What Is a Philanthropic Intermediary?
Philanthropic intermediaries connect funders to the groups they fund. The term “intermediary” refers to many kinds of entities, most of which are regrantors of philanthropic dollars, including fiscal sponsors, community foundations, collaborative or pooled funds, hosts or managers of donor-advised funds (DAFs), giving circles and more.
Philanthropic intermediaries connect funders to the nonprofits they fund. They can take different forms, including:
- Collaborative or pooled funds.
- Regrantors.
- DAF managers or DAF host organizations.
- Community foundations.
- Fiscal sponsors.
- Giving circles.
What do philanthropic intermediaries do?
Ideally, intermediaries make it easier for funders to give effectively. Intermediaries provide infrastructure, expertise, administrative support, power in numbers, and more to help funders support nonprofits.
Types of Philanthropic Intermediaries
There are many different types of philanthropic intermediaries. Common types of intermediaries include:
Collaborative or pooled funds
Through donor collaboratives or pooled funds, grantmakers combine their resources to make a bigger impact. Some collaborative or pooled funds have expert staff that creates grantmaking strategies and researches potential grantees to maximize impact.
Regrantors
Many intermediaries are regrantors, meaning they gather contributions from many funders and then regrant them to nonprofits. Regrantors can be especially helpful when it comes to global giving or moving resources to small, community-based organizations. In fact, much of the global giving by U.S.-based funders happens via U.S.-based regrantors. Say a U.S.-based funder wants to support groups protecting rainforests. They can make a grant to a U.S.-based intermediary that has a better understanding of the local groups in an area with a threatened rainforest, as well as the legal and administrative infrastructure to make charitable contributions in other countries.
DAF managers or DAF host organizations
Donor-advised funds – through which individual donors recommend grants from dedicated charitable accounts – can be housed at community foundations or at fund managers such as Fidelity Charitable or Schwab Charitable (two of the largest DAF managers). These host organizations or fund managers are intermediaries. They receive individual donors’ funds, set up and manage their DAF accounts, process grants from DAFs, and invest DAF funds that are not paid out in the form of grants in a given year.
Community foundations
Community foundations receive funds from many donors, and then regrant and invest the funds to benefit the community. A donor who wants to contribute to improving the quality of life in their town, but doesn’t have time to research which nonprofits are doing the most effective work, can donate to the local community foundation. The community foundation will then make grants to support an array of nonprofits in the community, working on issues like health and wellness, homelessness and the arts. Funders can also support demographic community foundations to make a difference in a particular population or religious community, such as LGBTQ community foundations, Jewish federations or women’s funds. Many community foundations also host donor-advised funds and giving circles.
Fiscal sponsors
A fiscal sponsor is an organization that shares its nonprofit legal and tax-exempt status with groups that don’t have 501c3 status. This can be a way for nascent or small organizations to receive funding while they work toward getting their own 501c3 status, and a way for funders to make tax-deductible contributions that support new or small organizations.
Giving circles
A giving circle is a group of individuals who pool their resources to share. Each member contributes to the pool, and then they decide together where to regrant or gift the funds. Giving circles can be informal and self-organized, or more formal and structured. Some giving circles are housed at community foundations, which provide logistical and administrative support as well as philanthropic expertise.
Many intermediaries offer a combination of these functions and more. For instance, NEO Philanthropy, an intermediary focused on social justice and human rights, hosts collaborative funds and donor-advised funds, fiscally sponsors nonprofits, and gives advice to nonprofits as well as donors.
Examples of Philanthropic Intermediaries
Different types of intermediaries move funds across different focus areas, geographic areas, types of funding approaches, and even different movement-building efforts. Some examples of philanthropic intermediaries include:
- Intermediaries such as the CLIMA Fund and the Global Greengrants Fund move funds to local grassroots groups working for climate justice in different regions. They research and build relationships with local groups on the frontlines of climate work, enabling donors to effectively fund community-based climate groups around the world.
- The Economic Security Project supports local projects and research to advance new economic models that might work better for everyone. Major grantmakers including the Omidyar Network, the William and Flora Hewlett Foundation, and the Ford Foundation back ESP, which regrants the funds to highly local efforts to create fairer economies.
- The Proteus Fund connects donors to grassroots movements. The Proteus Fund offers collaborative funds focused on specific areas like democracy reform and racial justice. Proteus staff has done research to identify and build relationships with groups doing important work in those areas. Donors give to the collaborative fund, and Proteus then makes grants to grassroots groups it believes will have a strategic impact on that issue.
How can I approach an intermediary about getting a grant or fiscal sponsorship?
Because there are so many different intermediaries – and types of intermediaries – there is no single path to approaching an intermediary about a grant or other support. Here are some tips for getting grants or other support from different kinds of intermediaries:
- Intermediaries that exist to move resources to local or grassroots groups are often quite approachable by design. Check their websites for guidelines for grantseekers or organizations seeking fiscal sponsorship. If they don’t accept unsolicited proposals, that usually means their staff has a process for researching and reaching out to possible grantees — so if your organization is doing good work on an issue they fund, they may well approach you.
- Get on the radar of a giving circle by building a relationship with one of its members or, in the case of giving circles housed at community foundations, by making sure the community foundation is aware of your nonprofit’s work. It’s not uncommon for a community foundation to share information with giving circles about effective nonprofits in their area of interest.
- Think of approaching a donor-advised fund holder as individual-donor fundraising. It’s just that in this case, the individual donor will make their contribution through a DAF.
- To find a fiscal sponsor, get to know nonprofits in your field. Which organizations are fiscally sponsoring other small or new nonprofits in the same field? Is there an intermediary dedicated to supporting small, community-based groups working on the issue your nonprofit works on? Some established nonprofits or intermediaries make a practice of fiscally sponsoring small or new organizations in their sector. For example, Film Independent has a fiscal sponsorship program to help independent filmmakers and media artists access philanthropic funding. Fulcrum Arts fiscally sponsors independent artists, art collectives, and small arts organizations.
What is the purpose of intermediaries in philanthropy?
There are cases to be made for – and against – the role of intermediaries in philanthropy.
Some say we don’t need intermediaries, and that direct giving would almost always be better. In some cases, intermediaries act as gatekeepers or create extra steps in the process of moving resources to nonprofits. Further, some intermediaries reduce transparency or accountability around philanthropic giving; for instance, grants made through donor-advised funds can be anonymous.
But in many cases intermediaries are helpful. Intermediaries can help funders easily and strategically move resources to small or new nonprofits, grassroots groups, organizations in other countries, and underfunded sectors.
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