide documentation and allow for board reviews on both sides.
From the Open Collective’s fiscal host programs which support 3000+ open-source software projects, to the New Venture Fund – fiscal sponsor of SPARC, to Educopia – fiscal sponsor of cita press, to the Code for Science and Society – fiscal sponsor to Invest in Open Infrastructure, there are a plethora of fiscal sponsor nonprofits with missions to help research projects and community efforts reduce operational overhead costs through economies of scale. Before reaching out to a potential fiscal sponsor, project leaders should review the eight models of fiscal sponsorship or similar documentation, as fiscal sponsor organizations will refer to these models by name (e.g. Model A). These models vary in terms of how employer-employee relationships are structured, project legal status, asset ownership, liability, and tax filing responsibilities. After learning of the models and myths of fiscal sponsorship, projects would be wise to budget time and effort for fiscal sponsor due diligence and the competitive, months-long consideration process that requires documentation about project governance and staffing, budget projections and secured grants, and strategic roadmaps.
4. Build your own house – Legally incorporate and sub-contract support
Many travelers go it alone, successfully building up their own operations. Projects with an established governance body have to take the first step by both a) empowering their board to take on liability and oversight for operations and finances, and b) by filing with federal offices to become an independent organization to facilitate tax filings (even as nonprofits), payroll, and financial payments to staff or contractors (e.g. Open Syllabus Project). Some projects incorporate as social enterprises (e.g. Archivematica’s relationship with Artefactual Systems Inc.), committing to generate returns for the public good while also generating financial returns for key stakeholders. Others may apply to join small-business incubator programs such as NSF’s National Innovation Network, or may found a nonprofit, e.g., DOAJ (founded under Lund University, now hosted by Infrastructure Services for Open Access C.I.C) or DSpace (originally founded by MIT and HP Labs, who jointly established DSpace Foundation, which then transformed into DuraSpace before merging with LYRASIS). Project leaders should be prepared to engage legal counsel to prepare and file incorporation documents and bylaws, engaging and preparing governance members along the way.
Founding teams missing key expertise can always access it via pro-bono assistance by board members or contracted services. However, managing these relationships takes time and effort. The biggest risks to this approach are burnout and liability during a critical growth phase, as founding directors support their boards while balancing day-to-day operations, project management, subcontractor oversight and fundraising. Projects going it alone will also not inherently be exposed to peer cohorts, thereby losing out on peer-learning opportunities, causing leaders to add this to their task list if they want to grow alongside their organization. Yet, if time is on your side, this path can provide maximum flexibility.
Hints from voyagers who came before:
Grant-funded initiatives transitioning out of their nest must always remember how complex their surrounding landscape is, even for those with a good roadmap. We recently shared a dozen tips on Educopia’s blog to help project leaders as they consider leaving their university nest. In sum, know your project’s worth and what you seek from a partnership in order to clearly communicate and set expectations with those you encounter on your sustainability journey to a new programmatic home.