Fiscal Agency: Doing great ‘nonprofit’ work, without being a nonprofit

Sometimes I use this space to talk about important community topics, like last month where we discussed “period poverty.” And other months I might discuss ways to get involved, like with the United Way Investment (Grantmaking) process. But other times, I like to use this space to peek behind the curtain of the nonprofit world and get a better view of “how the sausage is made.” Sometimes sausage making is a messy process, and it is often dull, not being the thing that exciting narratives are made of. However, it is still important, so I like discussing it, even if it can be a bit of a snoozefest! So, strap in, because this month I want to discuss the topic of nonprofit fiscal agency… one of the most important things we do at United Way, and at the same time one of the snooziest!

What is a “fiscal agency?” Glad you asked! In a nutshell, fiscal agency is the process whereby nonprofit work can get done under the umbrella of another nonprofit organization, without having to become a bonafide nonprofit yourself. Oftentimes, I will be out in the community and invariably somebody will say something like “I was thinking about starting a nonprofit to do X” (whatever X is). And then, “How do I go about becoming a nonprofit? It seems like a lot of work.”

My answer to the above question will often be “Have you considered fiscal agency instead of becoming an actual nonprofit?” And then we will begin discussing what that means. There are a great many nonprofits in our community (MANY hundreds, in fact). Each one of them must do certain things to obtain and maintain that status. That includes having bylaws, filing with the state, doing nonprofit tax accounting, having a board of directors, obtaining IRS status as a nonprofit (typically as a 501(c)3 organization), as well as the normal things like getting insurance, retaining a payroll company, etc. And you would have to do all of that before ever getting to the point of doing the thing you really wanted to do to change the world – your “mission.”

Well, if you are in a fiscal agency relationship with another nonprofit, then you do not have to do much or any of this, and you can just begin changing the world, and leave the rest of it to the fiscal agent organization. At United Way of Greater Nashua, we do a lot of this type of work, and have for a number of years. Programs which run through our organization as fiscal agencies currently include all of the following: Grow Nashua (a program which focuses on urban farming and food systems), UpBeat New Hampshire (a program which teaches kids to play strings instruments in the schools), Meals Matter (a program which addresses food insecurity in the schools, including school lunch debt), Nashua Prevention Coalition (a program working to reduce substance abuse with young people), the Smart Start Coalition (a group working to improve systems and access to childcare), the One Greater Nashua Coalition (a program striving to create a welcoming community for all newcomers), and others. Each of these programs has a different focus and operates independently from United Way, but if they align their work with serving underserved communities in the areas of health, education, or economic mobility, we are glad to take them on.

As a practical matter, when one of these programs does a project, they operate as if they are United Way with regards to things like accounting or insurance but are independent in how they plan and execute their work. They are responsible for their own fundraising and general sustainability but operate more efficiently than other organizations since they do not have the additional administrative burden of most nonprofits. That is our job! I think you can see how this type of arrangement can be a real win-win for the community. We all get the benefits of the work done by these programs, without having to find a way to fund the back-office bureaucracy of an additional nonprofit organization. It also allows these types of initiatives to come up to speed more quickly, since they do not need to focus any effort on the organizational elements up front. By the way, it is a lot of work on our part to make this happen and does take resources to accomplish. We have been blessed with some grant funding from the New Hampshire Charitable Foundation to support us in this work, because they realize that the work is much more important than the number of nonprofits in the community. We thank them for their forward-thinking in helping us with at least part of the costs.

Oftentimes, it is also a goal of ours to serve as a launching pad for organizations, which then spin off and become nonprofits. Such has been the case with the International Soccer Club and Stepping Stones, both of which started out as United Way fiscal agency programs and then became their own organizations. But we can point with pride at having served to help give them birth!

So, the next time you hear someone say, “I want to start a nonprofit to do X,” be sure to mention to them the idea of fiscal agency, whether it be with United Way or under the umbrella of another more suitably aligned organization. They might find the approach attractive for getting started in realizing their dreams of making our community a better place. Working together in this way can really be a benefit to everyone and fits so well with our concept that GREAT THINGS HAPPEN WHEN WE LIVE UNITED!

Mike Apfelberg is president of United Way of Greater Nashua.