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shared platform/fiscal sponsorship 101 with Lizzie Howells

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Charity vs. Nonprofit. You may or may not know that those two have different meanings! They both doing amazing, mission-centred work! But there are more rules and regulations for charities (if you’re in the US, that’s a 501c3) which means it takes a lot more time and resources to get going.

Many nonprofits have aspirations to become a charity, but one of the biggest questions I get asked along the way is - “how do we fundraise without charitable status?” You see - nonprofits cannot issue tax receipts to donors.

Now - the short answer is that donors are not giving for the receipts.

But the long answer is that there is a formal structure - in Canada called a Shared Platform and in the US Fiscal Sponsorship - that allows emerging nonprofits to issue tax receipts and then some!

There are lots of reasons why this model is growing in popularity. So much so that Mackenzie Scott herself invested in today’s podcast guest’s organization - to the tune of $18.9 million.

Join me for this conversation all about Shared Platforms with Lizzie Howell, Director, Shared Platform at MakeWay. With MakeWay’s shared platform, changemakers share a suite of centralized organizational supports, and coaching when needed, so more time and money can go towards building strong, vibrant, just communities and a healthier planet.

Myths that Lizzie wants us to walk away from:

  • Only big organizations can host a Shared Platform. MakeWay is unique in that they are the only Shared Platform host that has gone through an audit - so they have formalized the operations of Shared Platforms in accordance with Canada Revenue Agency. However, there are many smaller charities that also act as a Shared Platform for nonprofits that are aligned with their work.

  • You will lose control of your organization. MakeWay and other Shared Platforms values the autonomy of projects to be able to make their own decisions around things like compensation or who they hire. They are committed to equity, to economic well being, and realize their position to provide guidance and advice.

  • It’s just about issuing tax receipts. Established Shared Platforms do much more than allow your nonprofit to issue receipts for donations. They offer structure and support to help grow your impact.

Lizzie’s thoughts around Shared Platform

  • Support: As part of a shared platform, you can have access to a wide range of operational administrative support on the backend including financial management, human resources, grounds administration, charitable compliance, risk management. You get to focus on doing the work that you want to do, and create change in the community.

  • Efficient: It's a way to operate within the charitable sector that's far more cost and time effective than becoming a new charity.

  • Expertise: MakeWay has a great governance structure set up to support projects where they each have a steering committee who are responsible for providing strategic advice and direction for projects.

Favourite Quotes from Today’s Episode

Post your favorite quote on social media to share with us!

“The basic premise of the shared platform, instead of setting up their own individual charity, groups will become part of the MakeWay legal structure. So we have 70 what we call projects on the shared platform right now, each of those 70 projects operates as part of the legal structure of MakeWay. And they all have access to shared operational and administrative support on the backend. So things like financial management, human resources, grounds administration, charitable compliance, risk management, all those things that you need to do to be a charity, but you really don't want to do because you probably want to be out there in the field, focused on whatever the programmatic work is that you love.”

“We really value the autonomy of projects to be able to make their own decisions around things like compensation, and again, different groups have, different values in terms of who they hire and what that looks like and at MakeWay, overrule, we have a commitment to equity, to economic well being, and we realize that we're in a position where we were providing guidance advice, and of course, with the legal employer.”

Resources from this Episode


The Neighborhood Group

Ontario Nonprofit Network

The Good Partnership


Cindy W.: In our sector, there's been a lot of talk or dialogue around funding to non-registered charities, which is basically a nonprofit or if you're in the state non 501 C3, and the need to get money to some of these really grassroots movements or organizations so that they can have a really big impact on the ground.

And, that is not new to an organization here in Canada called MakeWay they have been doing this kind of work for a while, building out relationships with nonprofits or movements and leveraging their charitable status to get funding on the ground of this work. And so I've invited their Director of a shared platform, Lizzie Howell to join the podcast, to talk about all the ins and outs of what that relationship looks like because I've worked with small organizations that act as I'm going to call it a fiscal sponsor, even though that's not the technical term in Canada, it is in the US so I've worked with small organizations, who've done that with nonprofits and some of you listening might be a nonprofit, not be registered, and this might be a great way for you to leverage the charitable status of another organization.

So that's what we're covering on the podcast today. Some of it's a little technical, but I promise it's super relevant, especially today where we're really talking as a sector, starting to talk about a redistribution of funding.

My name is Cindy Wagman and I'm your host of The Small Nonprofit Podcast, where we bring you practical down-to-earth advice on how to get more done in your small nonprofit. You are going to change the world and we're here to help.

So my guest today, as I said, is Lizzie Howells and she joined MakeWay in 2019 as the Director of the shared plan. And she has worked in the nonprofit sector in Canada and the UK for over 10 years in a variety of roles including consulting with a diverse range of charities and their human resources and operations.

Now, as you will hear, at the time of recording, Lizzie was, not too far off from having a baby. She's actually on mat leave now. So we'll congratulate her on the arrival of her little one. And definitely, as I said, whatever side of the relationship you're on, whether you're registered charity and you want to do more work on the grassroots and want to maybe partner with non-registered organizations, or if you're not registered and you want to partner with charities, this conversation has content for you. Here we go. Lizzie welcome to the podcast.

Lizzie H.: Thanks, Cindy. Very happy to be here today.

Cindy W.: I'm really excited about this conversation. We haven't talked about this on the podcast, but it's been coming up a little bit more in my circles and I'm really excited to dive in. We're going to be talking about shared platforms which I don't know if everyone knows what that is.

So let's just start by talking about what does this mean? Why should organizations care or understand what this is and how, and then we can dive into some of the other topics related to it.

Lizzie H.: Absolutely. Thank you for opening up the conversation because I love talking about shared platforms. I'm really passionate about this type of infrastructure as a real opportunity for the sector moving forward. And so very happy to get operational on this and talk about all of the things that I think a great about shared platform.

So to answer your question, what is a shared platform? So I work for an organization called MakeWay where a national charity and a public foundation, and our goal is to enable nature and communities to thrive together. And so 20 years ago MakeWay then called Tides Canada looked at the charitable sector and the environment and said, you know what? It is so expensive, and it is so time-consuming for groups to become a registered charity, you need a lawyer, you need an accountant, you need to fill out forms it can take two years and cost estimates are anywhere from sort of 10 to 20 or $25,000, just to get access to that legal status and that charitable number and our team back then thought, what if there was a better way to be able to function and for groups to access the sector?

So what we did in MakeWays, is we set up a, what is now called a shared platform. And the basic premise of the shared platform is that instead of setting up their own individual charity, groups will become part of the MakeWay legal structure. So we have 70 what we call projects on the shared platform right now, each of those 70 projects operates as part of the legal structure of MakeWay.

And they all have access to shared operational and administrative support on the backend. So things like financial management, human resources, grounds administration, charitable compliance, risk management, all those things that you need to do to be a charity, but you really don't want to do because you probably want to be out there in the field, focused on whatever the programmatic work is that you love. And that got you into doing that. Maybe you do know how to be an accountant and knew finance. But you just don't want to, or maybe you really don't know how to, and it just doesn't make sense for you to learn. So as part of a shared platform, you have access to a wide range of operational administrative supports on the backend. You get to focus on doing the work that you want to do and create change in the community. And you're part of a group of, in MakeWay's case I mentioned, we have 70 projects all across the country. There are many other sets of platforms that exist across Canada that have different geographical focuses and different programmatic focuses.

And so shared platforms look a little different, but we can get into, but the main premise is that it's a way to operate within the charitable sector that's far more cost and time effective than becoming a new charity.

Cindy W.: And, this is relevant, so relevant to small organizations on both sides of the charitable registration. So in Canada, we call it charitable registration in the states, it's 501C3, but the idea is that there are small grassroots organizations or movements that don't have status, who would benefit from being part of an organization that's doing this, but then there's also smaller organizations. One of our clients has done this, where they almost act as a shared platform.

And, the best way I can think of describing it is like they're lending out their charitable status, but that's not really that accurate, but I think that's how we often think about it where we're like, okay let's partner with an organization. Maybe they have a similar mission. I know a lot of organizations that host those non-registered organizations will charge an administrative fee and stuff like that. And so there's a lot to unpack here. And I actually think let's start with what you need to consider. If you want to host other organizations, because MakeWay is in a unique position in Canada, having gone through an audit through the charitable revenue agents in Canada revenue agency.

And so you have had to cross all your T's dot all your I's and really make sure that things are above board. And so I'd love if you're an organization, who is thinking about doing this, or maybe you've done this what can we learn from MakeWays experience to make sure that we are doing this in the best possible. That's a big question.

Lizzie H.: It is, but it's a great one. It's a great one. And Cindy, you've covered one of the biggest tensions that I definitely experienced that make grand. I think other shifts that experience too, which is this need and desire to balance the vision of bringing in smaller grassroots groups who are just doing fantastic. work with the operational realities of what that actually looks like. The start to start with the, w why you would want to do this and why as an organization you might want to host groups MakeWay, has definitely found, especially since the start of the pandemic.

But honestly, before that, too we have been pretty inundated with requests from groups saying, I'm seeing these issues in my community. I have a solution. I have an idea. I have some contacts. I know what to do. I just need charitable funding and it can take me a year or two to get that. And we don't have that time. The time is now I don't have the money to get a lawyer. I just, I need to make this work.

And so I think a lot of funders are realizing that too, that especially in the past 18 months or so there's been this real move within, from philanthropy to, to target funds, to grassroots groups, which is really fantastic. However, oftentimes there are not the sincere equals and qualified donees on the ground set up to actually do this work. So it's the one that handles all this money on the other hand where is it going?

And so that's where things like shared platforms, come into play and organizations who say, okay, I have all this money to give to X, Y, Z in these communities but how do I actually get it onto the ground if there aren't charities that are doing the work? And so that's where make where we often hear from folks saying, how do we start up a shared platform?

Or as you say, we don't necessarily want to host a huge shared platform, but we want to start some project work and some programs and get these groups within our structure so that we weekend we can really help connect the philanthropic funding available to commute. And so that is, that's an amazing vision.

And then as you say there are some risks around compliance and how we do that in a way that is in line with the CRA regulations. And I mentioned there are many other shared platforms across the country, but MakeWays is the only one that I know of, that's gone through a very lengthy audit with the CRA.

And the good thing about that is that we feel pretty equipped to, to understand the ways in which this could work I will say, I'm speaking on behalf of VFI steps that we've been given and there may be other legal advice and things out there. But the main thing that the main advice I would give is that when it comes to hosting projects the CRA is really big on these words that many folks may have heard before direction and control.

And so it's very important that organizations who are hosting groups, and hosting projects are not doing such things as flowing through funds or lending out their charitable number or anything in that way. That, that, that, that's not how charities are designed to work. It's not necessarily in the public benefit.

So what is important though, is that for MakeWay, for example, we can say, we are supporting the 17 projects across the country. But this genuinely is MakeWays work. This is how we achieve our vision. We have a bold vision of nature and communities thriving together. We can't do it by ourselves. We need these 70 groups and we work with them on that part.

And for example, for us some tips there of how you make sure that you're not only demonstrating that so that it looks like you're compliant, but to actually be compliant because there were some real benefits and how the shared platforms can be set up.

So for example, we have 70 projects and 150 to 200 employees across those projects. And all of those employees are employees of MakeWay so we're the legal employer, which means that we get to provide support for those employees when it comes to the employment legislation and payroll and setting up employment contracts.

So as, as well as that being a requirement for us demonstrating, but no, actually genuinely these employees are our employees of MakeWay, and this is our work. It's a great support that we can provide as well. And

Cindy W.: Can ask about that? Cause that seems okay. So the first thing I heard you say is it needs to be mission-aligned to, has to be like, here is our mission and we need these people to fulfill that mission. So it can be an extension or new projects or programs, but it has to fit with the mission. But as an org, if I were an organization looking at bringing on all these employees, as part of the project, I would start having heart palpitations. That's a huge risk, so is that again, I know you're not a lawyer, but in your experience, is that a requirement or is that something you've done to as like best practice.

Lizzie H.: Yeah. Good question. I would say both. I think it is best practice, but I would say it definitely is, I would struggle to imagine that it wouldn't be a requirement. And you're right in that it is a risk. And I think that's something that I would flag for organizations thinking of hosting projects.

There are many risks involved. Part of the risk is compliance and it's doing this in a way where, you know, by trying to help groups, you want to bring them in and you want to set up this infrastructure and further your own mission, but you want to do it well so that you're not putting everybody's work at risk if you're, not doing anything correctly.

And so there are opportunities there in terms of, there's a lot of increasing momentum at the moment around shared platforms and possibly some talk of some federal guidance coming from the CRA about how to best do this. At the moment it is more things like MakeWay it has sets of precedent, but again, different groups get different legal advice too. There's a whole host of ways that the shared share platforms operate. But again, having things like in employees of the projects and MakeWays employees. When it comes to financial management MakeWay does have a legal and fiduciary governance responsibility through our board of directors.

So we have a great governance structure set up to support our projects where they each have a steering committee, which is a little bit like aboard. But again, Without that actual, that, that legal responsibility. So steering committees are responsible for providing strategic advice and direction for projects.

We then have a staffing structure. We have a project director within each project like an ED equivalent to that project that may engage other staff, paid staff, employees, contractors, volunteers et cetera. So we have a strong governance structure in place to make sure that we're providing support for all staff and volunteers involved with projects, but also that they have opportunities for escalation for asking questions and things like that

Then, governance and the staffing structure also within MakeWay include a dedicated support team for each project. And this has been a really important part that I would definitely give advice to others on. And again, this will look different depending on the size of the organization, MakeWay started off with one project back in 2001, and we are now at 70. And so our staffing structure looks really different to somebody that may just be wanting to host a couple of groups. But I think the scale may be different, but the premise is the same, which is that we have this really important role called a project specialist and have a team of project specialists that operate a little bit like account managers and have a portfolio of projects that they support.

So for us, that's anywhere from sort of 10 to 16 projects that they may be working with to really be, that day-to-day point of contact to really understand the vision and the mission of the project and their values so that when it comes to operationalizing and implementing that work, we can say, okay, you want to do this thing great, here's how you do this in a way that is charitable with, it's engaging with the government needing to think about lobbying, whether it's what you can, and can't create a tax receipt for things like that. That's what we're here for.

The advice I would give is that you don't necessarily need a team of six project specialists if you're starting small. But then knowing, making sure that you have that tactical compliance in-house and very good legal counsel to go to and you'd have questions is definitely important. And again, although I think shared platforms can have this reputation for being, having to be a little bit more strict and conservative when it comes to compliance because it's such a unique, I would say unique structure.

There is something to be said for many of our projects that they appreciate that we've gone through this audit. They know that we have tractable compliance and it's one of the pieces that if you're a group wanting to do good in the world, having to keep up with all of the regulations and things like that is, is just not something you necessarily want to be doing.

So in MakeWay, we take that on everything from charitable regulation to how wage subsidies work during the pandemic. That's something that as the legal employer and the holder of all of the risk, we take that on. So it definitely does come with risk-taking of that, however, it can be really rewarding, especially if you can do the work upfront to invest in the staffing structure, the resources upfront.

Cindy W.: Okay, so many questions. I love this. This is so near to me as well. Okay. I have, okay. I don't know which questions to ask first. I'm going to ask about trade pay transparency, because now you've built an employee base of all these people coming from very diverse projects that have kind of their own funding models or revenue, models. So does, how do you is there an expectation or pay transparency across now MakeWay where you work for equity in those positions, or is it really just project-based and they manage their own like pay bands and all that kind of stuff.

Lizzie H.: Yeah, another good question. And again, you've touched on this sort of really important piece. When you have a community of 70 projects for us, we really value the autonomy of projects to be able to make their own decisions around things like compensation, and again, different groups have, different values in terms of who they hire and what that looks like and at MakeWay overrule, we have a commitment to equity, to economic wellbeing, and we realize that we're in a position where we were providing guidance advice, and of course, with the legal employer.

So the very, very base level I would say that it's more, the latter that projects can choose their own compensation levels our role at MakeWays to make sure nobody's paying any beyond to be on the minimum wage. Things like that, that everybody's meeting employment standards for whatever jurisdiction that they're living and working in.

And some projects will choose to have different roles, different job descriptions, we'll all pay different rates. And then from the official backend, we work together to co-create that. So someone has said, I want to have this best, and this is how much I think. And then we'll work with them on that. However, you highlight a really interesting opportunity in the, one of them, I would say the flaw is actually in the shared platform model that we haven't quite nailed yet is that we often have groups coming on and MakeWay doesn't provide fundraising support and fund funding necessarily to projects.

They, as you say, they are responsible for their own revenue generation, which looks pretty different across each project. And so we are often in a situation where folks who will join the platform and they're essentially fundraising for their own salaries, which will mean that maybe they're going to get paid less, 'cause they, they'll get some money coming in and I'll just take this. Or they really want to hire groups from within the community, people who have lived experience I cannot tell you how many times project directors have said don't worry about paying me if the money runs out, we'll pay them first.

And so as much as, yes, there's some autonomy in that there are a whole bunch of systems really impacting who gets to choose how much they get paid and what that looks like. And it's a totally different situation from a project coming on board with really strong funding relations and honestly staff who can afford to get paid less versus those who can't.

So MakeWay the rule, we are looking at how we can help support some of our projects, especially the smaller ones that are dealing with some of those challenges, whether it's looking at how to provide startup funding, or, giving really intentional advice, helping with some of the fundraising upfronts. So although the shared platform model breaks down many barriers to accessing the sector, just like anyone else. So appraising within the sector, it's a really interesting question about wage transparency, because we do recognize that we don't still hold if there are problems that right there are definitely some inequity staff to show.

Cindy W.: Very interesting, great that you're thinking about it and trying to solve these things because very complicated. And I do want to talk about the fundraising model because like organization or projects. Do you have to raise their own revenue, do how, but they also benefit from a whole infrastructure that you provide? So does that, how does that work or if a smaller organization is looking to build a shared platform, do, would they be setting up so that they take a percentage raised or an annual fee or, what have you seen that works that makes it really sustainable for both the charity, as well as the project.

Lizzie H.: So I would say the most common model is a percentage. And that's what MakeWay looks at is a percentage. Other shared platforms tend to as well. And so that means that for every dollar raised by groups that's a certain percentage that goes towards the shared administrative costs, I would say, across share platforms that you see anywhere from on average, 12 to 18% of revenue going to those costs.

Of course, one of the risks of an organization taking this work on is that you need to actually cover your costs probably unless you have funding that is subsidized from other ways. It can be costly to cover these costs. And at the same time, you are probably wanting to engage groups because you want to be able to offer something that's cost-effective.

And so you know that by sharing your administrative and operational resources with these groups they're going to have an opportunity to get more, some more support at a lower sort of percentage than if you were looking at a standard in an organization. And there are many estimates right now of overhead being the true cost of overhead, not what we put on our funder reports but really how much it costs to just keep the lights on and run an organization. It can be as high as 20% and that's not a bad thing. It means that the organizations are investing in their infrastructure. They're paying their staff all of those things. And overhead and administration costs can have a bit of a bad rap.

But one of the great things about the shared platforms and especially it MakeWays is that we, genuinely, have no belief. And through the research that we've done is that we can offer these suites of support at essentially a heavily discounted rate. Given the shared opportunities for working with. So that said, yes, our projects do need to do their own fundraising.

And for many projects, it could look like grants and awards for others. It's individual donations fee for service, lots of different ways, of course, that the projects can bring revenue in. And one of the really interesting trends that we've seen over the past year or so that I think is worth sharing is I mentioned that there's Philanthropic funding at the moment that is going to grassroots communities and people want to be able to distribute wealth equitably, which is amazing for all of us. And one of the things that I've seen in a way to do this more, more equitably as funders will say, okay accept one application per entity or per organization that has grown because we want to spread the money out and we want to make sure that everybody gets a chance to apply.

However, if you are a shared platform and you have say 70 projects operating under one charitable number, it's a nightmare. It's a huge disadvantage, especially if you're not going to make an exception to shared platforms whose projects literally couldn't exist without being on a shared platform. But then by being on a shared platform, they are disadvantaged and applying for some funds.

And so a big part of my role is engaging with funders and saying, Hey, you have these restrictions on your funding. Let me share with you a little bit about the model we actually exist so that we can have a more equitable distribution of wealth across the sector and a more equitable sector. Will you give us an exception and a lot of the time funder to say yes?

Unfortunately, there are some, I will not name names, but there are some really big funders that don't recognize those restrictions or the model. And sometimes in a really difficult position that I know my colleagues and other shared platforms are into where they're big funders, particularly geographic ones.

And we've got 10 projects that are fit and want to apply. And we have to choose one to put forth, which is a really horrible position to be in. And we've developed some guidelines and we're very transparent with projects when that happens, but it's not ideal. So my plea to any funders listening is that this model is still unique. It's very innovative. One of the reasons why I'm really hoping that we'll have some increased guide guidelines coming federally ranched up platforms is, to just help raise awareness within the sector so that when it comes to finding where we're having folks that are not being disadvantaged for being part of a shared platform and funders are actually really seeing how much that we saving costs for the projects themselves for the CRA that's 70 projects that don't have to do their own annual filing every year because they're working with us. Ultimately it is an incredibly cost-effective model for the projects that are operating on the platform and for organizations hosting projects if it's done well. And that's definitely an opportunity over the next year, I think for increased opportunities for funders.

Cindy W.: Yeah, this is so great. I w okay I want to talk a little bit, actually, before we talk about the project side a term that I have heard used a lot is fiscal sponsorship, right? So I just want, we talked about the shared platform and that unique structure, and it's not lending your charitable status. I feel like fiscal sponsor is just an older term for this model, but am I correct? Or are they two different things?

Lizzie H.: