Hypha: Open Collective v1

Status: Proposed
Timeline: March - Sept 2021 [May - Sept 2021]
Scale: Large
Project Lead: patcon
Est. Hours: 60 hrs [Not including finance hours to process payments]

• Hypha: Open Collective v1
  • Background
  • The Problem Space
  • Objective
    • Proposed Pathway
    • Other Approaches
  • Plan of Action
  • Budget and Estimated Hours (cleanup: 30min)
    • Budget
    • Estimated Hours
  • Indicators of Success (15min)
  • Risks & Accountability (15min)
  • Appendices

Background

Supporting grassroots projects.

Fiscal sponsorship of unincorporated groups is a way for small groups to operate in a lightweight way. It's very common in Canada and internationally. Sponsorship involves an established legal entity (usually a non-profit) offering use of its administrative capacity (financial, legal, human resources, etc.) to a fledgeling initiative, so that this small group can work without taking on too much burden. This allows a small initiative with low resources to stay light on its feet.

While any company can technically offer fiscal sponsorship, there are a few players who offer this as a key service offering. MakeWay (previously known as Tides Canada) is one particularly well-known player in Canada. Makeway has helped the Ontario Nonprofit Network (ONN) in their decade of effort to popularize what they have termed the Shared Platform Model.

Hypha has existing relationships and origins amongst small and unincorporated community projects (Toronto Mesh) and the incubation/showcase spaces for such projects (Civic Tech Toronto hacknights, Our Networks). As active participants in community project spaces, Hypha members are well-positioned to address both the unique needs and the potential dangers of introducing financial flows into grassroots projects. Specifically, Civic Tech Toronto's established hacknight format presents excellent opportunities to interate on offerings. This weekly format supports high trust relationships and unique visibility into any new dynamics that might arise, to which our sponsorship offerings can be responsive.

Hypha members have existing relationships with Open Collective, Inc. ("Open Collective", or "OC") that create familiarity and trust:

• Attended events. patcon has attended various events OC has hosted and presented at in NYC. Co-founder Pia Mancini has also presented at a civic hacknight.
• Overlapping networks. patcon and ben know OC staff members through social and professional networks (dweb camp, COMPOST, web monetization, SSB, Code for America, civic tech, citizen science, etc.)
• Open Collective Slack. patcon has been active in their chat space for several years.
• Open Collective Ontario. patcon and ben (with Nomadic Labs' Sharon) had prior support from OC during an unsuccessful incorporation of an Ontario non-profit in 2018.

As users and advocates of open source software, Hypha has direct interest in challenges of funding open source. This is also a major focus of OC's current efforts. They have several entities that they've incorporated internationally:

• Open Collective Foundation, charity (USA)
• Open Source Collective, non-profit (USA)
• Open Collective Labs, upcoming (UK)

Open Collective has no current legal entities in Canada, but they are interested to develop a partnership to support a new Canadian incorporation during the coming year. They have approached Hypha with a paid opportunity to be involved in that setup in the near term. [#todo link other proposal - dc: i thought we were going to incorporate that as part of this proposal?]

The Problem Space

Within Canada, the fiscal hosting space also has unique dynamics that lead to small community projects facing challenges. There is a gap in how support is offered and as a result, opportunities for Hypha to provide meaningful infrastructure to support these projects. whether through direct fiscal hosting using the OC platform or through working with OC to develop a host in Canada. Down the road this could create co-operative development opportunities and digital tool service offerings inline with other initiatives.

Small community projects face several challenges supporting themselves financially, which we've recognized:

Projects tend to follow one of three routes, each non-ideal for distinct reasons:

• holding funds in a personal bank account
• registering for a community bank account intended for unincorporated entities
• engaging in traditional fiscal sponsorship programs

Regardless of the route, there is a weight in general administrative burdens of handling money, including financial, taxation and legal issues:

• burden of financial administration, even when done correctly, can harm morale, which is critically important in small projects
• the proper sets of financial and administrative expertise may be structurally missing in some groups, due to nature of work or mission. e.g., groups of artists or activists may be less likely to have experience with administration.
• administrative processes and systems designed by and for hierarchical groups, and make assumptions that these suit account holders

When taking the route of using personal accounts:

• risk in

When taking the route of using dedicated community accounts, there are challenges in both obtaining and using them:

• obtaining community accounts
  • not well-known and poorly documented
  • by default, not straightforward to connect with modern digital infrastructure. e.g., online ticket sales, crowdfunding, online payment processors, etc.
    • [dc: this does not reflect my experience with Our Networks or other projects at all. pc: i think i was trying to say the same thing as below…!]
  • though they can be requested, accessing additional online banking services is non-obvious. e.g., can sometimes get access, but need to make special requests based on unadvertised info.
    • [pc: my recollaction is that enabling things like unlimited e-transfers and stripe or ticket sales requires some extra asks, or am i misrecalling?]
  • fine-print capabilities of accounts vary substantially between institutions, requiring careful research for comparison,
• using community bank accounts
  • signing authority is rigid and burdensome. e.g., changes to account require everyone visiting bank in person, and so rotating responsibility is heavy process.
  • requirements of banking institution can distort decision-making tendencies of the group, and promote rigidity and hierarchy.
• Gaps in existing fiscal sponsorship in Canada (e.g., Shared Platform models) for small projects
  • these are a step in the right direction, but still some common pitfalls
  • with partners for whom sponsorship is not a common offering, in-roads are not clear
    • 15-20% cut of funds if common
  • sponsorshop can require uncomfortable trailblazing as the sponsoring organization builds its own processes
  • the most popular and visible provider (MakeWay) focus on working at larger scale
    • requires prior funding commitments or viable financial model
    • 12% of small project revenues contribute to shared platform costs (10% for larger projects)
  • make assumptions about other aspects of hosting that may not be needed including rentals or leases, employment, and insurance

Objective

Our objective is to aid small projects and informal groups aligned with our mission-work through improving their access to fiscal hosting in Canada and our region. In initial form (v1) we see this as finishing the set up our fiscal hosting capacity on Open Collective and developing confidence that we can offer that service to others while deepening our relationship with OC Canada.

Proposed Pathway

We propose a v1 that looks like:

• onboarding and hosting up to 6 collectives that span regions and focus areas we see potential in. re-evaluate after 6 months. (6 incl existing) 666
• finishing minimum needed documentation for these collectives to operate
• building capacity internally where we become more literate fiscal hosts, developing an understanding of future offerings and current needs in landscape
• defining the relationship with OC and our role in the development of an OC Canada

We see this as laying the groundwork for a larger v2 that is more effective and efficient for Hypha while also potentially including a larger initiative launch (whether internal Hypha or external OC Canada).

Other Approaches

There are other approaches we can undertake without putting current projects at risk:

• Do nothing. We use our OC only for our internal projects and a Hypha collective
• Move quicker as a Fiscal Host. We set more ambitious goals for onboarding collectives
• Support others projects. We commit to support the development of OC Canada on a faster timeline
• Holding pattern. We wait for OC Canada to exist and refer projects there in the meantime

Plan of Action

MARCH

• Write this proposal
• Soft-launch onboarding process

APRIL

• Approve proposal

MAY

JUNE

• create onboarding checklist
  • revise regularly?
• seek advice from OC about our goals/numbers
• admin
  • new time-tracking category
  • issue template?
  • new labels
• pace: one collective/week?
• check beta options with OC
  • custom apply form?
• define role for fiscal sponsorship lead
  • regular status updates
  • metrics?
• define finance tasks/expectations
• high contact with finance
  • adjust numbers only with ok
• set up shortlink
• set up landing page
  • inventory OC docs to determine what can be linked out to
• plain language
• set up kanban board to track onboarding of collectives
• future
  • brand name
  • subdomain
• review shared platform docs
• sign up for Thomson Reuters TrustLaw pro bono legal: http://www.trust.org/trustlaw/
• regular checkins with collectives
• projections of cashflow per-collective

Budget and Estimated Hours (cleanup: 30min)

Budget

Sweat Equity

Estimated Hours

Budget from thing:
10 / month

Maybe where we are today:

• time to onboard each collective (7.5hrs)

  • outreach/invitation (1h)
    • creeping
  • interview call (1.5h)
  • pre-launch checkin call (2h)
  • post-launch checkin call (1h)
  • admin (2h)

• admin structure (16hrs):

  • ongoing feedback:
    • sync 30 min bimonthly checkins / per 2 months
    • admin (emailing): 1 hrs/month
  • coordinating calls
    • 1 hour co-work (4hrs/month)
    • 1hr/week (8hrs/month)
  • OC host calls
    • months (1.5hr)
  • Fiscal hosting call (all f.hosts from international)
    • Optional
    • weekly (1hr)
  • Emerging: bugs / OC support
    • ???

• building resources (5hrs)

  • set up: ticketing (template), emails, tacking (spreadsheets – interviews, ops/leads with OC) 15hrs
    • 70%ish but not confident
    • plain language
    • 5hrs mth
  • stretch:
    • landing page and FAQ [stretch] (10h)

• finance time (?<5hrs)

  • OC support

• relationship building – pathways to OC Canada (6hrs)

  • user testing call
  • hosts (accounted above)
  • slack 5 hours in chat

• risks already:

  • wierd bugs, lots of issues

Indicators of Success (15min)

• project members have more insight into project finances: who pays? how much? what costs money?
• create opportunity for new "fundraising" roles on projects
• some proportion of "maintainance" work covered
• amount of cashflow through sponsored projects

Risks & Accountability (15min)

• legal limbo – structure takes on risks. experiment tied to co-op legal entity.
• if a project is sponsored and group convene in person (e.g., at a hacknight or hackathon), are we now liable if something happens there?
• if a hacknight is sponsored and mulitple projects (formal and informal) at a 3rd-party venue, are we now liable?
• work and safety obligations.
• projects don't properly communicate their relationship with us in external comms ("We're a Hypha project!")
• charitable status is required of fiscal sponsors to support receipt of many government grants. We won't be able to offer this crucial support without such status.

Appendices

Notes/descope:

Example:

• https://hackmd.io/@nquvNMOoReS4kVFKjbEWLg/rJ7KKdglO

Within Canada, the fiscal hosting space also has unique dynamics:

• Dynamics of Fiscal Hosting in Canada

  • similar to larger OC value prop (#todo copy)
  • community bank accounts are not clear or well-publicized
    • can't easily be attached to digital infrastructure (e.g., GoFundMe)
    • small groups get harmed when saddled with more legal admin admin
    • rigid bank signing authority may not match how they operate
  • Shared platform model
    • a solution, but very large and oversized for small projects
    • assumes offerings are space rentals, employment, insurance, etc
    • ONN, Tides Canada / Makeway => guidances for shared platform written by large players

• Hypha use up to now as Fiscal Host. 2 collectives (US) and soft-launch

  • we have prelim convos about legal/operational aspects with externals
  • not totally settled in what we know
  • convos? hosted a community call with folks to discuss offering

• #todo diagram: old world vs imagined future (highlight v1 positioning) [dc: not needed]

  • old world (note when $$ arrives)
    • informal community groups meeting alone
      • optional: community bank accounts
    • informal community groups meeting in parallel with others (e.g., CTTO)
    • incorporated non-profits; project or network seeded in spaces (e.g., ample labs, women & color)
    • incorporated companies
      • for-profit (e.g., Nomadic Labs)
      • co-operative (e.g., Hypha)
  • imagined world

Opportunities: (big scope. later. from above.)

• Gap in fiscal landscape
• paid opp to work with OC to develop a host in canada
• co-op development pathways
  • can small sponsored projects help small groups of collaborators be more cohesive, and then later being introduced to idea of starting "real" legal entities?
  • can we use our support role as a way to piggyback upskilling in co-op knowledge
• digital service provisions to emerging players
  • digital office tools