Module 5: Citizen Action Card, Open the Backpack
How to Audit a Fiscal Sponsor in Five Minutes
Pairs with Module 5: “The Backpack Trick” — Fiscal Sponsorship
You now know what fiscal sponsorship is — a legal arrangement that lets an unincorporated project raise money, hire people, and run campaigns under an established 501(c)(3)’s tax ID without ever becoming its own legal organization. The project has no EIN, no board, no 990. On paper, it does not exist.
This card teaches you how to look at any 501(c)(3) or (c)(4) parent and estimate how many invisible projects are hiding inside it — using only three schedules of the public Form 990.
What a Fiscal Sponsor Looks Like on Paper
Unlike an entity stack (Module 4), a fiscal sponsorship leaves most of its paper trail on a single 990. The problem is that the 990 does not cleanly list the sponsored projects. You have to read the 990 sideways.
The 5-Minute Fiscal Sponsor Audit
Step 1 — Pick a parent and pull the 990
Go to projects.propublica.org/nonprofits/ and search for the organization you suspect is acting as a large fiscal sponsor. Pull the most recent 990.
Look at the top of the return at Part I — Summary. Two numbers matter:
Line 12 — Total revenue. If this is in the tens or hundreds of millions of dollars for an organization whose public-facing mission looks small or vaguely “educational,” something is being hidden in the scale.
Line 18 — Total expenses. If this is also in the tens or hundreds of millions, the parent is running something much larger than its public profile.
Step 2 — Read Schedule I (grants to other organizations)
Schedule I lists every grant of $5,000 or more the parent made to an external organization during the year. These are the visible outputs.
Open Schedule I.
Count the total dollars listed in Schedule I grants.
Compare that to Line 18 (Total expenses) from Part I.
If Schedule I accounts for most of the parent’s expenses (say 70%+), the parent is mostly a re-granter — not a fiscal sponsor. The money it took in is flowing to other real organizations with their own 990s. That is not the backpack trick.
If Schedule I accounts for only a small share of the parent’s expenses (say under 30%) and Line 18 is still very large — the rest of the money is being spent inside the parent. Keep reading. This is the fingerprint of a fiscal sponsor running many internal projects.
Step 3 — Read Part IX (functional expense breakout)
Part IX breaks the parent’s expenses into categories. For a fiscal sponsor running many sponsored projects, the giveaway lines are:
Salaries and wages — is it large relative to total expenses? (Sponsored projects hire staff through the parent.)
Other employee benefits — same pattern.
Office expenses / Occupancy / Information technology — sponsored projects share the parent’s overhead.
Other expenses (Line 24a–24e) — this is the catch-all bucket. If this line alone is tens of millions of dollars, the parent is hiding significant program activity under “Other.”
Ratio check: a classic fiscal sponsor will show large salaries + large other expenses + small grants to external organizations. That is the backpack.
Step 4 — Keyword-search Schedule O
Schedule O is the narrative supplement. The parent is required to use it to explain unusual items. Sometimes — not always — the parent will list the names of specific sponsored projects here, especially if those projects made distinctive payments or generated distinctive revenue.
Pull up Schedule O.
Search the text for common fiscal-sponsor project keywords: project, initiative, campaign, coalition, fund, center for, fellowship.
Any project name you find that does not appear in Schedule I or Schedule R is a candidate sponsored project.
Write down every name you find.
Step 5 — Verify: does the “project” have its own EIN?
For every candidate project name you wrote down, go to the IRS’s Exempt Organizations Business Master File (EO BMF) or use ProPublica Nonprofit Explorer’s search to see whether that name has its own tax-exempt determination and its own EIN.
If the project name has its own EIN and its own 990 — it is a related organization, not a fiscally sponsored project. Cross-check it against Schedule R.
If the project name has no EIN and no 990 — you have just found a fiscally sponsored project. It does not exist as a legal entity. It exists as a line inside the parent.
Calculate the Backpack Score
Count these five signals. Each one is worth one point:
Parent’s total expenses exceed $10M but Schedule I grants are under 30% of expenses (+1)
Part IX “Other expenses” line is over $5M (+1)
Schedule O references three or more named projects, initiatives, campaigns, or coalitions (+1)
Five or more of those referenced names have no EIN when searched on ProPublica / IRS EO BMF (+1)
Parent’s public website lists “our projects” or “our programs” naming projects that do not appear on the IRS EO BMF (+1)
0–1: Conventional grant-making nonprofit. Not a significant fiscal sponsor.
2–3: Active fiscal sponsor. Worth understanding — may be legitimate community sponsorship at scale.
4–5: Industrial-scale backpack. Most of the parent’s program activity is being run through fiscally sponsored projects invisible at the project level. This is the architecture the series is teaching you to see.
Quick Reference: Backpack Red Flags (Not Proof — Questions Worth Asking)
Single project announces “we are fiscally sponsored by X” at the bottom of its website
Confirmed sponsored project
The parent X is the one whose 990 you audit
Your Assignment
Pick ONE of these:
Option A — The Sponsor Walk. Pick any large, advocacy-adjacent 501(c)(3) or 501(c)(4) you have seen in the news in the last twelve months. Pull its most recent 990 from ProPublica. Run the full 5-step audit. Calculate the Backpack Score. Report what you find.
Option B — The Website Walk. Go to the public website of any of the seven Arabella-affiliated nonprofits (New Venture Fund, Sixteen Thirty Fund, Hopewell Fund, Windward Fund, North Fund, Telescope Fund, Impetus Fund) or any other fiscal-sponsor platform the article references. List every project, initiative, campaign, or coalition the website names. Cross-reference each name against the IRS EO BMF. Count how many have no EIN. That count is the count of fiscally sponsored projects the website is telling you about that do not exist on IRS paper.
Option C — The Reverse Walk. Pick any politically-active campaign, coalition, or issue-advocacy brand whose name you have seen in the news but which you cannot find on ProPublica Nonprofit Explorer. Read its website footer and “About” page. Most fiscally sponsored projects disclose their fiscal sponsor at the bottom of their website (required by the National Network of Fiscal Sponsors guidelines). The named sponsor is the 501(c)(3) whose 990 you then pull. That is the reverse-walk — project name → fiscal sponsor → parent 990.
Report what you find. Post it in the comments. Tag us. Every citizen who opens a backpack makes the architecture one step more visible.
Shadow Patriots Action Library · Module 5 · Project Milk Carton · 501(c)(3) · EIN 33-1323547