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Open Collective Official Statement – OCF Dissolution

blog.opencollective.com

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Re: Open Collective Official Statement – OCF Dissolution

#21

Post by bombcar »

yorwba wrote: post #13
bombcar wrote: post #4

Earlier quoted context omitted.

Seems to me pretty simple - the "for profit" company behind the foundation (read: the for profit entity that charges the foundation as much as it can) charged too much so the foundation dissolved. >Unfortunately, over the past year, we have learned that Open Collective Foundation's business model is not sustainable with the number of complex services we have offered and the fees we pay to the Open Collective Inc. tec…

The foundation paid a lot more for their own employees than for the platform https://opencollective.com/foundation#category-BUDGET so I don't think you can pin it solely on the company, the "complex services" performed by the foundation itself also cost money. What confuses me about the budget breakdown is that the all-time expenses and contributions don't add up to the top-line disbursed and income amounts. Especial…

"This year" is all "no tag" which sounds like it's not sorted yet, or just shutdown expenses.

Last year was $1.3m for 5 "number of expenses" (high but not insanely so depending on what it covered) and $400k for the platform.

You can go into detail: https://opencollective.com/foundation/transactions?kind=EXPE... and I'm not sure how they classify employment versus various other things.

It may be that the for-profit company gave the foundation a ball of money to start, and it was to get self-sufficient by now, and failed to do so.

Re: Open Collective Official Statement – OCF Dissolution

#22

Post by ocdtrekkie »

bombcar wrote: post #4
armchairhacker wrote: post #2

I think https://blog.opencollective.com/open-collective-official-sta... is a better link. It also seems “Open Collective Foundation” is shutting down, and “Open Collective” is a super-organization which contains a lot of sibling organizations (“Open Source Collective”, “Open Collective Europe”). And most of the entities getting donations through OCF can simply move to other organizations (hopefully automatically keep…

Seems to me pretty simple - the "for profit" company behind the foundation (read: the for profit entity that charges the foundation as much as it can) charged too much so the foundation dissolved. >Unfortunately, over the past year, we have learned that Open Collective Foundation's business model is not sustainable with the number of complex services we have offered and the fees we pay to the Open Collective Inc. tec…

OpenCollective used to be much more transparent about how this was handled, but I don't think the math has actually changed much over the years:

Open Source Collective has a 10% fee. To my understanding, 5% of that used to go to OSC itself and 5% of it used to go to OpenCollective. OSC is stable, and still around, so I assume this math continues to work fine, but they simplified the view of it to just say "10% Host Fee" now, which includes both OSC and OC's portions.

However, you'll notice Open Collective Foundation is only charging 5%! That means, even assuming OCF was getting better pricing than OSC (another arguably internal fiscal host), there's almost no margin for OCF to operate.

It looks like OCF wasn't billing enough to cover what is otherwise probably a pretty reasonable platform cost.

EDIT: Actually, even crazier, it looks like OCF became 5% because OpenCollective gave OCF free service starting in 2020: https://blog.opencollective.com/open-collective-platform-is-...

Re: Open Collective Official Statement – OCF Dissolution

#23

Post by samspenc »

ShaneCurcuru wrote: post #18
simonw wrote: post #16

This is going to be a huge pain for the 600 groups that this affects (few of which are open source projects - this is NOT the part of Open Collective that handles open source). The key thing to understand here is what a "fiscal sponsor" is in the US charitable world. If you want to accept charitable donations from people in the US you really need special tax status with the IRS. This involves a lot of bureaucracy and…

I have a general explainer about the OCF shutdown (not the OC, or OSC, or OSE, or OSNV!) over here, where I include more links to software foundations that might also act as fiscal hosts, like Conservancy, SPI, or NumFocus. https://communityovercode.com/2024/02/open-collective-founda... What we really need is a lawyer/accountant/tax person to write a focused guide for collectives and how to move their money. US tax l…

I've wondered about this for a long time - can't a 501(c)3 non-profit hire open-source developers as employees, or easier, employ or fund them as contractors and pay them through a 1099?

I'm sure that non-profits hire for-profit companies or contract out work in some way, wouldn't that model apply to supporting open source projects through a non-profit?

Re: Open Collective Official Statement – OCF Dissolution

#24

Post by reverius42 »

samspenc wrote: post #23
ShaneCurcuru wrote: post #18

Earlier quoted context omitted.

I have a general explainer about the OCF shutdown (not the OC, or OSC, or OSE, or OSNV!) over here, where I include more links to software foundations that might also act as fiscal hosts, like Conservancy, SPI, or NumFocus. https://communityovercode.com/2024/02/open-collective-founda... What we really need is a lawyer/accountant/tax person to write a focused guide for collectives and how to move their money. US tax l…

I've wondered about this for a long time - can't a 501(c)3 non-profit hire open-source developers as employees, or easier, employ or fund them as contractors and pay them through a 1099? I'm sure that non-profits hire for-profit companies or contract out work in some way, wouldn't that model apply to supporting open source projects through a non-profit?

It might be hard to justify the need for that software -- I don't think 501(c)3 orgs can do literally anything they want and keep their 501(c)3 status. The things they fund have to go towards a specific mission, and "putting more OSS into the world" might not be a valid mission (?).

Re: Open Collective Official Statement – OCF Dissolution

#25

Post by neilv »

If OCF couldn't afford the fees paid to OCI, is there related risk to the other Open Collective entities (OSC, OCE, etc.)?

> Unfortunately, over the past year, we have learned that Open Collective Foundation's business model is not sustainable with the number of complex services we have offered and the fees we pay to the Open Collective Inc. tech platform.

-- "Open Collective Foundation Dissolution Announcement" https://docs.google.com/document/d/1odj1zfwqZgIyGOeBhv5QZxYH...

Re: Open Collective Official Statement – OCF Dissolution

#26

Post by geerlingguy »

NewJazz wrote: post #5

Is there a list of the 600 "collectives" that need to migrate to continue accepting donations? Do any of them already have alternative donation methods?

Early on, I had 'Drupal St. Louis' (a local meetup group) on the platform, and it was a huge help in our ability to put on a large-ish annual gathering. There's no other way we could've done it short of a very benevolent for-profit local company putting up all the resources.

Alas, that group slowly disbanded over the past few years, so luckily this announcement doesn't hurt us. But I have pulled out the last bit of funding we had left, and will donate it to a local tech foundation.

Re: Open Collective Official Statement – OCF Dissolution

#27

Post by mistrial9 »

reverius42 wrote: post #24
samspenc wrote: post #23

Earlier quoted context omitted.

I've wondered about this for a long time - can't a 501(c)3 non-profit hire open-source developers as employees, or easier, employ or fund them as contractors and pay them through a 1099? I'm sure that non-profits hire for-profit companies or contract out work in some way, wouldn't that model apply to supporting open source projects through a non-profit?

It might be hard to justify the need for that software -- I don't think 501(c)3 orgs can do literally anything they want and keep their 501(c)3 status. The things they fund have to go towards a specific mission, and "putting more OSS into the world" might not be a valid mission (?).

the mission of the 501(c)3 is defined in the original application for status. It is correct that spending has to be documented and related to the mission. There are more than a million 501(c)3 in the USA and the vast majority are small operations that are mission focused, and they do have to document and play by the rules, or face penalties or closure. That said, there is a "one percent" of non-profits who operate completely (mostly secret) structures and have for decades upon decades.

A primary reason to have a fiscal sponsor 501(c)3 -- and pay ten percent or more of income -- is that the paperwork is non-trivial each year.

Re: Open Collective Official Statement – OCF Dissolution

#28

Post by zachlatta »

simonw wrote: post #16

This is going to be a huge pain for the 600 groups that this affects (few of which are open source projects - this is NOT the part of Open Collective that handles open source). The key thing to understand here is what a "fiscal sponsor" is in the US charitable world. If you want to accept charitable donations from people in the US you really need special tax status with the IRS. This involves a lot of bureaucracy and…

Hi - I'm the executive director of Hack Club (https://hackclub.com). We are a nonprofit that helps tens of thousands of teenagers learn to code each year, and in 2018 we launched an in-house fiscal sponsorship program called Hack Club Bank (https://hackclub.com/hcb/), originally for our students.

Our sponsorship program has expanded and we now serve organizations of all mission types, including software, climate, and social movements. We sponsor over 1,500 organizations, most of them grassroots, and receive donations from funders including Ford Foundation, Gates Foundation, and many others for them.

We've been helping many OCF groups that need a new fiscal sponsor, and 3 have transferred over already. For any groups reading this - we would be happy to work with you and continue supporting your work.

Please email me directly at zach@hackclub.com and I can connect you with the right person on our team.

There are two unique things about HCB that sets us apart: 1) we are software-enabled, with a custom Rails app for financial management, which offers dramatically better UX than most fiscal sponsors (there is a demo if you click the screenshot on https://hackclub.com/hcb/), including the ability to have physical spending cards, and 2) we are a nonprofit ourselves, and any excess fees go toward making HCB free for high school students and supporting their education.

Re: Open Collective Official Statement – OCF Dissolution

#29

Post by michaelt »

reverius42 wrote: post #24
samspenc wrote: post #23

Earlier quoted context omitted.

I've wondered about this for a long time - can't a 501(c)3 non-profit hire open-source developers as employees, or easier, employ or fund them as contractors and pay them through a 1099? I'm sure that non-profits hire for-profit companies or contract out work in some way, wouldn't that model apply to supporting open source projects through a non-profit?

It might be hard to justify the need for that software -- I don't think 501(c)3 orgs can do literally anything they want and keep their 501(c)3 status. The things they fund have to go towards a specific mission, and "putting more OSS into the world" might not be a valid mission (?).

The PHP Foundation collects donations to fund maintenance and improvement to the PHP language, which is their charitable goal.

As far as I know, when you start a nonprofit there's no requirement that your nonprofit be particularly efficient or socially useful. You want to run a hospital that pays its CEO handsomely? Build a church in a town that already has plenty of churches? Organise international exchanges of frozen horse semen for a rare breed of horses? Run a college that charges $50k/year tuition? Pay for monks to just kinda hang out and vibe?

The IRS doesn't seem to require and proof those monks are measurably good for your immortal soul, or that there's widespread public support for horse semen exchanges, or that the college would be destroyed if they didn't have a football coach. The charity can just say "yeah we think the football team is, uh, good for student engagement, which serves our charitable goal" and the IRS goes along with it.

If a nonprofit college can pay a football team coach, the PHP foundation can certainly pay developers to work on PHP.

Re: Open Collective Official Statement – OCF Dissolution

#30

Post by anticorporate »

samspenc wrote: post #23
ShaneCurcuru wrote: post #18

Earlier quoted context omitted.

I have a general explainer about the OCF shutdown (not the OC, or OSC, or OSE, or OSNV!) over here, where I include more links to software foundations that might also act as fiscal hosts, like Conservancy, SPI, or NumFocus. https://communityovercode.com/2024/02/open-collective-founda... What we really need is a lawyer/accountant/tax person to write a focused guide for collectives and how to move their money. US tax l…

I've wondered about this for a long time - can't a 501(c)3 non-profit hire open-source developers as employees, or easier, employ or fund them as contractors and pay them through a 1099? I'm sure that non-profits hire for-profit companies or contract out work in some way, wouldn't that model apply to supporting open source projects through a non-profit?

In a nutshell, yes, but there are very few FOSS nonprofits with funding that allows them to do this. The Linux Foundation pays Linus, and I know the OpenInfra Foundation has a few technical roles on staff, but most simply don't have anywhere close to the money to pay for actual development. It's not a particularly attractive venture for corporate sponsors, or at least hasn't been historically, because they can spend the same money on their own developers and have much more control over what features and bugfixes get prioritized.
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