[simonw]

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 paperwork.

Or... you can find an existing 501(c)(3) that is willing to be your "fiscal sponsor". They handle the IRS paperwork and do things like provide a bank account for the donations to go into and make sure you are behaving correctly and legally.

They will generally do this for you because your cause matches with their mission - plus they usually get a small portion of your donations to help cover their costs (lots of accounting and legal work).

Once you've set that relationship up everything becomes massively easier for you... unless your fiscal sponsor dissolves itself, at which point you have to unwind that relationship and kick up a new one with someone else!

I learned about this because the Python Software Foundation occasionally acts as a fiscal sponsor.

[zachlatta]

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 [e-mail] 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.

[Forgeties79]

Just sent this comment to beehaw (fediverse instance). Open collective shuttering has them scrambling. Appreciate your willingness to help folks out with this!

[PenguinCoder]

Thanks for the headsup @BolexNOLA. Penguincoder here (of Beehaw) and we are tracking on this outreach. We definitely want to go with another well known and trustworthy fiscal host. Not sure that a Rails UX matters in this context but certainly nicer than some other banking front-ends...

[Forgeties79]

Happy to help. Guess you know my HN and beehaw accounts now haha

[dzink]

Ask them to add you to this list they mention in the announcement: https://airtable.com/appQVOmXysA863DDc/shrdjThde0Xteoabu/tbl...

[MaxLeiter]

Hack Club Bank was awesome back when I was helping organize HackSC. Thanks for the software!

[ametrau]

> donations from funders including Ford Foundation, Gates Foundation,

You know the projects “hack club” sponsor are going to be a particular “type”, and probably very weird and wasteful.

[albert180]

Could you explain it, instead of making weird implications, that only some insiders will understand?

[momentary]

HackClub.com purports to support Highschool coding clubs and building open source learning tools - I can't claim to know how successful this goal is, but it doesn't seem untoward or overly wasteful to me!

[ShaneCurcuru]

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 law means that generally, 501(c)(3) public charity organizations can't just transfer the money anywhere - it'll most likely need to be another 501(c)(3) or equivalent. That's going to trip a lot of people up who want to go to OC (for-profit) or OSC (a 501(c)(6) business leage), because neither will qualify for accepting fund transfers (I think).

Also, if you have any offinity for Europe, look at the OCE - they are a charity, and they sound like they're seeing if they could accept fund transfers from OCF for projects that fit their model. https://opencollective.com/europe/updates/regarding-the-anno...

[kseton99]

Hi guys, my law firm Seton & Associates originally assisted in establishing this 501c3 fiscal sponsor Open Collective Foundation many years ago. I have been a law practitioner in the space of advising charitable structures for 25 years. We know the ins & outs of the world of fiscal sponsorship. In addition, I am the CEO, Founder & Chairman of the Edward Charles Foundation which is a 501c3 fiscal sponsor. We are registered in all 41 jurisdictions requiring such registration and also are audited each year by an independent CPA Firm. We can help. We also have relationships with many fiscal sponsors to refer you if we are not the right fit. Feel free to email at [e-mail] and I will respond promptly.

[samspenc]

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?

[anticorporate]

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.

[reverius42]

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 (?).

[michaelt]

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.

[ShaneCurcuru]

As noted elsethread, there are several 501(c)(3)s that pay for software development, either via having their employees/contractors do it (directly or indirectly), or by providing grants or one-off funding for specific kinds of work. It really depends on the organization what their policies are.

The LF has plenty of employees who help code on their various sub-foundations in one way or another. Python, NumFocus, PHP, and some others have grant programs to help pay developers to work on specific code. And Conservancy and SPI are fiscal hosts that allow their independent projects to fundraise and pay for their own work.

On the other hand, the ASF explicitly does not allow funding to pay for project development, at least not in the context of the ASF itself. The ASF does have a paid infra staff/contractors who do write code, but it's all to run infra, not for project releases.

As noted elsethread, it's all about what the charity was setup to do.

[mistrial9]

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.

[thayne]

> This involves a lot of bureaucracy and paperwork.

And depending on the state, you may need a board of directors. Which is a huge pain for really small projects. Like say one or two developers.