@julietnpn @DanT and anyone else who can, feel free to edit or add your own thoughts / notes here. @dornawcox or @ldemmel or Rian it’s worth reviewing in case this is a tool that OT may consider using for funding management.
Use of Open Collective
We tested using Open Collective (opencollective.org) with the 2022 Gathering for Open Ag Tech (GOAT 2022 Conference - Open Collective). We used it for general account for money in and money out, with the goal of transparent bookkeeping and an easy way for people to send and receive money without GOAT having an actual organization to manage the money.
Each section below describes important details that you need to know and may not be obvious initially. In the end I make some recommendations based on our use.
Fiscal sponsorship
You need a fiscal sponsor (in this case Our Sci LLC) who is an organization in OC set up to do transactions as part of an event (or any organization who themselves does not have bank account). The fiscal sponsor needs to have the payment processor Wise and ideally also Paypal setup in order to be able to easily payout expenses, as well as their bank account information to receive payments. The fiscal sponsor also will be responsible for any bank transaction feeds (Wise has a 0.5% fee, and 31 dollar up front) and tax implications of holding any remaining funds by the end of the year (typically 20ish%).
Uses of Open Collective
- Tickets to the conference (multiple levels)
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Overall, this worked pretty well. We were able to create multiple pricing tiers, and in the case of individual ticket purchases, the tickets could be easily exported and tracked in our own spreadsheets so we know who was coming, approved, housing, and other things. -
When an organization purchased multiple tickets at once (2 or above), there was only a single location to put the individuals name… that means, on export, there was a single row for purchase and a comma separated list in that row of the individuals included in the purchase. It would have been better to split that expense into the number of individuals, rather than combining them.
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- Reimbursement of discounts of tickets to participants
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this was also possible by creating multiple tiers. We were able to provide emails with customized links to each accepted attendee with their appropriate ticket to purchase.
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- Reimbursement for conference expenses to organizers
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Eventually we got this to work.
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See below for details… there’s a lot of setup required to make this work.
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- Reimbursement of travel expenses to participants
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Eventually we got this to work.
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See below for details… there’s a lot of setup required to make this work.
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Reimbursement through Open Collective
As someone submitting an expense I am asked to provide a receipt or invoice for any given expense request, the amount, and to provide a means of accepting payment. Generally people put in their bank account information directly, though I think paypal is also possible. Most of the time, Wise can automate ACH (digital checks) payments from the requestors bank account to the bank account of the fiscal host. However, there are quirks that may not allow that, like:
- mismatched names between the bank account and the submitter
- Use of PO boxes is not allowed and will require a manual (non-Wise) transfer)
- Expenses submitted often have a delay (by Wise or OC, not sure) before you can pay them using wise. So you may need to wait a few minutes / hours before paying using Wise (it simply won’t let you select the ‘automatic’ option when paying).
Another quirk is that our bank (MSUFCU) sends the person having the ACH transaction sent to an email to re-request their banking information… this is really confusing because the requestor already put in their banking information in OC and is now getting another email from the bank directly re-requesting it. We found that users did not need to re-fill out this info from MSUFCU and the transaction successfully completed. So confusing and may be an issue with other banks with tight ACH transfer rules.
These seem random and pop up frequently enough to be confusing. If you do not perform the ACH transfer using Wise, then you must perform it manually through your bank account itself and mark it as paid manually in OC. This is ok, but not all banks make it easy to pay a wide range of accounts / people / locations using ACH.
If an organization in Open Collective is receiving a reimbursement, the payment can be made from their OC balance to the balance of the fiscal sponsor (this is like transfers between two Paypal accounts which have money loaded into them). This is by far the easiest transfer.
Recommendations
- If you are tracking income and expenses in OC, track all income and expenses in OC! Examples which may get missed are when the fiscal sponsor itself is paying for services… this is a case where, in theory, you’re transferring money from a bank account to the same bank account. However, in order to track accurately, you need to mark these transactions correctly.
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Connect Wise to OC AND to the fiscal sponsors Quickbooks account. Wise uses an API to your bank to allow OC to do ACH transfers, simplifying reimbursements that you would otherwise have to do manually. HOWEVER… if you do not also connect Wise to Quickbooks, then these individual transactions will not appear in Quickbooks, instead they will be bundled together and you won’t be able to separate important expenses like labor versus materials versus travel versus food (which is needed for tax purposes). This is a real problem for basically any organization, so connect to Quickbooks up front and run some test expenses (invoices and reimbursements, from OC or bank account or credit card) to ensure you or your bookkeeper understand how these expenses are going to show up. You can do this same process (adding a account the Banking tab of QB) with Paypal - then all paypal transactions that occur will show up to be reconciled in QB. Do this too for folks who use Paypal.
- To address this, have the fiscal sponsor log into Wise, go to Manage–>App Marketplace and select the Quickbooks integration. Also, in the
advancedoptions, also select the option to include ‘other expenses’. This will ensure that all expenses are captured in QB and ultimately reduce difficult reconciliation. Then go into quickbooks itself in the Banking tab, and click as if you are adding a new checking account. You’ll be allowed to select Wise as an option, then you need to provide a login to Wise. Special annoying trick! If you have a Google login as your default Wise login and attempt to “connect using Google”, the connection will fail. Instead you have to put in your Google credentials in the Wise login boxes (ie don’t “connect using Google”)… this will establish the connection and add Wise as a bank account in Quickbooks. Now you’ll be able to reconcile Wise transactions the same way you would reconcile any bank account’s transactions, which is quite cool.
- To address this, have the fiscal sponsor log into Wise, go to Manage–>App Marketplace and select the Quickbooks integration. Also, in the
- A plus to Wise is you can load many different currencies into the system making payouts in multiple currencies easier using OC.
- OC has an amazing Slack channel that is super responsive - use it! I posted a bug (well described and generalizable) and they fixed it within a week. I’m sure to an extent I got lucky, but it’s clear they are working hard to be responsive.
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Fiscal sponsors need to charge something, or be aware you’re going to donate time and money if you don’t charge… there are real costs and work associated with being a fiscal sponsor (see below). It’s probably easier to just charge a fixed fee (10%, 5%, whatever) than to track the exact details of the below items.
- Fiscal sponsors must spend time to approve all expenses as they come in to OC, and pay them (via ACH, wire, Wise, Paypal, etc.). This just takes some attention and time.
- There are bank fees for transferring money to Wise and through other platforms that aren’t always covered. If you want to charge the group you are fiscally sponsoring, you’ll need to create a reimbursement to cover those fees which is time consuming to calculate.
- If there is a remaining balance of a sponsored org at the end of the year, the fiscal sponsor holds the tax liability (20ish% in the US). This adds up fast - 10k remaining is 2k in taxes!
- Overall… with effort this is an effective tool for transparent funds management in diverse communities… but it will take some effort!!! Also, it’s still being actively developed, so connections to QB, Wise and Paypal will change which will create some bookkeeping headaches… so bookkeepers make sure to test the system before full on implementation so you don’t end up with a tax or reconciliation nightmare. You should also enforce systems that work for you on payments or cost reimbursements so you have a smooth integration with your accounting or other services.