Assessing Readiness for 501c3 Independence

We are a youth-serving organization that helps young people grow, thrive, and belong through sport and play. We currently serve more than 1,600 students each day across multiple school sites, with demand continuing to rise.

As we enter our next phase, we are developing a three-year strategic framework and forming a founding advisory board to support governance and long-term sustainability. As part of this planning, we are exploring whether to pursue independent 501(c)(3) status this year.

Our current structure includes a small staff, an LLC, and a fiscal sponsor—an arrangement that has allowed us to focus on program delivery while gradually building operational capacity. We recognize that independence involves more than legal filings; it requires ongoing governance, financial management, compliance, staffing, and fundraising systems that can sustain growth.

Through this consultation, we hope to gain strategic insight into:
- What it takes to maintain 501(c)(3) status over time (governance, financial, development, and compliance expectations)
- How small, growing organizations assess readiness for independence
- How funders, boards, and auditors typically view organizational structure and capacity
- The tradeoffs between continued fiscal sponsorship and becoming an independent nonprofit
- What systems, milestones, or staffing structures are helpful to have in place before pursuing independence
- How to determine the “right time” for a transition

The goal of this consultation is to develop a set of decision considerations, grounded in high-level guidance and an expert perspective, that our leadership and advisory board can use as we plan for potential independence.

For the Taproot volunteer, this engagement offers an opportunity to advise at a strategic level and help shape decisions that influence how we sustain high-quality, relationship-centered programming for the hundreds of young people we serve. We are happy to provide background materials in advance to support a productive consultation.

Experience Indicators:
- Experience with small or early-stage nonprofits
- Familiarity with 501(c)(3) maintenance requirements
- Experience supporting organizations through growth transitions
- Experience working with boards, audits, or funders
- Senior leadership or consulting experience

Bonus:
Experience supporting a transition from fiscal sponsorship to independent 501(c)(3) status