Fiscal Sponsorship Agreement

Transcription

1 SLS SAMPLE DOCUMENT 06/27/17 Fiscal Sponsorship Agreement Model A This is a Fiscal Sponsorship Agreement ( Agreement ), dated, 20 ( Effective Date ), between [ ], a California nonprofit public benefit corporation ( Client or Sponsor ), and [name of project director], an individual ( Project Director ). Background Client is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code ( IRC ). Its mission is to [insert mission]. [insert full name of project], ( Project ) is a [description of project]. The Client Board of Directors ( Board ) has determined that fiscal sponsorship of the Project furthers Client s charitable goals and, to that end, wishes to serve as fiscal sponsor of the Project. The purpose of this Agreement is to describe how Client will operate the Project and the other terms of the fiscal sponsorship arrangement. Sponsor and Project Director agree as follows: 1. Term This Agreement becomes effective on the Effective Date. Client will continue operation of the Project unless and until this Agreement is terminated as provided in Section Project Activities; Asset Use All activities conducted by the Project including, without limitation, programs, external communications, fundraising, processing of contributions, bookkeeping, negotiation of contracts and disbursement of funds (including grants) will be the responsibility of Client. All assets received by Client under the terms of this Agreement will be devoted to the Project within the tax-exempt purposes of Client. 3. Property Unless otherwise agreed in writing by Client, all tangible or intangible property, including, without limitation, intellectual property, created by the Project s personnel in the course of their work for the Project or obtained by the Project from third parties since the Project has been a project of Client and while this Agreement is in effect, will be the property of Client. 4. Contact Persons and Communication Client and the Project will each appoint an individual or individuals to act as the key contact and to coordinate the activities of the Project. Project Director is the Project s appointee. Client s initial appointee is its Executive Director. The Client appointee is referred to in this Agreement as the Sponsor Contact. Client may from time to time change Sponsor Contact by providing to Project Director a written notice to that effect. 5. Project Personnel 5.1 Advisory Committee As of the Effective Date, the Board delegates management of the program activities of the Project to an advisory committee that the Project has assembled for that purpose (the Committee ), subject to the ultimate direction of the Board. The Committee is a group of individuals that serves as a subordinate body to the Board and as an integral part of Client. 5.2 Employees; Independent Contractors As determined by Client, Project Director and any other Project personnel will become at-will employees of Client on the Effective Date and will be subject to the same personnel policies and benefits as are required by law to apply to all employees of Client. Project Director is primarily responsible for supervising Project employees and independent contractors but will Note: This document does not reflect or constitute legal advice. This is a sample made available by the Organizations and Transactions Clinic at Stanford Law School on the basis set out at nonprofitdocuments.law.stanford.edu. Your use of this document does not create an attorney-client relationship with the Clinic or any of its lawyers or students.

2 not have authority to make any major personnel decisions including, without limitation, those relating to hiring or compensation of employees or independent contractors, without first obtaining the written approval of Sponsor Contact. 5.3 Project Director. Project Director will have day-to-day responsibility for the Project as described in this Agreement. Client may rely on the statements and decisions of any Project Director as binding on the Project. 5.4 Capacity and Rights Project Director acknowledges that he or she is signing this Agreement in his or her individual capacity but for the benefit of the Project, and that he or she will exercise his or her rights and responsibilities under this Agreement solely for the benefit of the Project. The fact that Project Director (and his or her successor if any is named) as Project Director has rights and responsibilities under this Agreement does not affect in any way his or her status as an at-will employee of Client. 5.5 Replacement If Project Director resigns, is terminated by Client, or otherwise ceases to be Project Director, all rights of Project Director under this Agreement will immediately terminate without any further action by the parties. If that happens, the Committee, subject to the approval of Client, will identify another individual who will serve as Project Director, and this Agreement will be amended as appropriate to reflect the change in personnel and to give the new Project Director all of the rights and responsibilities of Project Director under this Agreement. 5.6 Authority to Sign Contracts Project Director will not have the authority to sign any grant agreements, leases, MOUs, licenses, consulting agreements or other contracts without obtaining the prior approval of Sponsor Contact. 6. Project Activities and Responsibilities 6.1 Fundraising and Grant Writing Project Director will be responsible for all fundraising and grant writing efforts on behalf of the Project. Client has no obligation to fundraise on behalf of the Project. Because Client and the Project may at times seek funds from the same sources, Project Director and Sponsor Contact will maintain open lines of communication regarding fundraising efforts. The Project will not approach specific foundations, businesses, government entities, or individuals if Client is considering approaching them for funding and Client has directed the Project to not contact such potential funding sources. Project Director will not undertake any fundraising campaigns, submit any grant proposals, or charge a fee for any products or services in connection with the Project without first obtaining the approval of Sponsor Contact. Project Director is not an agent of Client for purposes of soliciting gifts, grants, and other contributions, and is not authorized to make any binding commitments, either express or implied, to funding sources on behalf of Client. 6.2 Budget Before the beginning of each fiscal year, Project Director will submit a Project budget, in form and content acceptable to Client ( Annual Budget ), for Client s review and approval by the Board. In addition, Project Director will submit a separate budget, in form and content acceptable to Client, for each grant that the Project receives (a Grant Budget ). Each Grant Budget must be approved by Sponsor Contact. The parties recognize that budget factors change over time and, to that end, Project Director may submit a revised Annual Budget or Grant Budget during the year. 6.3 Spending Project Director may spend Project funds subject to these requirements: 2

3 (a) Project Director may only make expenditures in the advancement of or incidental to the tax-exempt purposes of Client. (b) Project Director may only make expenditures if permitted by the Annual Budget or the Grant Budget. (c) Before authorizing any expenditure, Project Director will verify that the Project has currently available funds at Client, exclusive of the Lease Reserve Account (described in Section 8.3), that are sufficient to cover the particular expenditure. (d) Project Director may only authorize expenditures with respect to a specific Grant Budget from funds available from the grant to which the Grant Budget relates. Grant funds from one grant may not be applied to expenditures related to a different grant or to other activities and programs of the Project. (e) Any expenditure that exceeds 20% of a particular line item in the applicable budget must be approved in advance by Sponsor Contact. (f) If Project Director has any doubt about whether the expenditure requirements set out above in subsections (a)-(e) have been satisfied, Project Director will consult with Sponsor Contact before authorizing the expenditure. 6.4 Reporting Project Director will provide written reports to Sponsor Contact, as Sponsor Contact may reasonably request, describing the Project s activities and accomplishments. The reports will be in a form and content that is acceptable to Sponsor Contact. Project Director will also provide Sponsor Contact with copies of the minutes of Committee meetings. 6.5 Project Audit Client, at any time and in its sole discretion, may conduct an audit or review of the Project s activities to confirm and document that the Project is being carried out in accordance with his Agreement, Client s exempt purposes, and applicable laws. Project Director will fully cooperate and provide information as Client may request. 6.6 Project Branding and Materials; Publicity Project Director will ensure that all Project materials and external communications, including, without limitation, the website, letterhead, registration forms, grant proposals, fundraising solicitations, donation acknowledgments and contracts, indicate in a form acceptable to Client that the Project is a sponsored project of Client. Client, in its sole discretion, may identify and describe its work with the Project and Project Director in connection with the fiscal sponsorship arrangement described in this Agreement in internal and external communications, including, without limitation, Client s website and marketing materials. 6.7 Acknowledgment Project Director acknowledges and agrees that Client may have served or sponsored, currently be serving or sponsoring, or in the future serve or sponsor other organizations or projects whose interests may be adverse to Project Director or the Project, including, without limitation, parties with whom Project Director or the Project compete for funding or have a current or potential programming relationship. 6.8 Location Project Director will be responsible for identifying appropriate physical space for the operation of the Project and ensuring compliance with the lease terms. 3

4 6.9 Sponsorship Policies. The Project will comply with the Sponsorship Policies attached as Exhibit A, which Client may modify from time to time in its sole discretion. 7. Financial Management 7.1 Restricted Fund Beginning on the Effective Date, Client will place all gifts, grants, contributions, and other revenues received by Client and identified with the Project into a restricted fund to be used for the sole benefit of the Project s mission as that mission may be defined by the Committee from time to time with the approval of Client. Client retains the unilateral right to spend such funds to accomplish the purposes of the Project as nearly as possible within Client s sole judgment, subject to any donor-imposed restrictions as to purpose on the charitable use of such assets. 7.2 Bookkeeping; Tax-Exempt Status Client will maintain the books and records of the Project based on Client s fiscal year. Client will establish separate bank accounts for Project funds. Client will provide quarterly financial reports to Project Director and such other financial reports as Project Director may reasonably request. Client will notify Project Director of any change in its tax-exempt status within 30 days of Client s receipt of notification of such change. 7.3 Financial and Tax Reporting Client will report all money and the fair market value of all property in the restricted fund as income of Client for financial reporting and tax purposes. It is the intent of Client and the Project that this Agreement be interpreted to provide Client with variance powers necessary to enable Client to treat the restricted fund as Client s asset in accordance with FASB Accounting Standards Codification Subtopics , (originally issued as FASB Statement No. 136, Transfers of Assets to a Not-for-Profit Organization or Charitable Trust That Raises or Holds Contributions for Others), while this Agreement is in effect. 7.4 No Financial Obligations for Client Client has no obligation to provide any financial support to the Project in any form, including, without limitation, making loans or grants, advancing cash, covering direct expenses, deferring or waiving rights to administrative fees, or forgiving loans. Any financial assistance provided by Client to the Project does not and will not create any right to further financial support. 7.5 Political Activity Client may limit expenditures by the Project for any attempt to influence legislation within the meaning of IRC Section 501(c)(3). Neither Client nor the Project will use any portion of the assets to participate or intervene in any political campaign on behalf of or in opposition to any candidate for public office, to induce or encourage violations of law or public policy, to cause any private inurement or improper private benefit to occur, or to take any other action inconsistent with IRC Section 501(c)(3). 8. Fees and Expenses 8.1 Administrative Fee As provided by the Sponsorship Policies, Client will charge the Project a percentage of the Project s gross revenues (the Fee Percentage ) as an administrative fee. The Fee Percentage will be [fee percentage]% as of the Effective Date. Within 60 days of Client s fiscal year end, the Board will perform an annual review of the Fee Percentage and may adjust the Fee Percentage accordingly in its sole discretion. In determining the Fee Percentage, the Board may consider the services Client provides the Project and comparable fiscal sponsorship administrative fees. Administrative fees are not refundable upon termination of this Agreement or otherwise. 4

5 8.2 Direct Expenses Client will pay from Project funds all expenses that are directly related to the Project, including, without limitation, payroll expenses, salaries and benefits, rent and utilities, supplies and equipment, legal fees, insurance, travel, and audit and bookkeeping expenses. 8.3 Lease Reserve If Client signs or assumes a lease for the Project that is other than a month-to-month lease, Client will establish a lease reserve account (the Lease Reserve Account ). Client will deposit in the Lease Reserve Account, from available Project funds, an amount that is sufficient to pay the rental for the space being occupied or to be occupied by the Project. Client will reduce or increase the amount in the Lease Reserve Account to reflect changes in the actual amounts that are legally owing under the Project s lease(s). 9. Termination This Agreement will terminate as follows: 9.1 Objectives Can No Longer Be Accomplished This Agreement will terminate when the objectives of the Project can no longer reasonably be accomplished by Client, as Client may determine in its sole discretion. In that case, Client, in consultation with Project Director and the Committee, will apply any remaining Project funds for purposes that are as close as possible to the Project s goals and mission. 9.2 Termination Upon Party Election This Agreement will terminate if either Client, or Project Director with the consent of the Committee, desires to terminate Client s fiscal sponsorship of the Project. Either Client or Project Director may terminate this Agreement on 90 days written notice to the other party. In that case, the following will apply: (a) Upon receipt (or delivery) of the notice, Project Director will identify another nonprofit corporation which (i) is tax-exempt under IRC Section 501(c)(3), (ii) is not classified as a private foundation under IRC Section 509(a), (iii) is willing and able to sponsor the Project, and (iv) is acceptable to Client (a Successor ). (b) Client will not unreasonably withhold its approval of a proposed Successor. The Successor may be an existing organization or a new organization that has been formed by Project Director and that has obtained, or applied for, a determination letter from the IRS as to its tax-exempt status. (c) If the parties agree upon a Successor within the 90-day notice period, Client will transfer the balance of assets in Client s restricted fund for the Project, together with any other assets held or liabilities incurred by Client in connection with the Project, to the Successor as soon as is reasonably practicable, subject to the approval of any third parties that may be required, and under terms of agreement that are reasonably acceptable to Client. (d) If Project Director does not find such a Successor within the 90-day notice period, Client may dispose of the Project assets and liabilities in any manner consistent with applicable tax, charitable trust laws, and other laws. 9.3 Termination if Breach Client may terminate this Agreement at any time if there is a material breach by Project Director that is not cured within 30 days after Client gives written notice of the breach. Client will in its sole discretion determine whether the breach has been cured. Such a termination will be effective on the date Client gives Project Director a written notice that the breach has not been cured. Client will dispose of the Project s assets and liabilities at the end of the notice period in a manner consistent with the provisions of Section

6 9.4 Termination if Insufficient Funds Client may terminate this Agreement if funds being held for the Project, excluding the Lease Reserve Account, will, in the sole judgment of Client, be insufficient to continue to pay the ongoing expenses of the Project. Such a termination will be effective 15 days after Client gives Project Director a written notice to that effect. Client will dispose of the Project s assets and liabilities at the end of the notice period in a manner consistent with the provisions of Section Effect of Termination Upon termination of this Agreement, the Client employees who are dedicated to the Project will be terminated at a time determined by Client in its sole discretion. Client and Project Director will cooperate in transition activities and use reasonable efforts to minimize interruption and adverse impacts of the termination. Sections will survive termination of this Agreement. 10. Indemnification Project Director will indemnify, defend, and hold Client and its directors, officers, employees and agents (collectively, the Client Parties ) harmless from and against any and all claims, liabilities, losses, damages, and expenses, including reasonable attorney s fees and expenses, directly or indirectly arising out of or resulting from (i) any breach by Project Director of his or her obligations under this Agreement; (ii) third party claims arising from the establishment and operation of the Project; or (iii) any other act or omission by Project Director. 11. Limitation of Liability The Client Parties will not be liable to Project Director for any incidental, special, consequential, exemplary, punitive, or indirect damages arising out of or resulting from this Agreement or this Agreement s termination. Any liability of the Client Parties in connection with this Agreement will not exceed the sum of all administrative fees paid by the Project to Client between the Effective Date and the date of final determination of such liability. 12. General Provisions 12.1 Entire Agreement; Modification; Controlling Document This Agreement, together with the Sponsorship Policies attached as Exhibit A, expresses Client s and Project Director s final, complete, and exclusive agreement, and supersedes any and all prior or contemporaneous written and oral agreements, negotiations, correspondence, course of dealing and communications relating to the same subject matter, including, without limitation, any and all prior fiscal sponsorship agreements between Client and the Project or Project Director. This Agreement may be modified only as stated in a writing signed by both parties which recites that it is an amendment to this Agreement. If there are any discrepancies, inconsistencies, or differences of interpretation between this Agreement and the Sponsorship Policies, this Agreement will control Severability If any provision in this Agreement is held invalid or unenforceable, the other provisions will remain enforceable, and the invalid or unenforceable provision will be considered modified so that it is valid and enforceable to the maximum extent permitted by law Assignment Project Director may not assign his or her rights or delegate his or her duties under this Agreement to anyone else without the prior written consent of Client. 6

7 12.4 Waiver Any waiver under this Agreement must be in writing and signed by the party granting the waiver. Waiver of any breach or provision of this Agreement will not be considered a waiver of any later breach or of the right to enforce any provision of this Agreement No Third Party Beneficiaries This Agreement is for the exclusive benefit of Client and Project Director and not for the benefit of any third party including, without limitation, members of the Committee or any Project volunteer or constituent other than Project Director Terminology For convenience, this Agreement refers to the rights and duties of the Project. All rights and duties are those of Project Director Notices Notices and consents under this Agreement must be in writing and delivered by mail, courier, , or fax to the addresses set out on the signature page of this Agreement. These addresses may be changed by written notice to the other party. Notices given in the manner provided by this Section will be considered given two business days after deposit in the mail, or the first business day after delivery to a courier or delivery by fax or Governing Law; Jurisdiction; Litigation This Agreement is governed by California law. Project Director and Client consent to the exclusive jurisdiction of the state and federal courts for, California. Project Director may not initiate any litigation in connection with the Project with parties other than the Client Parties without prior approval from Sponsor Contact Counterparts This Agreement may be executed in two or more counterparts, each of which will be deemed an original and all of which will be deemed to be one and the same instruments. * * * * * * * * [signature page and sponsorship policies follow] 7