Fiscal sponsorship

Fiscal sponsorship (also known as financial sponsorship, fical host), can be misunderstood as support by distributing funds. Fiscal sponsorship is a relationship in which an established nonprofit entity helps a project or organization without formal nonprofit status to raise and manage the funds needed to run the project or organization without having to register the organization with a government authority or establish and operate a nonprofit corporation.

In simple terms, it means that an organization that does not yet have a formal nonprofit status (or does not need one) can leverage the legal status and administrative systems of an established nonprofit to raise funds, conduct fundraising activities, and more.

Why Free and Open Source Communities and Projects would need Financial Sponsorship

Today, many free and open source communities and projects, both local and international, are looking to raise funds for their operations or seek corporate sponsorship for larger projects. Most of these organizations have no official status and are difficult to verify legally, so it is often difficult to raise and manage funds in the name of the community or project, or to obtain individual or corporate sponsorship. In addition, it is not only difficult to establish a non-profit organization with the tax authorities, or to obtain a non-profit corporation registration through the relevant government department, but it is also difficult to operate it on an ongoing basis.

With access to fiscal sponsorship, communities and projects can skip these complicated procedures and start raising and managing funds for their operations or projects right away. In addition, since the administrative part of the process is managed by the organization providing the fiscal sponsorship, the supported communities and projects can manage their funds transparently, conveniently, and efficiently, and can focus on more important things other than accounting and administration, and grow faster in a sustainable way.

Fiscal sponsorship in other countries

Fiscal sponsorship cases are not common in Korea, but there are many examples abroad (especially in the US). Our organization is trying to study these precedents and apply them to Korea.

• Open Source Collective: Over 2600 projects, including Webpack, OBS, Mastodon, curl, and others, have organized and managed their funding through the Open Source Collective instead of creating their own legal entities. https://oscollective.org/
• Open Culture Foundation (OCF): A Taiwanese non-profit organization, OCF supports various open source communities, mainly in Taiwan. They also help organize conferences, raising funds through sponsors and contracts, and various open source conference organizers in Taiwan, such as PyCon TW, COSCUP, and SITCON, are funded and managed by OCF. https://ocf.tw/en/
• Software in the Public Interest (SPI): A non-profit corporation based in the United States, various open source projects, including Debian, LibreOffice, OFTC, FFmpeg, and others, have raised and managed funding for their projects through SPI. https://www.spi-inc.org/
• Hack Club: A community and non-profit organization for young student developers around the world, Hack Club also provides financial sponsorship to over 600 different projects and organizations. https://hackclub.com/fiscal-sponsorship/