Hello folks, this is an impromptu emergency announcement.
In short: Open Collective Foundation, the fiscal host we use for Beehaw, will no longer accept donations starting on March 15, 2024. They will shut down completely at the end of the year, December 31, 2024. This was an extremely sudden decision by them; we were only made aware of it last night through their email to us. The cause given is "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;" they note that they froze accepting new collectives last year.
This obviously presents a lot of problems for Beehaw. Here are all the relevant dates given to us by Open Collective:
- Last day to accept funds/receive donations: March 15, 2024
- Last day collectives can have employees: June 30, 2024
- Last day to spend or transfer funds: September 30, 2024
- Day they formally dissolve: December 31, 2024
Because Open Collective holds our funds, based on our understanding it seems likely we will not be able to keep our existing funds unless we find a 501(c)(3) organization to be our new fiscal host or become one ourselves by September 30. (EDIT: Or, we just spend it all preemptively.)
Open Collective Foundation's also email writes that:
We will be providing assistance and support to you, whether you choose to spend out and close down your collective or continue your work through another 501(c)(3) organization or fiscal sponsor.
and so we'll be contacting them as soon as possible to see if we can arrange a solution with just their help.
But: in the mean time (and in case they can't help us, given the suddenness of this announcement) we need your help to find solutions--and we will probably need them urgently. If you have any help you can provide us, any services you can recommend, or anything that might help us quickly (and as painlessly as possible, given the short notice) transition to another service, that would be greatly appreciated. Fair warning that this will also likely derail the March financial update until we have a clearer picture of what we'll do and if OCF can help us going forward.
Thanks, and hopefully we can resolve this situation without difficulty.
I'm confused, can't you register as a 501c3? I know there are some hurdles, but I thought that wasn't so hard as to be impossible.
Either way, This sounds very stressful. I'm with you.
501 is not that easy. Sure, getting nonprofit recognition can be fast. But you are now buried in reporting requirements that put a heavy admin burden on you.
Very broad and simple but: You must register in a state and abide by their rules. Then apply for tax exempt status in that state. Then ask the IRS for your 501c3. Boom. Now what?
You need to setup systems to maintain a balance sheet to complete your 990 or 990ez, keep minutes on record, have a board, board manual, whistle lower and harassment policies....it gets paper heavy fast.
Why? States and the Feds trust you to provide a public service or good, and thus determine you shouldn't pay taxes in exchange. They will absolutely bury you if they find you are violating that trust.
Personally, I don't think the reporting requirements are all that burdensome (especially for an organization that receives less than $50k on donations per year). Most of the requirements are just good governance/administration, that it seems like they're doing anyway (the monthly Beehaw post outlining costs/receipts).
A formal board of directors or trustees that meets once a month? I'm pretty sure they already have regular meetings. Minutes? Yeah, someone just needs to send out an email summarizing who attended and what was decided or voted on in that meeting.
Annual filings? Seems like a straightforward transfer of the information they're already putting in the monthly posts to fill out the IRS's PDFs.
As for employment stuff, they simply don't need to have employees. If it's all volunteer officers and board members, with a few contracted vendors here and there, they just need a bank account (which can be free for nonprofits).
It'll cost a little bit more in overhead, not least of which is a donation payment processor, but I don't see it as being more administratively burdensome than what they're already doing.
That's incredibly helpful and informative. Thank you!
The most difficult part is creating the charter and selecting the appropriate category; after that it's a small filing fee (most states) and - as long as you stay under $50k income - a trivial tax reporting burden. I'll be filing two returns - one for MD and one for VA - for two non-profits I'm on the board of this weekend. I'll be done before breakfast. They both have federal EINs and both are small enough we use Excel for ledger (since QuickBooks has gone to online-only annual extortion as their business model). Without paid employees or stockholders (just a board of directors), edit: and have no substantial physical property, and without donations coming from prohibited individuals or sanctioned stated, there is diminishingly little paperwork. If it's just a virtual organization with leased remote assets like web services, the bar is pretty low. Maryland has no annual fee; Virginia has a small one ($75, I believe) to maintain the corporation.
The organization's I'm involved in are beyond that part so I never was exposed to those difficulties. I guess all the hard work's done for me already right?
LOL - the paperwork is the easy part. Getting money and keeping the org alive and relevant is the real work. But I think you know that. ;-)
It's a real task