As mentioned in yesterdays meeting - here is a proposal for meet.coop to use Open Collective.
Please add comments, notes, questions and feedback below - and I will update the proposal accordingly… and maybe we can discuss and see if we agree with the proposal at next Thursday’s meeting.
As mentioned in yesterdays meeting - here is a proposal for meet.coop to use Open Collective.
I’ve been involved for some time in a couple of projects that use OpenCollective as a way of gathering funds and disbursing them, without requiring any formal organisational identity. I’m perfectly happy with the way this works, and agree that it would be an appropriate arrangement for meet.coop to make at this stage of its development, pending any moves to formal incorporation.
I don’t think I would want to become an admin but agree with @osb that further admins should be appointed in addition to the role that he would play as fiscal host (a role that he/OpenCoop currently holds for a number of OC arrangements). The admins should be from the founder coops?
I want to continue exploring using Open Collective as a main payment channel for its transparency. I had a conversation with someone who used it before, but subsequently abandoned it even though they like the transparency aspect and the people behind the OC project. Basically, when there are lots of transactions among orgs within the platform, the fees stack up. Here is my understanding.
For example, under our currently work-in-progress scheme where a Beneficiary Member sells Meet.coop backend capacity to a Client through management of a Greenlight instance, when the Client pays €100 each month, the OC flow would go something like this:
- Client pays €100 to the OC Collective
- Subtract 5% fiscal host fee, 5% Open Collective fee, 3% payment processor fee = €87
- Beneficiary Member pays 70% of €100 to Meet.coop OC = €70
- Subtract 5% fiscal host fee, 5% Open Collective fee = €63
So in the end, the net profit for each party from the €100 is:
€63 for Meet.coop
€17 for Beneficiary Member
€5 for fiscal host of Beneficiary Member
€3.5 for fiscal host of Meet.coop
€11.5 for Open Collective and credit card processors
From the Beneficiary Member’s perspective, if they are not themselves a fiscal host in OC, €17 is pretty much what they would get monthly from selling a €100 account.
I’m not sure the above is 100% correct:
in 2 - The Open Co-op would not charge any fiscal host fee (as stated in the proposal)… also, I am not sure of the exact Open Collective card processing fees … OK having looked just now they simply pass on Stripe fees which are:
1.4% + 20p for European cards
or 2.9% + 20p for non-European cards
So for UK it’s a lot less than 3%
I’m not sure about 4 either - from looking at https://opencollective.com/pricing I don’t think OC charge anything to pay OUT… so there’s no need to subtract ANOTHER 5%
So, for your example, £100 would become
100 - 5% - 1.4% - 20p = £93.4
The other deductions / costs splits in your example are not really relevant to the proposal to use Open Collective as they are still to be determined / would be the same whichever payment platform / method we chose
Here I am assuming that the Beneficiary Member sets up as a Collective in OC with another Fiscal Host. A 5% host fee is pretty standard, of course it can be 0% to anything.
- I don’t want to assume that every Beneficiary Member needs to itself be a OC Fiscal Host to participate, so building in the 5% as an example
- I understand that the Open Co-op as Fiscal Host chooses to not charge any fee for fiscal hosting, but that basically hides the labour involved in the accounting
Approx 3% is taken from OC docs. In fact, Hypha was charged > 4% for our last transaction ($2.05 on $50). In 1 and 2, I am writing about a Beneficiary Member (e.g. Hypha), so we can assume they can land in any country.
Total donations (before fees) CA$50.00 Payment processor fees (Stripe) -CA$2.05 Platform fees (Open Collective) -CA$2.50
In 3 and 4, that’s when Open Co-op comes in, as the Meet.coop OC. Here the Beneficiary Member (Hypha) wants to send the 70% to Meet.coop (hosted by Open Co-op), and in 4, Open Co-op takes 0%* and the OC itself takes another 5%.
It’s paying out of the Beneficiary Member’s Collective (Hypha’s), but into the Open Co-op Collective (Meet.coop’s). The into is where OC takes another 5%.
*The fact that Open Co-op is waiving its hosting fee is appreciated, but I think if it ends up taking a lot of your time, it would only be fair to compensate for that labour. In my example, I am trying to illustrate that under OC, how fees stack up and approximately which money goes to where.
I just did some more searching to clarify this question:
When one OC Collective pays another OC Collective, what are the fees involved?
Let’s assume we have:
Meet.coop’s Central Account:
Meet.coop (a Collective)
hosted by The Open Co-op (a Fiscal Host)
Hypha wants to send €70 to the Meet.coop Central Account via OC. Currently, Open Collective does not support this well:
If you have a Collective with funds in its balance, you may use that as a payment method when contributing to another Collective within the same Fiscal Host. There are no fees for this method of donating.
Except we are not under the same fiscal host
We are working on the functionality to enable Collectives to give directly to Collective in a different host. As a workaround for now, use the following process:
- Contact the Fiscal Host backing the receiving Collective and ask them to submit an expense to the giving Collective for your donation;
- The giving Collective will approve the expense and pay out the receiving Fiscal Host;
- The receiving Fiscal Host will then donate the money to the receiving Collective.
So this means Meet.coop’s host, The Open Co-op, will submit an expense to Hypha for €70, which Hypha will approve. Then The Open Co-op will donate €70 to the Meet.coop Collective.
In this case I think there is little fees involved as Hypha can direct deposit to The Open Co-op over TransferWise to pay the expense, but then I don’t know if OC takes anything when The Open Co-op donates to one of its collectives, Meet.coop.
Would be useful to invite someone from OC to look at this thread.
I think Open Collective would be great if we can make it work for transparency and distributing funds.
If we need a way to setup payments quickly Collective Tools uses Wordpress Woocommerce with Stripe for monthly subscriptions fees (from all over the world) and we could basically duplicate that setup for meet.coop if needed - looks like this: https://subscribe.collective.tools/product/meet-coop-membership/
I’m assuming you purchased this premium woo plugin? https://woocommerce.com/products/woocommerce-subscriptions/
Or have you done it some other way?
How would it work to address resell profit shares: Proposal for meet.coop to use open collective
Or does each reselling org do their own billing and then Meet.coop invoices them? This part becomes not transparent and seems like an overhead. It’d be nice if there is platform that allows a payment to directly be split between two accounts. e.g. User member pays $10 a month, automatically $3 goes to reseller, $7 goes to Meet.coop.
One idea is to have Meet.coop itself is a OC Fiscal Host that charges 70% fee, and every reselling member is a OC Collective under it. When a payment is made, automatically 30% goes to the reseller, and Meet.coop “clips” 70%. Completely automated and transparent.
When a reseller needs money, they invoice their own Collective and get paid out. However, this requires a legal entity with a bank account to set up Meet.coop itself as a fiscal host. Now Meet.coop becomes quite centralized.
As long as Collectives are within the same fiscal host, we can easily transfer funds for free:
So each reseller, and also Meet.coop itself, can make a collective under an existing host (e.g. https://opencollective.com/opensource/). One problem with this (and 1) is, all the collectives have to be same currency, that of the fiscal host’s stripe account.
Use Stripe Connect with payment splitting:
A one-to-many correlation between charges and transfers (e.g., a charge made to a delivery service needs to be split between the business—the source of the items being delivered—and the delivery person)
I have no idea how complex this is to set up, and transactions will not be transparent.
Overall, I think we should have one person take charge of giving the Open Collective people a call, and describe what we need, and see what they recommend. I still prefer Open Collective, but also don’t want the end-to-end fees to exceed 10% on a transaction or create a hugely complex system.
good ideas - I am with you on not wanting fees to reach anywhere near 10% and avoiding anything too complex. I have emailed OC and requested a call to discuss… I will report back
Great! Here are some quotes from an earlier thread with Alanna from OC, in SSB. Hope it helps you get some context in that upcoming convo:
FYI: Open Collective now has bank transfers integrated in, so you don’t have to use Paypal to get paid from the SSBC Collective (or any other Collective). Just select “bank transfer” as your payment option when you submit an expense, and input your details.
The feature is still in beta but we can turn it on for any host that requests it. Just contact email@example.com to ask. When a person submits an expense they can choose their country and they will be paid in that currency, regardless of the Collective’s currency. Money is paid from the host’s Borderless account.
When a person submits an expense they can choose their country and they will be paid in that currency, regardless of the Collective’s currency. Money is paid from the host’s Borderless account.
Our #organizational-operations group, with #product-strategy-and-services, discussed the options of how to collect money (including Open Collective vs. Stripe use by collective.tools), surfaced various needs such as transparency and VATs, and with @osb’s new information from meeting with OC, our group is leaning towards adopting OC.
Yes we do, so that’s $199 per year for the subscription plugin. We also use the plugin for dealing with EU VAT for digital services for $29/year.
After some discussions in our “Organizational Operations - Payment processing” circle today we agreed to update the original Proposal to use Open Collective based on new findings, and to present this for approval at the All Hands meeting this coming Thursday.
Pia (CEO of OC) has offered to test their ‘contribution pricing’ (so far only offered to charities) to meet.coop as an experiment… it’s been working well for them so far and they are keen to explore if they can get off the 5% fees model. What this means is that Meet.coop would not be charged ANY fees by Open Collective - when a meet.coop customer checks out they would be asked for a contribution for OC. This defaults to 15%, but can be reduced to 10% or free - as per the attached “I don’t want to contribute”:
If the customer offers to pay fees they are added on top - not taken off our prices.
So the new proposal is simply:
To set up a meet.coop Collective, under a fiscal host - and sell monthly or annual subscriptions there, to keep all accounting transparent.
Providing Fiscal hosting does require a bit of accounting… so, rather than take this on at The Open Co-op, I’m now proposing we talk to Platform 6 about being our fiscal host. They quote a 2% charge - but since we know them this could be less … plus, we need to decide if we want to charge VAT or not - and select a suitable fiscal host accordingly - see OC VAT page for more details of how they deal with VAT.
I think we should also come up with a list of criteria for selecting a fiscal host. Here are my asks:
- They charge no more than 5% fees, 2% even better, but I am happy to pay something > 0% because it’s work
- They have TransferWise enabled and can pay invoices in any currency without incurring significant exchange rates
- They have clear strategy on VAT (or other tax) responsibilities (I don’t want either us or our host to suddenly realize they are on the hook for a bunch of tax money at year-end)
I have asked Pia the 3 Qs we need answers to RE:
- notification of failed payments
I have asked Platform 6:
- about their fees
- about VAT
- whether they have TransferWise set up
Will report back here if I hear back in time, or in the meeting tomorrow…
answers from Pia at OC:
1 - Would we get notification of failed payments?
You won’t directly, apparently. We surface that information in the monthly collective report but you won’t get an immediate notification. I think our friends at Octobox, which implemented on open collective what you want to implement where using the API for fetching that automatically. I’ll ask them.
2 - Receipts are a feature. You can add as a host what you want to show in the receipts. Coming up feature you will be able to generate an invoice ahead of a donation.
3 - We include VAT in the receipt. If you have a host in EU (not sure UK) and you give anything against a donation you’ll have to include VAT
the lack of immediate notifications on failed payments is not a great imho … but maybe we can set up a Zap / other workaround…
Personally I wouldn‘t feel super good with having an open collective fiscal host that is not a producer member of meet.coop. If I understand open collective correctly we would be quite depending on the fiscal host, e.g. In regards to approving expanses.
As mentioned yesterday in our call a lot of organizations probably need official and correct (including VAT etc.) invoices in order to send funds to meet.coop. So open collective probably will only be relevant for individuals?
I think I am not convinced yet that open collective is the right way to go, at least not for a general payment solution. Another and probably easier way and one we probably have to provide anyways (invoices, currencies etc.) would be to use the Bank accounts of the different producer members that a relevant for the specific user members and than distribute money (if needed) between those. What would arguments be against that solution and in favour of open collective? Just so that I can understand it better as I do not have any experience with open collective and I have only the informationen from their website.