Fiscal Sponsorship FAQ
Many individuals, foundations, corporations or governmental organizations restrict funding of independent projects to tax-exempt organizations. To address this situation, IFP Minnesota (an established tax-exempt public charity under section 501(c)(3) of the Internal Revenue Code) has created the IFP Minnesota Fiscal Sponsorship Program.
The Fiscal Sponsorship program at IFP Minnesota has been designed to assist media artists who are members of IFP MN seeking grants and/or contributions from sources requiring a federal exempt tax status, i.e., a non-profit organization status. For individual contributors, this arrangement allows for charitable contribution deductions on federal tax returns. Selected projects will be allowed to use IFP Minnesota's federal exempt tax status to individuals under the following conditions:
• Applicant must be an Individual Level Member ($85/year) of IFP Minnesota in good standing
• Applicant must currently reside in the State of Minnesota, and establish proof of residency for the past 12 months
• The project must be noncommercial in nature (see further explanation below)
• The individual media artist must sign a contract with IFP Minnesota which states the artist guarantees grant monies received will be used for the purpose intended; that artist will be responsible for fines, return of grant monies if the grant is rescinded or the IRS questions the accounting for the grant monies; and that artist will be responsible for any final reports and accounting to the granting agency
• Artist agrees to credit IFP Minnesota on project being served
Eligible Projects Include:
IFP Minnesota has been the leading resource for the Minnesota independent film movement for 22 years. Its 500 members participate year-round in activities ranging from popular screenings to cutting-edge workshops, seminars and networking events. IFP Minnesota's Fiscal Sponsorship Program is filmmaker-friendly, designed specifically for film, video and photography projects that fall within the following categories:
a) documentary films and other works of nonfiction
b) films produced by first-time filmmakers (or students)
c) fiction works with proposed budgets not exceeding Tier 1 of IATSE's National Agreement currently $3.6M
Once the IFP Minnesota Fiscal Sponsorship Program accepts your project, donors may make tax-deductible contributions to IFP MN, requesting that the funds be applied toward your project. IFP MN will make its various programs available to you, monitor your project to ensure that the project advances IFP Minnesota's charitable and educational purposes and disburse the contributions received, minus the 5% fee. You will be responsible for providing IFP MN with periodic reports of the status of your project and the use of the funds.
IFP Minnesota does not control the content of the project and is not connected, in any way, to the actual production of your project. All right, title and interest in and to the completed project belongs to the filmmaker allowing for complete artistic and creative control.
Why is IFP MN Fiscal Sponsorship Different?
The selection of the right sponsor is crucial because potential donors carefully examine institutional factors before awarding grants. One such factor is whether your project seems to have community support. Because one advantage of organizational sponsorship is that it provides you with credibility, it is important that you select a sponsor with a good reputation and a rapport with its own donors.
IFP Minnesota and its connection to a national network of other IFP organizations that are the leading resources of the American independent film movement is an important factor. Nationwide, IFP's 9,000 members participate year-round in activities ranging from popular screenings to cutting-edge workshops, seminars and networking events. By offering invaluable information, assistance and access to the world of independent film, IFP Minnesota helps its members find out the latest on who's who, who's buying, who's financing and who's making features, shorts and documentaries. Through the IFP network, you have the chance to make valuable connections and ultimately to penetrate the industry.
Benefits of IFP Minnesota's Fiscal Sponsorship:
Credibility and Reputation. IFP Minnesota respected programming opens the door to valuable industry services you won't find elsewhere and a wide network of industry relationships intended to complement those services. Over the past 22 years, our programs have helped over 100 American independent films progress from concept to production and eventual distribution. When committing your project to the IFP Minnesota's Fiscal Sponsorship Program, you unlock a world of benefits and "know-how" designed to help get your movie made and distributed.
No Deadline. No Wait. Some fiscal sponsor programs have strict deadlines and make you wait up to 8 weeks for an answer. At IFP MN, applications are available online, accepted year round and reviewed every two weeks. After being accepted into the fiscal sponsorship program, you will take part in a 45-minute meeting with our Executive Director, and after that, you're "up and running."
Competitive Fees. Fiscal sponsorship fees vary from organization to organization and in some cases they may equal 10% of the contribution. IFP Minnesota's 5% fee is among the lowest offered in the industry.
Your Project on www.ifpmn.org. Our Web site, is the one of the most recognizable URL's in the independent film sector. As a fiscal sponsorship participant, you can publicize your project to potential donors and allow donors to link to your Web site for donation information. You can even publicize your project to potential donors and allow them the option of making secure online credit card donations through PayPal.
Individual Consultations. Throughout your project's development, you can access staff to discuss your fundraising and film distribution strategies and tactics to identify, target and approach. IFP Minnesota's staff deliver more than 30 years of combined experience in the independent film sector. Tap us for strategic advice on proposals to specific donors, help in understanding your distribution options as you move into post-production, and assistance with resource allocation or establishing a budget.
Up to 25% off all IFP MN Classes, Seminars & Conferences. You will receive discounted access to all IFP workshops on the art, craft and business of writing and making movies for film or TV including: the annual Independent Producers Conference, hands-on classes for Final Cut Pro and many other software programs, Elements of Screenwriting, Documentary Nuts & Bolts and more.
Note: to take advantage of discounts you must register by phone. Discounts are not offered through our Web site registration. Discounts are available only to the signer(s) of the fiscal sponsorship contract.
Many Other Benefits. IFP Fiscal Sponsorship participants also receive: access to discounts on many steps of the filmmaking process (from film stock to post production services), free one-on-one sessions with staff on such issues as post-production, legal, festivals and distribution/foreign sales, and free monthly screenings of great new short films at the Cinema Lounge (with writers, directors, and producers who are interviewed by the Lounge's host).
How IFP Fiscal Sponsorship Works: Program Fees. Once you are accepted into the program, IFP acts as your project's exclusive fiscal sponsor for the duration of your project (all right, title and interest in and to the completed project belong to you and may be copyrighted in your name). In return, IFP charges a standard administrative fee for operating the program, as follows:
A fee of 5% will be charged for this service to IFP MN members:
The Fee Is:
$0 - $9,999
after $10,000 - 20,000
an additional $500
after $20,000 - 30,000
an additional $500
after $30,000 - 40,000
an additional $500
after $40,000 - 50,000
an additional $500
Note: An up-front fee of $500 is charged initially. This fee represents your 5% fee for the first $10,000 raised through the program. Thereafter, fees are paid at the time of the contribution. Fees cover administrative costs and bank charges. IFP MN will charge the Project directly for any liabilities or direct expenses it may incur on behalf of the Project, such as legal fees, late fees, etc.
All contributions received are deposited into IFP Minnesota's federally insured (FDIC) bank account. After a period of 3-5 business days, IFP Minnesota will issue a check in the same amount, minus any fees, to the Project.
IFP Minnesota will accept up to $500,000 in grant and donated monies on behalf of a fiscal client. Sums above that amount must be approved in advance by the Executive Director and/or the IFP Minnesota Board of Directors.
IFP Minnesota reserves the right to accept or deny fiscal sponsorship projects, dependent upon the complexity of the terms of the agreement, the ability of the artist to demonstrate fiscal responsibility, and the alignment of the Project with IFP MN's mission.
How Funds are Disbursed. Once funds are contributed on behalf of your Project, IFP Minnesota will issue a check to the project director or your production company. Because IFP Minnesota will issue checks only to the project director or production company and not to individual vendors, the project director or production company usually establishes a separate bank account for the project. The majority
of our Fiscal Clients have formed a legal entity such as an LLC for the project-consult with your tax advisor on the best scenario for you. For more information on how to file for an LLC in Minnesota, check with the Minnesota Secretary of State's website.
Tax Reporting Requirements. You are responsible for maintaining your own financial records. You should consult your tax advisor concerning proper tax reporting.
IFP Minnesota will provide its 501(c)(3) letter from the IRS and a letter stating filmmaker's status as a fiscal sponsorship client and as an IFP Minnesota member. IFP will send you a 1099 form each year, which reports on the total amount raised through the program.
Foundations and individual donors may request additional materials from IFP Minnesota (such as IFP Minnesota's Form 990, budgets, a list of the board of directors, etc.) We will be able to provide this material to you upon request. Filmmaker is responsible for including copies of the 501(c)(3) letter and for acknowledgments to donors for the project.
IFP MN will provide acknowledgment letters to donors who contribute $100 or above to your project.
IFP MN requires an annual report from the fiscal client on the progress of the project, an income/expense report on grants/donations received, and how these funds were expended.
Grant Period. IFP MN will keep open a fiscal sponsorship client's file for 3 years. After that, a new contract can be made at no extra cost to continue the project sponsorship. After the grant period is over, a final report is submitted by the filmmaker to both any granting organizations and to IFP Minnesota for its records.
*The foregoing text represents a summary of the Fiscal Sponsorship Program. If chosen to participate, please refer to the Sponsorship Agreement and other underlying documents for all the terms and conditions applicable to the Program.
Eligibility: To be considered for the IFP Minnesota Fiscal Sponsorship Program, your project must fall into any of the following categories:
1. Documentary films and other works of nonfiction
2. Films produced by first-time filmmakers (or students)
3. Works of fiction with proposed budgets that do not exceed Tier 1 of the IATSE National Agreement currently $3.6M.
How to Apply:
1. Contact Executive Director Andrew Peterson.
2. For documentaries, a thoughtful, clearly written treatment. For fiction work, your shooting script. For both, a statement summing up what you are trying to do and how you will organize the elements into a coherent and interrelated dramatic whole (1-2 pages).
3. A thoughtful budget that is well developed, realistic and consistent with your narrative and includes all phases: pre-production - post-production. (1-2 pages).
4. CV's or bios of principle production personnel (Producer, Director, Writer, Cinematographer, Editor. (generally, 1 paragraph per person).
5. Work samples (can be on-line)
6. A check or credit card application fee for $500 made payable to IFP Minnesota, along with current membership status. Individual Level membership dues of $85 are also due at this time (if membership is not current.)
7. Send Application Materials To:
Fiscal Sponsorship Program
IFP Minnesota, 2446 University Avenue West
, Ste. 100, St. Paul, MN 55114
. Questions about the program can be directed to Executive Director at email@example.com.
Accepted applicants will be notified of acceptance via email. Upon acceptance, a meeting will be set up to create the contracts. Rejected applicants will be notified via post. Sample media will be destroyed. If you request feedback, you may schedule a phone appointment with the Executive Director.
Frequently Asked Questions:
Q: What is a 501(c)(3) organization? A: A 501(c)(3) organization is an organization, described in section 501(c)(3) of the Internal Revenue Code, the contributions to which are deductible for Federal income tax purposes to the extent allowed by law.
Q: What is the difference between corporate sponsorship and fiscal sponsorship? A: Corporate sponsorship generally consists of support, usually in the form of money or materials, given directly to the project. Often the corporate sponsor expects something in return for its support of a project, such as advertising or use of the project for publicity purposes. In addition, many corporations also have philanthropic programs that donate to tax-exempt charitable organizations. These programs typically will not provide funds to a non-exempt film project but may fund a fiscal sponsorship program. Fiscal Sponsorship is a legal mechanism by which an established public charity, that is tax-exempt under section 501(c)(3) of the Internal Revenue Code, provides financial and administrative assistance to selected filmmaking projects. The public charity does not seek anything in return. A film project selected for a fiscal sponsorship allows the project to solicit tax-deductible contributions from individuals, foundations, corporations or governmental organizations.
Q: Why does the Fiscal Sponsorship Program have an application process? A: IFP Minnesota must insure that project activities are conducted according to IRS regulations and will further the charitable and educational purposes of IFP Minnesota. Therefore, IFP Minnesota must establish discretion and control over the project and the contributions received. The program accomplishes this through an application process and internal policies and procedures regarding grants to selected projects. In addition, the producer of each accepted project must enter into a sponsorship agreement with IFP to govern the relationship between IFP Minnesota and the project.
Q: Why does IFP MN need to establish discretion and control over a sponsored project? A: IFP Minnesota is legally responsible for the funds received on behalf of a sponsored project and must insure that the project uses the funds for IFP Minnesota's charitable and educational purposes. This is accomplished through an application process, internal procedures regarding grants, and a sponsorship agreement between IFP and the project to govern the relationship. Technically speaking, your donor has made a contribution to IFP with a recommendation that IFP grant this contribution to your project while also monitoring that their funds are put to proper use and that all tax-reporting requirements are met.
Q: Once I am fiscally sponsored, have I become a non-profit? A: Being sponsored at IFP Minnesota does not make the project or production company a tax-exempt organization. The donors gain the benefit of a charitable deduction for income tax purposes by donating to IFP, a section 501(c)(3) organization.
Q: Does the project retain its own legal identity if it has a fiscal sponsor? A: A project in the IFP Minnesota Fiscal Sponsorship Program is a separate legal entity and is not a part of IFP Minnesota. As a result, the project retains creative control and ownership of its work but remains responsible for tax reporting and liability issues.
Q: Does fiscal sponsorship allow the project to be absolved from tax reporting? A: No. Contributions received by IFP MN and disbursed through the IFP Minnesota Fiscal Sponsorship Program may be treated as income to the project. The Project is legally responsible for proper tax reporting and should consult his or her tax advisor. IFP will issue Form 1099-MISC for total payments over $600 during the calendar year to each project, except if the project is a corporation. Note that an LLC is treated as a partnership and not as a corporation, except if IFP has received certain written notification from the LLC stating that each member of the LLC is a corporation. Consult a tax advisor to determine your specific liability.