4 ms·

Interestingly, non-profits tend to have the same problem with general fund funding. People will donate food or buildings (which is great), but it is actually h

Interestingly, non-profits tend to have the same problem with general fund funding. People will donate food or buildings (which is great), but it is actually hard to get money to pay the utilities. In-kind on grants helps but is often shrunk for reasons of "getting more money to do the objective". Paying technical debt or utilities is not sexy and a lot of people want their name attached to cool new things not keeping the lights on.

bluehatbrit 5y ago
This is a such an understated problem with non-profits and charities. In the UK (not sure about other countries) it's pretty common for people to give money to a charity which is ring-fenced for a particular thing. Legally the charity then can't use that money for anything else. No one wants to fund the general running of a charity, they'd rather fund a specific event or programme. That causes so much overhead on accounting to ensure those funds go to the right projects and figuring out how to pay the water and electric bills. People don't realise that it actually costs more money on accounting to give ring-fenced money like that. I imagine similar is true towards things like the linux kernel with development efforts.
- rkangel 5y ago
  You inevitably need to fundraise for something, because it's the emotive stuff that helps you fundraise. You can be careful about your fundraising though to make sure that it isn't quite as restrictive as it needs to be. My favourite story here is "Scrunchy the cat". Scrunchy was a cat in one of the UK cat charities (Cat's Protection?) who needed a hip operation. Management were very clear "if you raise money for this, make sure it's not restricted to just Scrunchy". Inevitably the fund raisers ignored this completely and ended up raising enough money for Scrunchy to have 20 hip operations and the money couldn't be used for anything else. Scrunchy had her hip operation, and then for a few years afterwards any cat in the Cat's Protection who needed the same operation was renamed Scrunchy!
zachlatta 5y ago
I run a nonprofit and we have a policy that we only accept unrestricted funds to allow us to operate at maximum efficiency and impact. There is a large and not often talked about principle agent problem that restricted donations create, in addition to the additional overhead. We make our finances 100% transparent so the people we serve, donors, and the public can hold us accountable. Our open finances are at https://bank.hackclub.com/hq/ https://bank.hackclub.com/hq/. Main homepage at https://hackclub.com https://hackclub.com / open source at https://github.com/hackclub/hackclub https://github.com/hackclub/hackclub
- saul_goodman 5y ago
  This is a great way to go when you have a very narrow scope as it seems you have here (well done btw). The downside for groups with wider scopes is turning away money if the donor isn't comfortable with this. Even a hackerspace may have this problem. A donor may wish to sponsor some improvements to the metal shop, but if they don't restrict the donation for the metal shop, then some delay occurs, new board is elected, etc, then suddenly those funds get lost in the shuffle and money gets spent on the wood shop instead. It does keep a non-profit honest, but unfortunately yea it comes with overhead of tracking the funds and ensuring they get routed correctly.
- illsorted 5y ago
  Just want to say that Hackclub is an awesome idea. Nice work!
saul_goodman 5y ago
Seconding this. However I do appreciate the chicken-and-egg problem donors have here as they can get tricked into throwing money at a non-sustainable project if it's not already on steady-enough-legs to cover the non-sexy things that need money to operate. They might not be able to tell how much follow-through the organization really has or if it's just all fluff that will waste a bunch of their donated funds if the project goes under prematurely. But it's so frustrating to get a non-profit started and need funds to move forwards with the mission but donors don't want to fund the critical stuff like utilities. But hey, they still "love your mission". I also appreciate they usually want to make single donations rather than letting an organization get hooked on a steady stream of donations, it helps keep the org from getting stagnate. And segregating restricted and non-restricted funds is an extra chore on the already taxed treasurer has to look forward too.

bluehatbrit 5y ago

This is a such an understated problem with non-profits and charities. In the UK (not sure about other countries) it's pretty common for people to give money to a charity which is ring-fenced for a particular thing. Legally the charity then can't use that money for anything else. No one wants to fund the general running of a charity, they'd rather fund a specific event or programme. That causes so much overhead on accounting to ensure those funds go to the right projects and figuring out how to pay the water and electric bills. People don't realise that it actually costs more money on accounting to give ring-fenced money like that. I imagine similar is true towards things like the linux kernel with development efforts.

rkangel 5y ago
You inevitably need to fundraise for something, because it's the emotive stuff that helps you fundraise. You can be careful about your fundraising though to make sure that it isn't quite as restrictive as it needs to be. My favourite story here is "Scrunchy the cat". Scrunchy was a cat in one of the UK cat charities (Cat's Protection?) who needed a hip operation. Management were very clear "if you raise money for this, make sure it's not restricted to just Scrunchy". Inevitably the fund raisers ignored this completely and ended up raising enough money for Scrunchy to have 20 hip operations and the money couldn't be used for anything else. Scrunchy had her hip operation, and then for a few years afterwards any cat in the Cat's Protection who needed the same operation was renamed Scrunchy!

zachlatta 5y ago

I run a nonprofit and we have a policy that we only accept unrestricted funds to allow us to operate at maximum efficiency and impact. There is a large and not often talked about principle agent problem that restricted donations create, in addition to the additional overhead. We make our finances 100% transparent so the people we serve, donors, and the public can hold us accountable. Our open finances are at https://bank.hackclub.com/hq/ https://bank.hackclub.com/hq/. Main homepage at https://hackclub.com https://hackclub.com / open source at https://github.com/hackclub/hackclub https://github.com/hackclub/hackclub

saul_goodman 5y ago
This is a great way to go when you have a very narrow scope as it seems you have here (well done btw). The downside for groups with wider scopes is turning away money if the donor isn't comfortable with this. Even a hackerspace may have this problem. A donor may wish to sponsor some improvements to the metal shop, but if they don't restrict the donation for the metal shop, then some delay occurs, new board is elected, etc, then suddenly those funds get lost in the shuffle and money gets spent on the wood shop instead. It does keep a non-profit honest, but unfortunately yea it comes with overhead of tracking the funds and ensuring they get routed correctly.
illsorted 5y ago
Just want to say that Hackclub is an awesome idea. Nice work!

saul_goodman 5y ago

Seconding this. However I do appreciate the chicken-and-egg problem donors have here as they can get tricked into throwing money at a non-sustainable project if it's not already on steady-enough-legs to cover the non-sexy things that need money to operate. They might not be able to tell how much follow-through the organization really has or if it's just all fluff that will waste a bunch of their donated funds if the project goes under prematurely. But it's so frustrating to get a non-profit started and need funds to move forwards with the mission but donors don't want to fund the critical stuff like utilities. But hey, they still "love your mission". I also appreciate they usually want to make single donations rather than letting an organization get hooked on a steady stream of donations, it helps keep the org from getting stagnate. And segregating restricted and non-restricted funds is an extra chore on the already taxed treasurer has to look forward too.