Building a Collaborative Model: Fiscal Sponsorships
Collaboration with partner organizations at the state and national level was a centerpiece of Freedom to Marry’s work to win marriage from its very inception. Over the 14 years this central campaign existed, we partnered with numerous organizations of many different kinds – national LGBT organizations, national non-gay allies, gay and non-gay institutional funders, businesses and labor groups both big and small, progressive and conservative groups, state-level LGBT and allied groups, regional US groups, and even international organizations. We knew that winning marriage – especially winning in the court of public opinion – would take many players each bringing their pieces to further the shared strategy Freedom to Marry was created to drive.
As we progressed in the overall campaign to win marriage nationwide, Freedom to Marry learned new lessons at every stage and worked centrally to avoid repeating mistakes and reinventing the wheel.
From the beginning, Freedom to Marry pioneered new models for collaboration. We brought national gay and non-gay groups together in periodic conference calls to prioritize and coordinate action across the country. Freedom to Marry founder Evan Wolfson and board member Tim Sweeney led the creation of the Civil Marriage Collaborative, a core group of institutional funders who pooled funds and made joint grants to support the state-based work that was an essential and early element of Freedom to Marry’s Roadmap to Victory national strategy. Freedom to Marry regranted a quarter of our own funding to partners and allies, serving as a funding engine for the strategy and showing our commitment to “put our money where our mouth is.” Prior to morphing into the full-fledged central campaign in 2010, we helped create the “National Collaborative,” an experimental partnership of national advocacy groups and institutional funders who from roughly 2005-10 agreed to invest in a coordinated way in key, strategic states. And throughout, we recognized the need for local and national groups to work in concert to bring about the freedom to marry as quickly and as efficiently as possible.
In the first few years of Freedom to Marry’s work, state-level efforts were primarily driven by a state court legal challenge coupled with and supported by public education work designed to lay the foundation and create the climate for a positive outcome. In those states, we always pushed to achieve coordination among those helping in the effort. That allowed for sharing of effective messaging strategies, elimination of duplication of effort, and overall collaboration. However, as the work shifted more and more to legislative and ballot measure efforts after 2009 – work that required a unified campaign working swiftly and on all cylinders to prevail – a more structured method for collaboration and focused campaign capacity were needed.
That lesson was driven home after the heart-breaking loss in the spring of 2009 in New York. While a number of factors contributed to that painful stumble, one was insufficient collaboration among those doing the work in the state. When Andrew Cuomo took the Governor’s office in New York a year later with the publicly stated goal of securing the freedom to marry for all New Yorkers, we knew it was time for (and we had the incentive to force the creation of) a more structured collaborative model. That year Freedom to Marry pioneered a new joint campaign model, centered on a written agreement (a Memorandum of Understanding or MOU) that we signed along with the Empire State Pride Agenda and the Human Rights Campaign. Working together under a shared brand, each contributing a “pay to play” share, and with a shared work-plan and pooled resources, we launched New Yorkers United for Marriage (NYUM) and worked closely with the Governor and legislative leaders to secure a pivotal victory in July 2011.
That very first state-level MOU established NYUM as a fiscally sponsored project housed under the auspices of Empire State Pride Agenda with a goal of doing communications, lobbying, field, and online work to win marriage in New York. In addition to reflecting the work-plan and joint efforts committed to (including, for instance, the hiring of shared communications consultants), the MOU laid out the specific financial investment to be made by the three primary parties, how additional funds would be “credited,” what might be done with excess funds and email lists, etc., and how conflicts among the three groups would be resolved.
Freedom to Marry employed the New York MOU as the model for the nearly 20 other state-based campaigns we created over the next four years. Those campaigns and the activities reflected in the MOU’s and negotiations that they embodied were central vehicles for winning marriage in state after state, thus building momentum (as our strategy entailed) for the final national win at the United States Supreme Court in 2015.
We adapted this model to the unique elements of each state we worked in post-2011 – its politics, its strategic needs, the capacity of the local groups, and which national partners were willing to join us in working in that state. The MOUs became increasingly comprehensive as we added clarity regarding governance, oversight and selection of a campaign manager, levels and types of investment by the partners, organizational leadership, the role of the fiscal home of the entity, list management, and fundraising. Just as importantly, Freedom to Marry developed an expertise in both negotiating and bringing to closure the terms of the MOU, and the expertise and capacity to act as the fiscal sponsor. That last element meant we had to develop the internal systems and infrastructure to handle the financial, administrative, and human resource needs of local, coordinated partnership campaigns nationwide. Regardless of size, we could then create and guide affiliated campaigns nimbly at the state-level whenever called for.
By the time of the June 2015 Supreme Court decision bringing marriage to same-sex couples nationwide, Freedom to Marry served as the fiscal sponsor for 8 joint campaigns with budgets ranging from $100,000 to approximately $1,000,000:
- Respect for Marriage Coalition (2012)
- New Jersey United for Marriage (2013)
- New Mexico Unites for Marriage (2013)
- Why Marriage Matters Ohio (2013)
- Why Marriage Matters Arizona (2014)
- Nevada Freedom (2014)
- Nevada Freedom Action (2014)
- Hoosiers Unite for Marriage (2014)
- Michigan for Marriage (2014)
In addition, Freedom to Marry played a lead role in this model of state campaign in 10 other states where another partner organization served as fiscal sponsor:
- New Yorkers United for Marriage (c4 – 2011)
- Standing Up for New Hampshire Families (c3 – 2012)
- Rhode Islanders United for Marriage (c3 – 2012)
- Hawaii United for Marriage (c4 – 2013)
- Oregon United (c3 – 2013)
- Illinois Unites for Marriage (c4 – 2013)
- Freedom Oklahoma (c3 – 2014)
- Why Marriage Matters Colorado (c3 – 2014)
- Why Marriage Matters Pennsylvania (c3 – 2014)
Why Collaborative Campaigns – and the Implications for the Fiscal Sponsor
As we progressed in the overall campaign to win marriage nationwide, Freedom to Marry learned new lessons at every stage and worked centrally to avoid repeating mistakes and reinventing the wheel. For example, we learned through experience that when a legislative effort was gearing up in a state, it oftentimes didn’t work for national groups to inject large investments directly into what had previously been a small statewide LGBT organization. In many cases, those groups weren’t equipped to manage a campaign that could have a budget double, triple, or more than the organization had ever had. For national partners, in order for many to be willing to invest significant resources, they required having some governance role to ensure the funds were being spent most strategically and efficiently. And from an operational perspective, most state partners simply didn’t have the management capacity to double, triple, or more the staff.
To deal with these problems expeditiously and relatively non-divisively, while meeting the urgency of getting going or responding to an attack or opportunity, we found that creating a state-based, single campaign entity facilitated the ramp-up needed to win marriage in the state. A single campaign allowed national partners a governance role in the campaign, giving them the security to invest in the single campaign entity rather than running their own efforts, which posed problems of coordination and duplication. By establishing a well-structured campaign with clear objectives, strategies, and roles, we created a model for efficient decision-making and created a single locus of leadership for action, use of resources, and messaging. The state-based LGBT rights organization would always play a central role in the effort and had the confidence that, once the mission at hand was complete, the new campaign organization would dissolve and the state organization would have greater clout and assets as a result of having participated in the coalition campaign. Freedom to Marry’s track record of working in multiple states and investing resources rather than drawing funds out of the state – reinforced by our identity as an finite campaign entity aimed at winning and then closing, rather than perpetuating itself – helped bridge the occasional tension or turf struggles.
A necessary element was finding a way to create an organization that could function smoothly without having to establish a new corporate entity with IRS registration in every state. We needed to be able to move nimbly; having one of the core partners act as a fiscal sponsor allowed us to do that. Using a fiscal sponsor made it easy to create a place for funds to be deposited, checks to be written, staff to be hired, online asset ownership to be established, and office leases to be signed.
What made this work was that throughout we were not hands-off or operating at arms-length; Freedom to Marry was deeply involved as a partner in the work and campaigns, apart from our role as fiscal sponsor or funding engine.Scott Davenport, Freedom to Marry's Chief Operating Officer
What made these fiscal sponsorships unusual, however, was the flexible delegation of control over those decisions to the campaign. In other words, the organization that served as the fiscal sponsor explicitly had no singular control over how funds were going to be expended. Instead the campaign board and the campaign manager had the primary authority for spending, hiring and firing. Yet the fiscal sponsor bore considerable risk as a result of this sponsorship. These campaign entities were successful because the MOU drafting process clarified the rules around decision-making and set boundaries in ways that helped protect both the lead partners and the fiscal sponsor.
For example, each of the eight campaigns in which Freedom to Marry served as fiscal sponsor had different specifics to their governance and operations. However, they all had one thing in common – a well-defined, written framework describing who could make which decisions and what internal governance procedures would be used to coordinate program and administrative operations. Even with all the different specifics (and, in fact, because of them!), we learned how to nimbly adapt our approach to operationalizing these fiscal sponsorships so that programming could begin quickly.
And, of course, what made this work, too, was that throughout we were not hands-off or operating at arms-length; Freedom to Marry was deeply involved as a partner in the work and campaigns, apart from our role as fiscal sponsor and/or funding engine.
Key Lessons Learned
Once the MOU was in place and it was clear that Freedom to Marry was going to act as the fiscal sponsor, the detail work of establishing operational norms began. This was worked out between our own Operations Team and the varying state campaign teams. Over time, we worked together to jointly create operating procedures and fine-tune them in three key areas – Financial, Human Resources, and General Operating Systems:
Expense Authorization – Within Freedom to Marry, only two individuals were granted authority by the Board to approve expenditures – yet we needed campaign staff to be able to approve expenses without additional approvals and oversight. As a result, in each fiscal sponsorship we delegated such authority to the campaign manager (sometimes requiring approval from our representative on the campaign’s board). Meanwhile at least two members of Freedom to Marry’s Operations Team reviewed expenses for apparent consistency with the campaign’s goals and to reduce the risk of malfeasance. In this way we managed the risk of delegation while empowering the campaign staff and its leadership.
Documentation Processes – To meet the needs of our auditors for expense documentation and to reduce fraud risk, we adapted Freedom to Marry’s requisition paperwork process. We required all payment requests to have similar forms of documentation (invoices or receipts, for example). Rather than require sign-off by an internal staff member, however, the campaign manager approved the expense, reviewed in-house at Freedom to Marry. From there we could process checks on a timely basis. Similarly, we adapted our personnel change authorization forms (using the partnership logo) for personnel changes. These were signed by the campaign manager and our Director of Operations.
Reimbursements – Freedom to Marry maintained an online expense management system (Expensify) to manage processing for individual reimbursement of expenses, such as travel costs For our fiscal sponsorships, the campaign manager determined the specific reimbursement guidelines for the campaign, and this policy would be programmed into Expensify. Thus, campaign staff would submit reimbursement requests to the campaign leadership; these reports would be reviewed by the Operations Team for correct documentation; and funds would be released.
Access to Funds – Freedom to Marry had two authorized check signers (The President and the COO.) Because Freedom to Marry bore fiduciary responsibility and liability, there was no direct access to cash granted to campaign managers. In a limited number of cases, a debit card was issued to the campaign manager linked to the campaign’s checking account with a programmed withdrawal limit to allow for the inevitable petty cash needs while limiting exposure to improperly controlled spending.
Cash Segregation – While it is possible with a variety of technical approaches to maintain segregated funds within the accounting system of the larger organization, we opted to create fully segregated cash accounts and fully segregated accounting and bookkeeping systems using separated QuickBooks company files. Accordingly, for each new fiscal sponsoree we opened a new checking account, created a new set of books for bookkeeping, ordered separate check stock and deposit endorsement stamps. This permitted more flexibility in terms of providing access to funds to the campaign manager, while also reducing many of the concerns that comingled funds can create. It also provided a nice integration with our online cash reimbursement and expense reporting software.
d/b/a – Because of regulations arising from the so-called “Patriot Act,” the name of the entity conducting business must appear on the checking account. Thus, it was required for each fiscal sponsorship that we receive a certificate of assumed name to conduct business under that entity’s chosen name. In the State of New York (Freedom to Marry’s corporate base), this is a straightforward (if time-consuming and overly bureaucratic) process that does little more than secure acknowledgement from the Secretary of State recognizing our intention to do business under that assumed name.
Deficit/Surplus – Typically, the MOUs spelled out that no deficit was permitted without agreement by all partners to fund it according to the ratio of their initial investment. The MOU also spelled out that any surplus would be returned to the partners by the same ratio. In some cases, there were excess funds at the end of the campaign, and those funds were distributed pro rata to the partner based on their overall investment. In a small number of cases, campaigns did close out with a small deficit, which Freedom to Marry covered if partners were unable to contribute.
Contracts – Because long-term, financial responsibility lay with Freedom to Marry for the activities of the campaign, we reviewed and approved all contracts following our standing policy. All contracts were signed by our Chief Operating Officer. The main consideration in reviewing them, beyond a “reasonability” check, was to ensure the terms of cancellation did not extend beyond the presumptive lifecycle of the partnership and were easy to invoke.
- Hiring & Firing – All decisions pertaining to the hiring and firing of staff were left to the discretion of the campaign manager, with oversight of the campaign “board” as warranted by the MOU. (At least one Freedom to Marry staffer from our in-house “states team” was on the board of all of the campaigns.) The sponsored entities were bound by the same employment laws that governed the sponsoring entity, which meant that there could be no significant difference in the HR policies on hiring and firing between the two entities.
- Compensation – Compensation levels were set by the campaign manager for all campaign staff, and the campaign board set the compensation for the campaign manager. Freedom to Marry did not second-guess compensation levels relying on the campaign boards (on which we had representation) to provide a check on overspending or other issues.
- Benefits Eligibility / Employment Status / Employment Policies – Initially, all campaign staff were provided with the same benefits as Freedom to Marry staff. However, as this differed substantially from typical campaign practice, we chose for most of the fiscally sponsored campaigns to offer a different benefit package. We did this by establishing a separate subsidiary entity within Freedom to Marry, which was where these fiscal sponsorships were housed. For those campaigns, we developed and provided a more cost-competitive and appropriate benefits package.
General Operating Systems
- IT Support – We provided no IT support to the campaigns we sponsored. The largest among them, New Jersey United for Marriage, entered into a service contract with an IT services company to provide laptop computers to its staff of 30 and its contracted field staff of 30. They addressed their copier needs in the same fashion. All others simply purchased their computers and addressed maintenance concerns as they arose. (Click here for more details on the online and social media support our Digital Action Center provided to state campaigns.)
- Physical Infrastructure / Insurance – At the campaign managers’ discretion, campaigns would either seek offices in shared space rented with other movement organizations or contract with a landlord directly. As with other contracts, leases were reviewed by Freedom to Marry to minimize fiscal exposure beyond the likely term of the campaign. However, in at least one case excess lease payments were required when one campaign was shut down earlier than expected.
- External Communications – It was useful to have each campaign entity operating under a single brand and name. The communications strategy was aligned with the goals of the partnership campaigns, which typically tracked closely with Freedom to Marry’s own communications strategy. Given Freedom to Marry’s role in crafting much of the larger national strategy through our research and messaging apparatus, we usually provided technical communications support, but ultimately the partnership board and campaign leader were responsible for governing the overall strategy of the specific local campaign, frequently relying on a more closely tuned understanding of the local dynamics at play. Our Digital Action Center was the back-end for all of the campaigns’ websites and social media, providing another way of assuring efficiency and adherence to best practices.
Elements for a Successful Fiscal Sponsorship
Throughout all this work in managing and supporting these campaign-based, fiscal sponsorships, we learned many lessons. In addition to the technical expertise and ability to adapt that we developed, it was clear that three key elements went a long way to building a successful ability to implement this kind of national campaign:
- Early Relationship Building – It was important for the operationally focused teams of both the campaign and Freedom to Marry to meet together early to discuss each others’ role and perspective in coming together. While we wanted the campaign to succeed, Freedom to Marry naturally viewed operational decisions through a longer-term lens, which could appear to be burdensome to the small campaign staff (i.e. Freedom to Marry wanted to maintain documentation when the campaign staff had little use for that). Creating and maintaining an open channel of communication early helped during the inevitable occasions when the going got a little rough.
- Clarity of Expectations – In short, the clearer expectations are at the outset, the easier it is to reduce the number of rough spots. In other words, if we at Freedom to Marry had a requirement of the campaign, better to spell it out up front than surprise the campaign down the road with something it was not prepared to handle.
- Document the agreement – The devil is always in the details. As we brought each set of campaign partners come together, we all needed to answer key questions that set the framework for the overall collaboration. These were then spelled out in writing in the MOU both to reduce surprises and to create real clarity. Later, as the launch date of the campaign approached, the operations teams of Freedom to Marry and the campaign also needed to clarify operating procedures in writing (often through the exchange of emails).
Typical topics covered in our MOU’s addressed:
- What is the name of the campaign?
- What is its purpose/goal and likely time frame?
- Who are the partners?
- How much investment is expected of each partner? When and in what form (cash or in-kind expenditure)?
- What is the governance structure of the partnership (who gets a vote)?
- Will there be a campaign manager, and who will hire the campaign manager?
- Where will the funds for the campaign be housed (with which organization?)
- How are deficits and surpluses handled?
- Who will contribute email lists initially, and what happens to the larger joint email list once the campaign ends?
- Who is in charge of messaging and branding decisions?
- What happens to the cash and intellectual assets of the campaign once dissolved?
Typical Operating Procedures included:
- How often will the fiscal sponsor provide financial reports to the campaign leadership?
- What reports will be provided?
- What are the key business operation actions (bill-paying, hiring, firing) and what documentation is required to trigger those?
- Who are the key contact persons on either side for each process?
- What lead-time is required for each process?
- Who can sign contracts? How do contracts get approved?
- What happens if a deadline is missed? Are there exceptions?
- What happens if requesting exceptions becomes the rule?