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