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Open Collective Official Statement – OCF Dissolution

173 points by chenrui 3y ago

armchairhacker 3y ago
I think https://blog.opencollective.com/open-collective-official-statement-ocf-dissolution/ 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 keeping existing sponsors), although others have to find a non-OC organization because they have extra requirements? The whole situation seems strange and technical.
- bombcar 3y ago
  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. tech platform. It states it right there.
  - yorwba 3y ago
    The foundation paid a lot more for their own employees than for the platform https://opencollective.com/foundation#category-BUDGET 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. Especially the income seems to be almost entirely opaque; maybe that was a large one-time grant that is now running out.
    - bombcar 3y ago
      "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=EXPENSE 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.
  - elixiry 3y ago
    I don't know what happened, but this def is not the full story. Surely if the company had known it was squeezing the foundation to death it would have been in its best interest to offer a better deal no? I mean it's not like the company has hundreds of customers, and keeping the foundation alive even with reduced to maintain some income and avoid repetitional damage seems like a no-brainer.
  - ocdtrekkie 3y ago
    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-moving-on-to-0-fees-for-charitable-collectives/ https://blog.opencollective.com/open-collective-platform-is-...
- dang 3y ago
  (this was originally posted to https://news.ycombinator.com/item?id=39542039 https://news.ycombinator.com/item?id=39542039, which had a different link)
TechSquidTV 3y ago
Very tragic. We have GitHub sponsors of course but that's also obviously tied to a specific vendor that I'm sure many or some would like to avoid for various reasons. Beyond the fact that I'm sure everyone currently receiving long running donation support is likely going to see massive drops in funding after finding a new provider.
- beberlei 3y ago
  Its just one financial host that is closing down. Most open source is on a different host called "Open SOURCE Collective". The platform still stays and there is no need to migrate to something else for open source projects.
NewJazz 3y ago
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?
- beberlei 3y ago
  Yes you can see the list on the opencollective page here https://opencollective.com/foundation https://opencollective.com/foundation
- simonw 3y ago
  I think this is the list: https://opencollective.com/foundation#category-CONTRIBUTIONS https://opencollective.com/foundation#category-CONTRIBUTIONS That's a LOT of groups! This page here indicates they were raising $13m a year back when they had 300, so it could be double that now: https://opencollective.foundation/ https://opencollective.foundation/
- geerlingguy 3y ago
  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.
samspenc 3y ago
Too bad, I always saw Open Collective as one of the few options open-source developers (who are not supported by Big Tech) had to self-fund their work. Curious what people think are the best alternatives now? I can think of GitHub Sponsors as well as creator-friendly tools like Patreon, Locals etc.
- buildfocus 3y ago
  Open Collective isn't shutting down - open-source funding is unaffected. The Open Collective _Foundation_ (OCF) appear to be part of the funding structure for open collective sponsorship of charitable but not necessarily open source organisations in the US, and only groups using the OCF to host their finances are affected.
- beberlei 3y ago
  Its just one financial host that is closing down. Most open source is on a different host called "Open SOURCE Collective". The platform still stays and there is no need to migrate to something else for open source projects.
- ShaneCurcuru 3y ago
  Naming things is hard, as software engineers know. It's only OCF that's shutting down, not OC, or OCE, or OSC, or even OCNZ (I just found out about that one today). In any case, there are plenty of other funding models/sites out there, the trick is finding one that really fits how your FOSS project works: https://fossfunding.com/#how-are-individual-projects-or-maintainers-funded https://fossfunding.com/#how-are-individual-projects-or-main...
lopkeny12ko 3y ago
[flagged]
- samspenc 3y ago
  Open-source is the one place where I actually don't mind the "spam" or self-advertisement. Pretty much all software projects today use some open-source libraries. These open-source libraries need funding to sustain and thrive, and also remain supported for the long haul and make feature improvements and bug fixes. But precisely because they are open-source, they get very little funding since people get it for free. What to do then? The only way is to ask for donations. OpenCollective is just one of the options open-source projects use for fund collection - there are others, but not surprised to see OpenCollective so visible in this aspect of open source funding and outreach.
simonw 3y ago
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.
- ShaneCurcuru 3y ago
  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-foundation-shutdown-explainer/ 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-announcement-to-dissolve-open-collective-foundation-us https://opencollective.com/europe/updates/regarding-the-anno...
  - 3y ago
JamesCoyne 3y ago
Given this news, it's interesting to read the "Investor Update" published by Open Collective earlier this month: https://blog.opencollective.com/open-collective-inc-investor-update/ https://blog.opencollective.com/open-collective-inc-investor... Open Collective will (presumably) experience a further drop in revenue as they lose the "platform fee" they collected from OCF
- pbronez 3y ago
  Key quote: “”” over the last three years, the source of funds on the platform shifted majorly from small donations to added funds. A mechanism that was originally an unplanned “add-on” became the main source of our revenue, shifting our incentives and, slowly, our strategy, in a way that we did not plan for, and I failed to predict. As a result of this movement to direct-to-hosts large grants and funds (with their increased compliance and opex); the cost to hosting collectives while equally sharing the fee on the transaction became untenable for the fiscal hosts. “””
neilv 3y ago
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/1odj1zfwqZgIyGOeBhv5QZxYHn422VOMdo32i3T3CPps/edit https://docs.google.com/document/d/1odj1zfwqZgIyGOeBhv5QZxYH...
vikramkr 3y ago
So OCI inc, the for profit, creates OCF, the nonprofit. The nonprofit isn't viable because the "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." And then this blog post on OCIs page regarding OCF's decision to shut down indicates the announcement "came as a surprise to us." What's going on here? The google doc with the foundation's announcement (https://docs.google.com/document/d/1odj1zfwqZgIyGOeBhv5QZxYHn422VOMdo32i3T3CPps/edit?ref=blog.opencollective.com https://docs.google.com/document/d/1odj1zfwqZgIyGOeBhv5QZxYH...) puts the blame on OCI's fees but OCI claims "The exact specifics of OCF’s decision to dissolve are not known to us. We have to trust that OCF had a good reason to do this." It sounds like OCI was making revenue off this nonprofit that they started by charging them an unsustainable rate and then is trying to not confront that directly in their statement. 600 groups affected by this dealing with implications with the IRS and tax paperwork - this is not a confidence inducing post from OCI or OCF
poohlaga 3y ago
Hi all, I'm Lauren Gardner, the Executive Director of Open Source Collective (OSC). I wanted to share my gratitude for all of the conversation and help supporting the projects in flux after the announcement that OCF is dissolving. To clarify: only OCF is closing down. This does not impact all the FOSS and OSS projects hosted in the Open Source Collective. While OCF hosts several projects that need c3 status, the bulk of the projects are hosted on the c6 OSC and are supported and can receive contributions as usual. The maintainers of the projects employed by OSC have not been impacted. Because OSC is a c6, projects currently hosted by OCF (a c3) can not transfer their funds to us, so I'd like to re-share a message from Pia, the co-founder and CEO of Open Collective. --- Ask: We have built a matching tool to connect collectives in OCF to potential fiscal hosts (on AND off the open collective platform) and a CRM to track their status and support. We are asking all fiscal hosts who can take on some of these groups to reach out so we can add them to the matching tool. We are tagging collectives based on locale, mission, and size at the moment, but we can expand to language (python, javascript, etc) for example or other tags. Please reach out to support@opencollective.com directly with resources or questions Open Collective's statement can be found here: https://blog.opencollective.com/open-collective-official-statement-ocf-dissolution/ https://blog.opencollective.com/open-collective-official-sta... — And if you have any questions for Open Source Collective (OSC) you can reach us at hello@oscollective.org

173 points by chenrui 3y ago

I think https://blog.opencollective.com/open-collective-official-statement-ocf-dissolution/ 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 keeping existing sponsors), although others have to find a non-OC organization because they have extra requirements? The whole situation seems strange and technical.

bombcar 3y ago
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. tech platform. It states it right there.
- yorwba 3y ago
  The foundation paid a lot more for their own employees than for the platform https://opencollective.com/foundation#category-BUDGET 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. Especially the income seems to be almost entirely opaque; maybe that was a large one-time grant that is now running out.
  - bombcar 3y ago
    "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=EXPENSE 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.
- elixiry 3y ago
  I don't know what happened, but this def is not the full story. Surely if the company had known it was squeezing the foundation to death it would have been in its best interest to offer a better deal no? I mean it's not like the company has hundreds of customers, and keeping the foundation alive even with reduced to maintain some income and avoid repetitional damage seems like a no-brainer.
- ocdtrekkie 3y ago
  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-moving-on-to-0-fees-for-charitable-collectives/ https://blog.opencollective.com/open-collective-platform-is-...
dang 3y ago
(this was originally posted to https://news.ycombinator.com/item?id=39542039 https://news.ycombinator.com/item?id=39542039, which had a different link)

TechSquidTV 3y ago

Very tragic. We have GitHub sponsors of course but that's also obviously tied to a specific vendor that I'm sure many or some would like to avoid for various reasons. Beyond the fact that I'm sure everyone currently receiving long running donation support is likely going to see massive drops in funding after finding a new provider.

beberlei 3y ago
Its just one financial host that is closing down. Most open source is on a different host called "Open SOURCE Collective". The platform still stays and there is no need to migrate to something else for open source projects.

NewJazz 3y ago

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?

beberlei 3y ago
Yes you can see the list on the opencollective page here https://opencollective.com/foundation https://opencollective.com/foundation
simonw 3y ago
I think this is the list: https://opencollective.com/foundation#category-CONTRIBUTIONS https://opencollective.com/foundation#category-CONTRIBUTIONS That's a LOT of groups! This page here indicates they were raising $13m a year back when they had 300, so it could be double that now: https://opencollective.foundation/ https://opencollective.foundation/
geerlingguy 3y ago
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.

samspenc 3y ago

Too bad, I always saw Open Collective as one of the few options open-source developers (who are not supported by Big Tech) had to self-fund their work. Curious what people think are the best alternatives now? I can think of GitHub Sponsors as well as creator-friendly tools like Patreon, Locals etc.

buildfocus 3y ago
Open Collective isn't shutting down - open-source funding is unaffected. The Open Collective _Foundation_ (OCF) appear to be part of the funding structure for open collective sponsorship of charitable but not necessarily open source organisations in the US, and only groups using the OCF to host their finances are affected.
beberlei 3y ago
Its just one financial host that is closing down. Most open source is on a different host called "Open SOURCE Collective". The platform still stays and there is no need to migrate to something else for open source projects.
ShaneCurcuru 3y ago
Naming things is hard, as software engineers know. It's only OCF that's shutting down, not OC, or OCE, or OSC, or even OCNZ (I just found out about that one today). In any case, there are plenty of other funding models/sites out there, the trick is finding one that really fits how your FOSS project works: https://fossfunding.com/#how-are-individual-projects-or-maintainers-funded https://fossfunding.com/#how-are-individual-projects-or-main...

lopkeny12ko 3y ago

[flagged]

samspenc 3y ago
Open-source is the one place where I actually don't mind the "spam" or self-advertisement. Pretty much all software projects today use some open-source libraries. These open-source libraries need funding to sustain and thrive, and also remain supported for the long haul and make feature improvements and bug fixes. But precisely because they are open-source, they get very little funding since people get it for free. What to do then? The only way is to ask for donations. OpenCollective is just one of the options open-source projects use for fund collection - there are others, but not surprised to see OpenCollective so visible in this aspect of open source funding and outreach.

simonw 3y ago

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.

ShaneCurcuru 3y ago
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-foundation-shutdown-explainer/ 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-announcement-to-dissolve-open-collective-foundation-us https://opencollective.com/europe/updates/regarding-the-anno...
- 3y ago

JamesCoyne 3y ago

Given this news, it's interesting to read the "Investor Update" published by Open Collective earlier this month: https://blog.opencollective.com/open-collective-inc-investor-update/ https://blog.opencollective.com/open-collective-inc-investor... Open Collective will (presumably) experience a further drop in revenue as they lose the "platform fee" they collected from OCF

pbronez 3y ago
Key quote: “”” over the last three years, the source of funds on the platform shifted majorly from small donations to added funds. A mechanism that was originally an unplanned “add-on” became the main source of our revenue, shifting our incentives and, slowly, our strategy, in a way that we did not plan for, and I failed to predict. As a result of this movement to direct-to-hosts large grants and funds (with their increased compliance and opex); the cost to hosting collectives while equally sharing the fee on the transaction became untenable for the fiscal hosts. “””

neilv 3y ago

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/1odj1zfwqZgIyGOeBhv5QZxYHn422VOMdo32i3T3CPps/edit https://docs.google.com/document/d/1odj1zfwqZgIyGOeBhv5QZxYH...

vikramkr 3y ago

So OCI inc, the for profit, creates OCF, the nonprofit. The nonprofit isn't viable because the "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." And then this blog post on OCIs page regarding OCF's decision to shut down indicates the announcement "came as a surprise to us." What's going on here? The google doc with the foundation's announcement (https://docs.google.com/document/d/1odj1zfwqZgIyGOeBhv5QZxYHn422VOMdo32i3T3CPps/edit?ref=blog.opencollective.com https://docs.google.com/document/d/1odj1zfwqZgIyGOeBhv5QZxYH...) puts the blame on OCI's fees but OCI claims "The exact specifics of OCF’s decision to dissolve are not known to us. We have to trust that OCF had a good reason to do this." It sounds like OCI was making revenue off this nonprofit that they started by charging them an unsustainable rate and then is trying to not confront that directly in their statement. 600 groups affected by this dealing with implications with the IRS and tax paperwork - this is not a confidence inducing post from OCI or OCF

poohlaga 3y ago

Hi all, I'm Lauren Gardner, the Executive Director of Open Source Collective (OSC). I wanted to share my gratitude for all of the conversation and help supporting the projects in flux after the announcement that OCF is dissolving. To clarify: only OCF is closing down. This does not impact all the FOSS and OSS projects hosted in the Open Source Collective. While OCF hosts several projects that need c3 status, the bulk of the projects are hosted on the c6 OSC and are supported and can receive contributions as usual. The maintainers of the projects employed by OSC have not been impacted. Because OSC is a c6, projects currently hosted by OCF (a c3) can not transfer their funds to us, so I'd like to re-share a message from Pia, the co-founder and CEO of Open Collective. --- Ask: We have built a matching tool to connect collectives in OCF to potential fiscal hosts (on AND off the open collective platform) and a CRM to track their status and support. We are asking all fiscal hosts who can take on some of these groups to reach out so we can add them to the matching tool. We are tagging collectives based on locale, mission, and size at the moment, but we can expand to language (python, javascript, etc) for example or other tags. Please reach out to support@opencollective.com directly with resources or questions Open Collective's statement can be found here: https://blog.opencollective.com/open-collective-official-statement-ocf-dissolution/ https://blog.opencollective.com/open-collective-official-sta... — And if you have any questions for Open Source Collective (OSC) you can reach us at hello@oscollective.org