Shannon Wray – How Open Collective moved from a for-profit to a non-profit #FOSSBack

This talk discusses the transition of Open Collective from a for-profit to a non-profit organization over the past two years. The speaker, Shannon, describes Open Collective as a platform for collaborative money management, primarily focused on fiscal hosting, which allows unincorporated groups to access non-profit status, banking, and legal support. The presentation highlights various non-profit entities formed under the Open Collective umbrella, including Open Source Collective and Open Collective Europe, and their significant fundraising achievements. Shannon also outlines the challenges faced in 2024, including the closure of a major fiscal host, and the resultant restructuring of governance through the newly established Open Finance Consortium emphasizing community ownership. Finally, she shares insights on revenue generation, the need for financial sustainability, and innovative governance models aimed at fostering collective decision-making.

[music] [applause] >> Beautiful. Hello. My name is Shannon. I work at Open Collective. We're going to take you through what's been happening over the last 2 years and how we have transitioned from a for-profit company to a non-profit. So, let's get started. I've been with Open Collective for 5 years. This started off when I was in New Zealand. I was a small contributor just doing about 5

hours a week helping out with documentation. These are all of the pictures over the last 5 years from our company retreats. We meet up about once a year in person. The whole team is remote to connect to each other. I feel like this photo really shows the the vibe and the energy of our team. And all the love between us all. So, yeah, I just wanted to

yeah, show you that. Um What is Open Collective? Can I get a show of hands of who has interacted with Open Collective, knows about Open Collective, maybe is hosted by Open Collective? Awesome. Lots of lots of engagement in the room. I'll give a brief little teaser for anyone that doesn't know. Open Collective is collaborative money management platform. Um we help really complicated organizations how to look after

their their money. Not just for themselves, but also for lots of other groups that they might be supporting. One of the biggest use cases for our platform is this concept called fiscal hosting. Um this is where non-profits share their status with lots of other smaller giving them access not only to that status, but also to bank accounts, accounting help, legal help. So, um that's our biggest kind

of use case and primary focus. The beginning of Open Collective was um really born out of this need where not everyone wants to do all the admin and the bureaucracy when it comes to starting a non-profit, starting a legal entity, figuring out how to hold money for a group of people, especially when it's just the beginning and you're just trying something out and maybe someone wants to

give you some money, but does it go in a personal bank account? Where Where does that money get held? So, that was really the fire in the people's belly that started Open Collective and is still the use case that we are fighting for and improving on today. As I touched on, the way that we have done that is in collaboration with this network of fiscal hosts. So,

we've helped thousands of smaller unincorporated collectives all around the world raise and spend money through this kind of system. we've worked with some fiscal hosts that were started by other people, but most of the time we have incorporated and built those non-profit entities ourselves. So, as we can see here, we've got Open Collective starting all the way at the beginning at 2015. We then started Open Source

Collective which you might know of because they're the big open source fiscal host. We then started another entity called Open Collective Foundation. They were more focused on mutual aid groups in the states. A little bit of open source. Please I do apologize for the acronyms and the Open Collective in every single name. As I said, we did start a lot of these, so it was the same

teams. Um another one, Open Collective Europe. Um We then had the Social Change Nest who are from the UK. They do a lot of social change work. We've got the Gift who are based in New Zealand. They are as well doing social change work. We then have Open Collective Europe Foundation, which is very similar to the Open Collective Europe based in Europe, focused on open source and

mutual aid. So, it's all different non-profits in different parts of the world with different legal statuses able to help different groups of people. Um another one that's more recent is Ralph Foundation, a 501c3 based in New York. And then we have Open Source Europe, which is spun out from Open Collective So, this is the network of non-profits that we have helped to make and have a part

of the ecosystem. we have Open Source Collective who a lot of you are probably aware of. They I really wanted to indicate the size of Open Source Collective and the amount of impact that they've had. So, over the course of the past 10 years, they have generated $64 million for open source. So, that's the amount of money that has been raised and has passed through the entity

and has been given to Open Source projects around the world, really. Um as you can see here, they have about 2,300 open source projects that they're supporting. So, yeah. Um touch on some of the other ones a little bit more in depth. Open Collective Foundation, which is the 501c3 based in the US. Um They were helping mostly mutual aid groups, etc., etc. Open Collective Europe, Open Source

Open Source Europe. Sorry, even I'm getting lost. >> [laughter] >> So many similar names. Again, the Gift Collective from New Zealand. They've now yeah, about 6.6 million, which is really awesome. I'm from New Zealand, so it's it's important for me. Social Change Nest, etc., etc. So, all of those together have generated about 166 million that has been raised through all of those initiatives across so many different

impacts of open source, mutual aid, education, arts and culture, civil tech, climate and so much more. So, as we see here, I've put the the graph of total raised against when all of these entities were kind of created and we can really see that the impact really started happening around 2020 and 2021. This was mostly due to COVID the mutual aid work that was happening in the

US around that time. And yeah. I'm going to jump in and zoom in to 2023. a slide showing the breakdown of revenue for the Open Collective platform and what it looked like in 2023. As you can see, we were getting most of our revenue from two of those non-profits. Um we had specific agreements with these non-profits where we kind of had like a 50/50 revenue share. So,

to keep on being able to build the Open Collective platform, this was the kind of arrangement that we had. Um and this here is an image of what ownership of Open Collective the platform looked like at the time. So, we have about 50% of it owned by the investors, a little bit for staff, 26% held by the initial founders of the company, and then some that was

just sitting around. There had been this exit to community kind of concept that had been spoken about over that time around how do we want to continue as a platform? Um what do we want to um where do we want to go? We were really following the exit to community movement and we were really inspired by it. When Open Collective started, we were never going to become

a unicorn and raise a whole lot of money and create a whole lot of money for our investors. Our investors really understood that we were a lot more about impact and about the mission that we were trying to achieve. we were trying to figure out like how can we yeah, do an alternative to the standard startup exit become a community project that is really stewarded by the

most important people that are using the platform, which is the fiscal hosts, the communities, the non-profit network. We really wanted those people to have the chair in the front seat. Let's now jump forward to 2024. Um as you can see, there's a little bit of a dip in the amount of money that was being raised through all of those nonprofits. Um unfortunately, one of the biggest one

of the biggest fiscal host nonprofits on our platform, Open Collective Foundation, closed down. Um this was due to a lot of different reasons, but um yeah, it was a a shock to the whole system and um the momentum and the kind of motivation of what we were all working towards was really questioned. and the biggest impact that it had for the platform was that we lost a

whole half of that revenue that um we had coming in pretty steadily. this really made that network of fiscal hosts and nonprofits kind of question like, what is the platform going to do? Where are they going to go? This is infrastructure, digital infrastructure that these nonprofits really rely on for the impact that they're doing, for all of the community projects that are being hosted. Um There were

questions of is Open Collective going to become a food delivery service? You know, are their investors going to be like, come on, we need to make profit. Like, what are you guys going to do now? Yeah, are we going to pivot? is there going to be, you know, Berlin kebabs given out by the Open Collective team? Like, >> [snorts] >> there was a lot of questions going

So, this is kind of what followed. We had two of the larger um nonprofits that were left, Open Source Collective and Open Collective Europe, fighting with the original founder of like, how can we have the play infrastructure that we're relying on? this resulted in this kind of split that happened. we have a new nonprofit with another acronym very similar to all the others called O F I

Consortium. This is the new home for the Open Collective platform. So, we managed to keep the platform, the business, and some of our cash reserves. Within that negotiation though, we lost the Open Collective branding. We lost some of our reserves, and our co-founders gave up a lot of their shares that they had in Open Collective Inc. Uh in order to secure the platform for the community. So,

yeah, we have O Um the mission is to make sure that the Open Collective platform remains in the hands of the community, stays transparent, and is designed for the long-term resilience of all of the communities that rely on the on the platform. These are our members right now. So, we've got Open Source Collective, Open Collective Europe, Gift Collective, Social Change Nest, Raft, and Open Source Europe, all

the ones that I've mentioned earlier. really like Open Source Collective that drove this change. They had the ability, because they were that other half of the money that we relied on to keep the platform afloat, they had that leverage to say, you guys kind of you have to give us the platform, otherwise we're going to go somewhere else. And because Open Source Collective used that leverage, and

they were like, hey, like, this needs to be community owned, this needs to be stewarded by the people that rely on it, it needs to be under a new legal entity. If you don't do this, we're just going to leave, and then you've got no revenue, and it's worth even less. it's been so beautiful to see the Open uh nonprofit that is so strong use that strength

to not only protect what it needs for its community, but to also protect all of those other nonprofits around the world that are relying on the software. There's so much important important work happening in the UK due to the Social Change Nest. You know, they've got 7,000 grassroots groups that they're focusing Same with the Gift Collective in New Zealand. They're just getting started, but I think they've

got about 50 collectives that they're they're supporting. And these are people that don't have to deal with accounting, don't have to deal with taxes, and are really able to just get on with their mahi, as we say in New Zealand, and like focus on the important work. So, it's it's really really huge what Open Source Collective has done, not just for the open source projects, but to

keep this platform running for everyone else that relies on it. We are still really reliant on Open Source Collective though. They are holding up so much of our ability to keep the platform running for everyone else. And it feels like this. They're they're really we're really relying on them. this is the investment breakdown from those members showing how much Open Source Collective is giving to keep the

platform running right now compared to the other member organizations. I think it is important to balance this and to show like the votes or the shares in comparison. So, even though Open Source Collective is giving the amount that they are, the governance system that we have set up moving forward does make sure that they don't have more than a 50% share here. Uh and really balances out

um the needs of the other hosts as well. One of our bigger focuses for the next few years is to figure out how we can be more financially sustainable and not so reliant on Open Source Collective. Um I think for the resilience of everyone that relies on the platform, we really need to make sure that we're not um reliant, yeah, on on that one entity, cuz if

something were to happen to them, it would be, you know, devastating for everyone else. But, they're strong. We we've got this in mind, and we're moving through with it. I wanted to go back go into a little bit of governance stuff. I've been helping to set up the governance work for the general assembly for Open Finance Consortium. Um it's been really interesting. It's work I haven't done

before, but it's been really really fun. Um we don't do voting, even though like in the bylaws everyone has this kind of breakdown with votes. We've built in uh a consent-driven decision-making model. Um this means that in order for a proposal to pass, we have to have at least 50% of the general assembly members engaging with that proposal. they have to yeah, either consent or object. If

anyone objects, the proposal stops. It doesn't go any further. And then we have to have at least 50% of the members consent to something for it to pass. And if someone doesn't consent, members who have not participated will be considered as having their consent. Yeah. So, this is the kind of um way forward that we've had with regards to our governance. Um here's a little snapshot of

the proposals that we've passed so far through the system. Um we've gone from very base level proposals around decision-making, like how how do we make decisions together? the roles and responsibilities of the different governing bodies. Um what does community ownership mean? And then now we've been getting into some of the more nutty-gritty things, what is our like interim roadmap at the moment, and what we're focusing on

building. We've just rolled out new pricing for the platform, so that's been a big change. What's our policies around platform tips and crowdfunding fees. So, we're now kind of getting into some of the heavier-weighted decisions that have a big effect on the members. Um and the rest of the community. But, it feels really really good to be making these decisions with the people that it impacts the

most, and having their voices in the room. And I've made a little slide of what we need help with. >> As every um open source project needs, we're now nonprofits, we can apply for grants. So, >> [clears throat] >> if you know of any opportunities that we should be applying for, please let me Obviously, donations as well. We're always um needing more cash. Um we really want

to start actually creating impact reports. This is something we've never done to showcase the impact that we've had. Um any sales introductions. We've never done sales for the Open Collective platform. Uh I'm about to start this work, so any large organizations that are dealing with really complex um money management problems, we're really interested in any cool projects that need a fiscal host, they need a kick-start, they

need bank accounts, legal statuses. Um, we're really curious about applying to be public digital infrastructure. There's a few things we need to do internally to document some of the ways to fork Open Collective, but um, that's something else we really want to um, to Any other conferences we should be attending? Um, we're also wanting to put together some case studies and explain um, the people that are

using And um, if there's any other governance nerds out there that are curious about what we're doing or have any tips or tricks, we're also really interested in involving any corporate sponsors um, who are interested in the platform or also any collectives who are wanting to have a say in how we're building and working on things in Open Collective. last but not least, this is the team.

there's some pictures from some of our retreats over the years. Um, the team's definitely shrunk a little bit over the last few years, um, but it's still a steady crew and I have a lot of a lot of love and a lot of appreciation for everyone that's been going through all of this and working working together. So um, little shout out to the team, there's there's quite

a few of them here. that's all from me. Uh, here's some other information if you want to reach out. Um, open to questions. So round of applause please for Shannon AND THE TEAM. >> [applause] >> WONDERFUL. AND fortunately for us all, we've got nearly 10 minutes of Q&A and I see the first hand risen, so I'm going to dash and pass the microphone. Hi. Uh, first of

all, thank you and uh, I'm I am involved with a project Open Web Docs which is under Open Source Collective, so very happy to uh, hear about all this stuff. One specific question, I didn't quite understand what where is the new legal entity and what kind of legal entity did you choose for the nonprofit? Very good point that I missed. So we're a 501c6, which is a

membership organization based out of the US. Um, this gives us the ability to function as like a nonprofit in the states. We can apply for grants. We can't give like charitable donations or anything like that. Um, we're registered out of Delaware. Um, we had the same question when we were uh, at FOSDEM doing a similar presentation and um, the reason why we went with this structure was

mostly just because it's what we know. It's where a lot of the other legal entities that we've started have been made and um, yeah, it's it's just kind of the easiest way to get it going and get it started. There's been a lot of questions at the moment around being US-centric and all of the complexities that have come up with that. We've just applied for a grant

to decentralize Open Collective which I'm really excited about and I really hope that we get. It's work we've been wanting to do anyway. This would allow uh, let's say Open Source Europe or Open Collective Europe to actually have their own instance based in Europe. Um, we think this would be a really important step, especially doing it right so that everything is still interoperable. Um, and that people

can still give to the other entities. so yeah, it's something that we're thinking about, but Hey, uh, thanks thanks for the talk. Um, yeah, as as we the same, we are also using Open Collective for our finance and donation management and so on. Um, yeah, I have a question or I have two questions. Uh, the first one is uh, I mentioned yesterday in my talk that we

have this case of the Brazilian government that wants to give us money, but for them it's almost impossible to pass money to a Spanish-based uh, nonprofit. So my question would be, would be possible to use a fiscal host in Brazil and through Open Collective receive that money uh, to the no, send that money to the nonprofit based in in Spain? And the second question is how the

projects, the open source projects that we use Open Collective can be more involved in the governance of Um, I was at your talk yesterday. I was the one going woo when all the Open Collective stuff was shown. Um, um, it's really cool to see uh, your organization as a use case Decidim. Um, you guys uh, you're own uh, you've got your own legal entity, you've you're kind

of managing everything uh, your as your own without a fiscal host, so it's super awesome to see these types of use cases on the platform. Um, it's our ultimate goal. We would love all of our collectives that are hosted to become their own legal entities and have their own kind of backbone, so it's really awesome to see. Um, I was thinking about this question at the end

of your talk cuz I was like, hmm, how do we get them this money from the Brazilian government? Um, we did have a host based in Brazil that I think they're closing down. Um, I don't know of any others off the top of my head, but I'm sure that we can figure it out. We would need to understand the restrictions of the Brazilian government and why and

all these things, but please message us and we can help you. I've kind of become a of a how to get money here or there kind of directory. I get all these emails through the support of like, this is our situation and I'm like, hmm, this one or that one. So yeah, please reach out and we'll be happy to help you. and yes, we're really really interested

in how do we get collectives involved in right now we've really had to focus on a lot of the big moving parts like our pricing model for the platform, um, other kind of big heavy things. As soon as that stuff is like done and and kind of solidified, it'll be all of that other beautiful stuff of like the profile pages and the how do we show these

graphs? And so um, we would love to have the collective voices in the room. Um, and yeah, I'll I'll note you guys down to reach out when we kind of activating that that pathway and it would be really lovely to have you guys in the room. My third question would be uh, yeah, what what is like the most typical I don't know how to say that. Um,

I mean, what what types of donations are projects receiving? They are like small donations, they are being able to receive public grants or project grants? Like what's the typical >> money sent use case? at the beginning, it was mostly crowdfunding. That was what we were seeing on the platform. Like it was really those smaller contribution, those individuals, maybe a little bit of corporate sponsorship coming in. Over

the years, especially after 2022, 2023, we've seen that the crowdfunding is not really increasing, maybe a little bit. What's really increasing is the grants and the corporate sponsorship money that's coming in and this is what we call added funds on the platform. So it's any money that kind of comes in through different kind of channels with the company directly reaching out to Open Source Collective, creating a

fund. Like we have a fund um, for Airbnb, for Google, um, a whole lot of these big corps. Like they give Open Source Collective a whole lot of money and then they say, give it out to these 10 collectives that you guys are hosting. So it's really helps with like efficiency for these corp corporations cuz they can kind of go to their team and they have one

invoice, they have one line item and the fiscal host really facilitates moving that money to the places it needs to go. Um, so yeah, we're really seeing a big increase when it comes to the corporate giving, the grants. Um, I know that Open Source Collective is thinking beyond that. They're like, okay, how do we do procurement? How do we open up governments being able to give to

all of the collectives that they're hosting? Um, are there any other legal entities that should be represented? Are there any other things that are stopping people from giving that we can do on a legal and a kind of structural basis that would um, open up more money for the for the open source projects. Thank you. So sorry I missed it at the beginning. Have you looked at

um, how to enable local legal entities to form all over Europe given that each country's laws are a little bit different about this? Do you have any insight there? We are seeing that. Like I'm part of the fiscal hosting network in Europe that has just been kind of coming together. Um, fiscal hosting as a concept has come out of the US. So it's really strong in the

US, there's thousands of them, but in Europe it's kind of just forming. Um, we have hosted some of the first like Social Change Nest was the first fiscal host in the UK. Um, we do find that uh, Open Collective Europe Foundation is able to serve the whole of Europe, but we are noticing like there's a lot of very specific German fiscal hosts that are popping up now

that they've got very specific needs here for the German groups. And uh, we really do think that decentralization and more and more hosts is the best thing because it doesn't take much like at the moment uh, Open Climate who's another big fiscal host based in Belgium that helps the climate uh, space, Extinction Rebellion, all of those sort of groups, they've had one of their collectives get in

a lot of trouble with the government. Um, you never know like what can happen uh, to that fiscal host. So we really want to decentralize, have as many as possible so that if one goes down, you just move everyone to another one. Um, so yeah, the more the merrier. It's good work. That's the good tagline to end this presentation, the more the merrier. So, big round of

applause for Chanel and Open Future, please.