What is fiscal hosting?
Fiscal hosting is where a legally registered organisation (the fiscal host, also known as a fiscal sponsor) holds money on behalf of a community group, social movement or project that doesn’t have the capacity or desire to register as a formal legal entity.
What are the benefits of having a fiscal host?
There are many reasons why grassroot movements, community groups and organisations choose to be fiscally hosted. Below we’ve outlined the top three:
You can apply for grants and funding opportunities
Before funders can give out grants, they require a level of accountability that is normally provided by legal status e.g. a registered charity is legally obligated to use their money for their charitable cause.
A fiscal host acts as a guarantor for groups that are not formalised as a legal entity. In acting as a guarantor, fiscal hosts provide funders with legal assurance that the money will be spent according to the funding terms agreed.
Fiscal hosting allows you to respond fast
Many grassroot groups emerge through the need to respond quickly to a crisis. Registering as a nonprofit, on the other hand, can take several months. Even if you do plan to become a constituted group, a fiscal host can offer immediate credibility in the meantime.
You can spend less time on admin and more time where it matters
Having thousands of pounds going into someone’s personal bank account can quickly become problematic. Not only could it be taxed as personal income, but it can also lead to questions of trust and become a burden for the person responsible for keeping track of all of the incoming and outgoing money.
A fiscal host will safely hold your money in their bank account while still allowing you to access the money when you need to.
Some fiscal hosts (including us), will provide you with a platform where transactions (income and expenses) are transparently logged meaning you won’t have to spend time on reporting.
For larger groups, a fiscal host can help with bigger back office administration tasks such as managing payroll.
What is the difference between fiscal hosting and fiscal sponsorship?
There is no real difference between fiscal hosting and fiscal sponsorship. In the US you’ll likely see the term fiscal sponsorship used. However, in the UK you’re much more likely to see it called fiscal hosting.
Where fiscal hosting / fiscal sponsorship has been commonplace in the US for some time, it is only recently beginning to gain traction in the UK, particularly with the rise of mutual aid groups responding to the COVID19 pandemic.
The term ‘fiscal hosting’ was first used by Open Collective, a platform that connects groups fiscal hosts as well as enabling groups to easily track their incoming and outgoing expenses.
While both mean the same thing, we prefer the term fiscal host as it better encapsulates the relationship we have with the groups that we fiscally host. While we might ‘sponsor’ a group i.e. act as a legal guarantor, we also aim to provide a home where they can manage their money as well as access the support, network and resources to grow their impact.