OPEN COLLECTIVE FOUNDATION 501(c)(3)

TERMS OF FISCAL SPONSORSHIP AGREEMENT

Legal agreement (official)

Plain English help text (unofficial)

These are the basic Terms of Fiscal Sponsorship of the Open Collective Foundation. This agreement is entered into effect (“Effective Date”) upon acceptance of the Terms of Fiscal Sponsorship when creating a Collective (“Initiative”, “Collective”, or “Sponsee”) and requesting fiscal sponsorship by the Open Collective Foundation (“Sponsor” or “Foundation") by and among Open Collective Foundation, a California nonprofit public benefit corporation, and the Collective.

These are the terms under which Open Collective Foundation fiscally hosts initiatives. This agreement takes effect when an initiative that has applied is approved.

In this document, the Open Collective Foundation is called the “Sponsor”, the “Foundation”, “we” or “us”, and the initiative is called the “Sponsee”, the “initiative”, the “Collective” or “you”.

For the purposes of this document, both Fund and Collective profile types on the Open Collective platform are referred to as “Collectives”.

What we call “fiscal hosting” is called “fiscal sponsorship” in this agreement, because that’s the legal term in the US.

RECITALS

The parties enter into this Agreement with reference to the following facts:

A. Sponsor is a California nonprofit public benefit corporation exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code (“Code”), the charitable purposes and activities of which include enabling individuals and groups, working together, to create and fund initiatives that benefit the public, by providing services and support including fiscal sponsorship (“Sponsor’s Mission”). In alignment with Sponsor’s Mission, it serves as a fiscal sponsor to certain charitable initiatives which meet the criteria set forth in the protocols, which are attached hereto and incorporated herein by reference as Exhibit A (“Protocols”).

The Open Collective Foundation is a 501(c)(3) organization. This means it is exempt from taxes and its income must be used for a charitable purpose, not for profit.

Our purpose and mission is explained in Exhibit A below. Serving as a fiscal host to initiatives who share our charitable purpose is one way we achieve our mission.

B. Sponsee’s charitable mission as set forth in the materials submitted to Sponsor has met the Foundation’s criteria as set forth in Exhibit A.

You told us about your initiative’s mission, and we agreed that it fits with our charitable purpose.

C. The initiative desires to become a Collective of the Foundation, to support the initiative, and the Foundation desires to accept the initiative as a Collective of the Foundation in support of the initiative, upon the terms and subject to the conditions set forth herein.

We want to fiscally host you, and you want to be fiscally hosted by us.

D. In support of the Initiative, Sponsor has approved the establishment of a restricted fund (the “Fund”) to receive donations of cash and other property earmarked for support of the Initiative, and to grant from the Fund all amounts raised by Sponsee during the Term (as defined herein), less any administrative charges, interest, expenses and other fees (as provided for in the Protocols), to Sponsee in furtherance of the Initiative.

We will hold funds and pay them out on your behalf, minus fees. We won’t use your initiative’s money for anything else.

AGREEMENT

In consideration of the mutual promises in this Agreement, the parties agree as follows:

1.       RECITALS

The above cited Recitals are incorporated herein by this reference and made a part of this Agreement.

We all agree to the facts in the “recitals” section above.

2.        TERM OF AGREEMENT

This Agreement shall commence upon the Effective Date, and will continue unless and until terminated under Section 6 of this Agreement (“Term”).

This agreement starts when the Foundation becomes the initiative’s fiscal host, and it will continue until terminated (as explained in section 6 below).

3.         RELATIONSHIP & PROCESS

Sponsor will assist in managing the Fund and any Other Assets (as defined in Section 3(E) below) held for the benefit of the initiative. The Foundation will collect the income and will pay and disburse the net income and principal for purposes of the Initiative as specifically set forth in the Protocols.

We will collect money and other assets on your behalf, and will pay money out for expenses related to your initiative, as long as they meet the requirements explained below.

A. Relationship of the Parties. Nothing in this Agreement constitutes the naming of the Sponsee or members or agents of the Sponsee as an agent or legal representative of Sponsor for any purpose whatsoever except as specifically and to the extent set forth herein.

You can’t legally act for the Foundation, except in the specific ways laid out in this agreement.

B. Protocols. The Foundation will manage the Fund according to the Protocols, as set forth in Exhibit A. The Foundation may update the Protocols from time to time. If the Foundation makes any changes to the Protocols that significantly affects the initiative’s rights or obligations under this Agreement, OSC will notify the initiative of the changes, and the changes will become effective 30 days after that notification.

We will manage your funds according to the processes explained below. We might adapt or improve them over time. If they change, we’ll let you know.

C. Solicitation of Contributions & Fundraising. Sponsee may solicit gifts, contributions, sponsorships, and grants to Sponsor for the purposes of the Initiative, including through Sponsor’s website platform (“Platform”). However, at least 60 days prior to any official fundraising campaigns or events that are to be physically held in a particular geographic location (as opposed to online), Sponsee shall be required to provide notice in writing to Sponsor so that Sponsor may comply with any applicable state or local rules or regulations. For purposes of clarity, Sponsee shall not be required to provide such notification to Sponsor for any fundraising campaigns or events that solely take place over the Internet.  

You can fundraise online through your page on Open Collective.

If you are going to hold an offline fundraiser, you need to let us know so we can make sure certain legal regulations are followed.

If your fundraising activities are only on the internet, you don’t have to notify us about them.

D. Agreements with Third Parties. Sponsee is not authorized to enter into any agreement or obligation with a donor, sponsor, vendor or other third party that purports to bind the Foundation or the Initiative, including any agreement restricting the use of any contribution. The Foundation must approve, in advance and in writing, any agreement with a third party committing Initiative funds or establishing any obligation on the part of the Foundation or the Initiative.

If you want to enter into an agreement with someone else, such as a contract with a vendor or providing a specific service to a sponsor, you need to get our permission, because legally that agreement is with the Foundation.

E. Ownership of Initiative Property. As between the parties, Initiative shall retain all right, title, and interest in any intellectual property of the Initiative, including any copyrights, trademarks, trade names, artwork, designs, logos, copy, and all other intellectual property (collectively, “Intellectual Property”). Furthermore, Initiative represents that it has the authority to represent the interests  of and act on behalf of the Initiative. The Foundation acknowledges and agrees that, absent any separate agreement to the contrary, any Intellectual Property provided to the Foundation by the initiative or its agents for inclusion in the Initiative shall not thereby be transferred to the Foundation.

Notwithstanding the paragraph above, Initiative may separately agree to transfer assets, including Intellectual Property and physical property, to the Foundation to be held for the benefit of the Initiative. Any such transferred assets (“Other Assets”) shall become the property of the Foundation.

You own the intellectual property of your initiative. If you provide us something like a logo for use on your page, it still belongs to you. You may also choose to transfer other assets of your initiative to us.

4.        THE INITIATIVE

According to the terms of this Agreement, the Foundation will create a Fund for the Initiative to receive funds earmarked for support of the Initiative, and to make disbursements for expenses incurred in furtherance of the Initiative.  Beginning on the Effective Date, the Foundation will place all such revenues received by the Foundation and identified with the Initiative into the Fund to be used for the benefit of the Initiative’s mission. Any significant changes to the Initiative’s mission must be approved in advance by the Foundation to ensure alignment with the Foundation’s Mission. The Foundation will exercise full control over the Initiative’s financial administration, management, and disbursement of the Fund and any Other Assets. The Foundation shall have the right to deduct Project Dues and Expenses, as defined by the Protocols, directly from the Fund without further approval by the initiative.

We will accept, hold, track, and pay out money for your initiative.

We will use that money only to further the mission of your initiative.

You can update your initiative’s mission, but we’ll need to make sure it still fits the Foundation’s criteria.

We’ll do all the admin and management related to paying out money from your initiative’s budget.

  1. Restricted Fund: Sponsor’s Income. The parties agree that all money and the fair market value of the Fund and all Other Assets will be reported as the income of Sponsor, for both tax purposes and for purposes of Sponsor’s financial statements. Accordingly, Sponsor is responsible for the processing and deposit in the Fund of all monies received for the Initiative.

We’re responsible for taxes and accounting, and money for your initiative will be reported as the Foundation’s income.

It’s our responsibility to make sure money contributed for your initiative is credited to your balance.

B.  Restricted Fund: Acknowledgment of Contributions. Sponsor is responsible for providing donors with acknowledgement of charitable contributions received by Sponsor for Initiative.  

We will send receipts to your donors.

C.  Restricted Fund: Disbursements. The Foundation will disburse monies from the Fund and dispose of Other Assets only for valid expenses of the Initiative, and only upon receipt of a request from the Initiative detailing and documenting the expense as specifically set forth in the Protocols.

You can submit expenses and we’ll pay them out from your initiative’s funds.

5.        CHARITABLE PURPOSES

A.  All of the assets received by Sponsor under the terms of this Agreement will be devoted to the purposes of the Initiative in furtherance of Sponsor’s charitable, Code section 501(c)(3) purposes. Sponsee agrees it will use the funds Sponsor disburses to it from the Fund solely for the purposes of the Initiative, and it will repay to Sponsor any portion of those funds that is not spent or committed for those purposes.

Contributions to your initiative must be devoted to your charitable purpose.

You can’t use your initiative’s funds for anything other than furthering your charitable purpose, and if you do you have to pay it back.

B.  Expenditures for any attempt to influence legislation within the meaning of Code section 501(c)(3) are subject to limitations imposed by Sponsor. Sponsee will not use any portion of the assets to participate or intervene in any political campaign on behalf of or in opposition to any candidate for public office, to induce or encourage violations of law or public policy, to cause any private inurement or improper private benefit to occur, nor to take any other action inconsistent with Code section 501(c)(3).

You may not use your initiative’s funds to influence legislation, to support breaking the law, or for private profit.

6.        TERMINATION

Either the Foundation or the initiative may terminate this Agreement on 30 days' written notice to the other party.

Either you or we can end this fiscal hosting relationship with 30 days notice.

If there is a positive balance in the Initiative Fund or the Foundation holds Other Assets of the Initiative at the time of termination, the Initiative’s assets will be distributed as follows:

  1. The Foundation will reimburse any valid expenses of the Initiative upon receipt of a final request from Initiative, submitted within 15 days of notice of termination, detailing and documenting the expense as specifically set forth in the Protocols.
  2. Within the 30 day notice period, Initiative may identify a successor organization who is willing and able to carry on the Initiative, and
  1. Which is recognized as tax-exempt under Internal Revenue Code (the “Code”) section 501(c)(3) and is not classified as a private foundation under Code section 509(a), or
  2. To which distribution of the Initiative Fund and Other Assets is otherwise consistent with applicable tax and charitable trust laws (a “Successor”).

Upon determining that the Successor meets these qualifications and that the distribution is permitted by applicable law, the Foundation will transfer the balance of assets in the Foundation’s restricted Fund for the Initiative, together with any Other Assets held or liabilities incurred by the Foundation in connection with the Initiative, to the Successor. To initiate the transfer of funds, the Successor payee must submit an expense as outlined in the Protocols. The transfer will be made after the end of the notice period or any extension thereof, subject to the approval of any third parties that may be required.

  1. As an alternative to a Successor, Initiative may choose to transfer the balance of its Fund to another Sponsee Initiative of the Foundation, or to the Foundation’s general operating Fund, subject to applicable law.

If you want to shut down your Collective or Fund and there is are assets left, your choices are:

  • Spend the money through submitting expenses.
  • Find or form another organization that we are allowed to transfer them to—usually this will need to be another 501(c)(3).
  • Donate them to another initiative under OCF, or to OCF itself.

501(c)(3) entities are not allowed to transfer assets to individuals or for-profit companies in most cases.

  1. If no Successor or other qualified recipient is identified prior to the end of the notice period (including any mutually agreed extensions), the Foundation may, in its sole discretion, distribute or spend the Initiative Fund and dispose of Other Assets in any manner consistent with applicable tax and charitable trust laws, which may include granting any balance to another fiscal sponsor, re-allocating any balance to another initiative for substantially similar purposes, or using any balance to defray the Foundation’s costs of administering its fiscal sponsorship program.

If you don’t pick one of the above within the allotted time, we will choose for you.

7.        NOTICE

Any notice, demand, delivery, or other communication under this Agreement will be in writing and will be deemed properly given if delivered in person or mailed by first class or certified mail, postage prepaid, or sent by facsimile or email in the manner provided in this paragraph to the following persons:

To Sponsor:         

Open Collective Foundation

340 S. Lemon Avenue, #3717 Walnut, CA 91789

Email: contact@opencollective.foundation

To Sponsee:         

Collective or Fund name, Email address, and information

provided when creating the Initiative

If you need to give us notice of something relevant to this agreement, it needs to be in writing. You can email us or mail us a letter.

If we need to notify you of something, we will do it in writing using the contact info you provided when you signed up.

8.        ARBITRATION

Any controversy, claim, or dispute between the parties arising from or related to this Agreement that cannot be resolved through discussions between the Sponsee and Sponsor’s leadership must be submitted to mediation before a single mediator mutually agreed to by the parties. If the claim or dispute is not resolved through mediation, it will be submitted to legally binding arbitration before an arbitrator mutually agreed to by the parties. The arbitration will be governed by the rules of the American Arbitration Association. Binding arbitration under this provision is the sole and exclusive remedy for resolving any such dispute or claim, and no party has right to a trial in the civil courts or any right to appeal the arbitrator’s decision, except as may be permitted by the arbitration rules.  Judgment upon the award rendered by the arbitrator may be entered in any court otherwise having jurisdiction thereof. The parties will evenly split the costs of the arbitration. Each mediator and arbitrator under this provision must be an attorney who has been licensed to practice law in the State of California or any other state for at least 10 years. If the parties cannot agree upon a qualified mediator or arbitrator, each party will select a qualified person and those two (2) will select a third qualified person to be the sole mediator or arbitrator. Notwithstanding the above, neither party is prevented from obtaining injunctive or other equitable relief from a court of competent jurisdiction pending the resolution of a dispute through mediation or arbitration.

If we have a dispute related to this agreement, we will first try to work it out by discussing it together.

If that doesn’t resolve the problem, we will do mediation with someone we both approve.

If that doesn’t resolve the problem, we will go to binding arbitration, instead of going to court. That means a qualified person will hear both sides and then make a decision, which we will all have to abide by.

If we go to arbitration, we will split the cost.

9.        ATTORNEY’S FEES

The prevailing party in any legal action to enforce this Agreement is entitled to recover its costs and reasonable attorney’s fees in addition to any other relief granted.

If there is legal action related to this agreement, the winning side will have its costs and legal fees paid by the losing side.

10.        CHOICE OF LAW

This Agreement is governed by and interpreted in accordance with the laws of the State of California applicable to agreements made and to be enforced entirely within such State. The sole situs of all mediation, all arbitration, and any other form of dispute resolution for any controversy or claim arising out of this Agreement is the County of Los Angeles in the State of California in the United States of America.

This agreement is governed by the laws of the State of California. If there’s a dispute resolution process, it will take place in Los Angeles.

11.        ENTIRE AGREEMENT; MODIFICATION

This Agreement supersedes any prior oral or written understandings or communications between the parties and constitutes the entire agreement of the parties with respect to the subject matter hereof. This Agreement may not be amended or modified, except in a writing agreed by both parties hereto.

This agreement is the official one when it comes to the issues covered in this document, regardless of any other communication or understanding between us.

We both have to agree for this agreement to be changed.

12.        MISCELLANEOUS

Each provision of this Agreement will be separately enforceable, and the invalidity of one provision will not affect the validity or enforceability of any other provision. The failure of Sponsor to exercise any of its rights under this Agreement will not be deemed a waiver of such rights.

If one part of this agreement is invalid, it doesn’t invalidate the rest.

If we don’t exercise a right that we have, it doesn’t mean we’re giving up that right for the future.

13.        SPONSEE RECEIPT OF AGREEMENT

By agreeing to this Agreement, Sponsee acknowledges that each member and agent of the Sponsee has received a complete copy of this Agreement, including Exhibit A, Protocols and hereby agrees to be bound by the terms hereof.

You acknowledge that you have received this document and agree to what it says. This is usually done via ticking the box during the signup process.

14.        SPONSEE LIABILITIES & INDEMNIFICATION

Sponsee is responsible for all activities of its Initiative, including any financial or other liabilities and hereby agrees that it will not enter into any conflicting obligations herein as it pertains to this subject matter. Sponsee shall indemnify, defend and hold harmless Sponsor and its respective agents, representatives, employees, directors, managers, members, and officers from any and all claims, damages, losses, liabilities, costs and expenses (including reasonable attorney’s fees) resulting from Sponsee’s performance of its obligations contained herein; injury (including sickness, disease or loss of life) to any person, or damage to any property of any third party at or as a result of Sponsee’s activities or its Initiative, including that caused by Sponsee’s willful, wanton or intentional acts; Sponsee’s improper use of or claim to the Initiative, including those made by any third party for Sponsee’s violation of any intellectual property laws; or Sponsee’s operations of the activities under its Initiative.

You are responsible for your initiative’s activities.

You won’t enter into another agreement that conflicts with this one.

You can’t hold the Foundation responsible or sue us if you or your initiative hurt someone, cause damage, or fail to honor this agreement.

EXHIBIT A
Protocols

The following are Protocols of Sponsor; these Protocols may be amended by Sponsor with 10 days notice at any time.

These are our policies and processes. We may change them in the future as long as we give you 10 days notice.

1.   Criteria: In furtherance of Sponsor’s Mission, it promotes initiatives in the United States with the charitable purposes outlined below. As such, Sponsee has provided evidence and Sponsor has confirmed that Sponsee’s Initiative has met one (1) or more of the following criteria for Sponsor’s fiscal sponsorship of the Initiative:

  1. Increasing access to educational resources and training: With the advance of technology and the movement towards a society where people work together to enhance and develop the future, there has been an increase in the number of organizations and groups that are coming together to promote education. 
  2. Creating a positive social impact: Sponsor’s social impact purpose is aimed at finding ways to (i) eliminate prejudice and discrimination; (ii) combat community deterioration; (iii) decrease juvenile delinquency; (iv) serve the less fortunate or distressed; (v) serve to prevent animal or child cruelty; or (vi) create a positive impact on society.
  3. Developing tools to improve civic participation within cities or communities: Sponsor sponsors initiatives aimed at fostering civic participation, democratic debate and rebuilding community ties and strengths.

These are our charitable purposes.

We’ve confirmed that your initiative’s purpose is to further at least one of these in the United States.

2.   Requirements Imposed on Sponsee: To remain in compliance under the terms of this Agreement, Sponsee must use the funds received for stated activities; and maintain at all times a public and transparent ledger for the disbursement of those funds on the Platform.

Your initiative must only funds for its stated mission, and maintain a transparent budget through Open Collective.

3.   Sponsor Fee & Expenses: Sponsee will be required to pay fees (“Fees”) and cover any expenses Sponsor incurs on Sponsee’s behalf as a result of this Agreement. Sponsee’s Fund will be automatically deducted to pay from the Fund the following Fees and expenses:

  1. Fees consist of:
  1. 5% of the gross amount of all funds raised by Sponsee via credit card transactions through the Open Collective platform during the Term of this Agreement; AND
  2. A percentage of the gross amount of all of the funds raised by Sponsee during the Term of this Agreement via any means besides credit card payment, as follows: 8% for budgets of up to $500,000, 6% for budgets between $500,000 and $1,000,000, and 4% for budgets larger than $1,000,000; AND
  3. All interest earned on the Fund which will be retained in Sponsor’s general fund.  

You agree to fees and expenses being automatically deducted from your balance.

You will pay a 5% fiscal hosting fee on credit card transactions and 4-8% on bank transfers and checks, plus payment processor fees.

Interest earned from money held on your behalf goes to the Foundation.

  1. Expenses: In addition to the Fees, Sponsee is responsible for any merchant account credit card processing fees incurred by Sponsor as a result of administration of the Fund, which are directly related to Sponsee’s Initiative.

Payment processor fees, such as from Stripe and PayPal, will be charged to your budget if incurred.

4.   Platform: Upon execution of this Agreement, Sponsee’s Initiative will be featured on the Platform located at https://opencollective.com/foundation. Sponsor will set Sponsee up on the Platform such that Sponsee will have its own dedicated page that tracks, in total transparency, the funds that it raises and the expenses it incurs in relation to the Initiative. The Sponsee’s page on the Platform will be linked to Sponsor’s Stripe account, Transferwise account, and PayPal account so that Sponsor has control over the funds received and disbursed under the Platform for purposes of Sponsee’s Initiative. The Platform thus serves as a fundraising avenue for the Sponsee’s approved Initiative enabling it to raise funds and pay for Initiative expenses. The Platform makes the revenue and expenses of Sponsee available to the public through a transparent ledger.

Your initiative will show up on the Foundation’s page on Open Collective.

Your initiative will have its own page on Open Collective, showing your transparent budget, which you can use for fundraising.

Your initiative is linked to our Stripe, Transferwise and Paypal accounts to facilitate accepting and paying out money, which we manage.

5.   Disbursements: In order to receive a disbursement from the Fund to cover expenses incurred in furtherance of the Initiative, the Sponsee must upload its receipts/invoices onto the Platform for review by the staff members of the Sponsor. Upon Sponsor’s receipt of said receipts/invoices its staff members will review all documentation to ensure the expenses to be incurred are valid and in alignment with Sponsor’s exempt purposes and the terms of this Agreement. Upon approval by the Sponsor staff members, Sponsor will allow those expenses to be incurred from the Fund by Sponsee through the Platform using PayPal. Transferwise, or other mutually agreed payment method. Each time Sponsor approves such expenses, the funds allocated to Sponsee on the Platform will automatically decrease by the amount used. Notwithstanding the foregoing however, prior to incurring any expenses outside of the United States (“Foreign Expenses”) for which Sponsee wishes reimbursement from the Fund, Sponsee shall obtain prior written consent from Sponsor. Specifically, Sponsee shall be required to submit details of such anticipated Foreign Expenses to Sponsor, which shall include but not be limited to the maximum amount to be incurred. In the event Sponsor determines in writing that such Foreign Expenses may be eligible for reimbursement from the Fund as provided for above, Sponsee shall be permitted to incur the disclosed and approved Foreign Expenses and seek disbursement from the Fund pursuant to the process set forth above. Sponsor shall not reimburse from the Fund, any Foreign Expenses incurred by Sponsee for which Sponsor does not provide prior written approval.  

To trigger a payout of your funds, submit an expense on Open Collective and approve it as the admin. Then we will review it to make sure it’s valid.

Once approved by both you and us, we will pay the expense using Paypal, Transferwise, or another mutually agreed payment method, and automatically deduct that amount from your balance.

Generally we only pay expenses for activities within the US. If you want to fund international activities, get our permission first, or we might not be able to pay the expense.

6.   Funds Received/Expenses Paid Outside Platform: In the event that Sponsee receives funding outside of the Platform (that which does not go directly into the Fund), Sponsee will immediately transfer such funds to Sponsor for deposit into Sponsee’s Fund; at no time shall Sponsee hold any funds for the Initiative outside of the Fund or utilize the services of any other fiscal sponsor during the Term of this Agreement. Sponsor will use a feature enabled on the Platform to ‘Manually Add Funds’ to Sponsee’s page upon Sponsor’s receipt and deposit of the outside funds into the Fund. This means, that Sponsor will assign the funds received in the Fund destined to the Initiative for the Sponsee, thus increasing its budget. In the same fashion, if an expense is paid outside of the Platform by Sponsee, because for example the recipient does not hold a PayPal account or another payout method is required, then Sponsor will use the ‘Mark as Paid’ feature on the Platform, that allows Sponsor to record that an expense has already been paid through a different method and that amount is automatically deducted from the Sponsee’s Fund balance.

If you raise funds for your initiative outside of the Open Collective platform, you need to transfer them to us.

If you send us funds for your initiative from another source, we will add them to your balance.

You can’t hold funds for the initiative in another account, or simultaneously have another fiscal sponsor for this initiative while we are your fiscal host.

If an expense for your initiative gets paid outside of the platform, we will manually deduct the amount from your balance.

7.  Reporting: Sponsor will send Sponsee a monthly email report with all transactions related to the Fund including the revenue generated and the invoices and expenses that have been paid.

We will email you a monthly report of activity related to your initiative.