Cybersecurity & Compliance for Fiscal Sponsors

For fiscal sponsors, managing compliance is nothing new. From financial oversight to IRS reporting, sponsors provide the operational backbone that allows nonprofit projects to thrive. But in today’s increasingly digital world, there’s another area of compliance that deserves urgent attention: cybersecurity.

As stewards of sensitive data—including donor information, financial records, and employee credentials—fiscal sponsors are attractive targets for cybercriminals. The consequences of a data breach go far beyond financial losses. A single incident can undermine trust, disrupt operations, and damage the missions of every project under your umbrella.

In 2024, Infosecurity Magazine reported that nonprofits saw a 30% year-over-year increase in weekly cyberattacks, highlighting the growing risk landscape for mission-driven organizations. Protecting your mission is harder than ever, as cyber threats evolve and appear in many different forms. Phishing remains one of the most common entry points for attackers, often disguised as legitimate emails or login requests. These attacks can trick even well-trained staff into handing over passwords, financial details, or sensitive organizational data.

So what does this mean for fiscal sponsors?

Cybersecurity Is Now a Compliance Issue

Traditionally, cybersecurity was seen as an IT concern—important, but separate from governance and compliance. That’s no longer the case. Regulators, funders, and insurance providers increasingly expect nonprofits to demonstrate due diligence in protecting their digital assets. If your organization collects or stores personal information, you may already be subject to laws like the California Consumer Privacy Act (CCPA) or the EU’s General Data Protection Regulation (GDPR).

For fiscal sponsors, this means taking a broader view. You’re not just securing your own operations—you’re responsible for the digital health of every sponsored project. Even if a project operates with some independence, its data handling and communication tools may still reflect on your organization in the eyes of auditors, donors, and stakeholders.

Building a Secure and Compliant Infrastructure

Effective cybersecurity starts with a risk-based approach. Begin by identifying where your data lives—whether in cloud systems, file-sharing tools, email inboxes, or financial platforms. From there, implement foundational security measures such as:

• Multi-factor authentication (MFA) for all staff and contractors
• Regular security awareness training for employees and sponsored projects
• Role-based access controls to limit exposure of sensitive data
• Incident response plans that include notification procedures for stakeholders

These steps not only help prevent breaches but also demonstrate to funders and regulators that you are serious about compliance and risk management.

A Shared Responsibility Across Sponsored Projects

One of the key themes we’ll explore in our upcoming RoundTable Technology webinar, Protecting Your Mission: Essential Cybersecurity for Fiscal Sponsors and Their Sponsored Projects, is that cybersecurity can’t sit on one person’s desk—it requires a shared culture of vigilance and responsibility.

Fiscal sponsors should empower their sponsored projects with guidance, policies, and tools to follow cybersecurity best practices. Consider offering cybersecurity onboarding for new projects, conducting annual security reviews, and maintaining open communication channels for reporting threats or concerns.

Remember, your reputation as a fiscal sponsor depends not just on your systems, but on the security posture of every project under your wing.

The Bottom Line: Cybersecurity Is Mission Protection

In the nonprofit world, compliance is about more than ticking boxes—it’s about safeguarding the work your community depends on. Cybersecurity is no longer optional; it’s a core part of fulfilling your fiduciary and operational responsibilities as a fiscal sponsor.

That’s why we’re inviting fiscal sponsors to join our upcoming free webinar:

Protecting Your Mission: Essential Cybersecurity for Fiscal Sponsors and Their Sponsored Projects.

This session is specifically tailored for organizations like yours, offering actionable strategies and expert insights to help you reduce risk, ensure compliance, and protect the communities you serve.

👉 Register now to reserve your spot and take the first step toward a stronger cybersecurity foundation.

Sources:

• Infosecurity Magazine. “Cyber-Attacks on Nonprofits Increased by 30% in 2024.”