Vigil for Democracy Fiscal Host
Vigil for Democracy has established itself as a fiscal host to serve as an administrative home for such activists, organizers and movements choosing to raise money for a social action, event or expenses associated with specific cause. As a fiscal host, we provide the transparent budget keeping, expense management and fiscal oversight for collectives formed under our fiscal sponsorship.
The following is information about our fiscal sponsorship along with tips, rules and instructions for applying and setting up your collective under Vigil for Democracy as your fiscal host.
What is fiscal hosting?
Grass roots activists and social action organizations or movements often need to raise funds to support their activities. They also need to keep track of money raised and how expenditures will be made to stay organized and provide transparent reporting for constituents, stakeholders and principals responsible for taxes and bills. However, doing so without already having a company structure in place makes fundraising more complicated as there may not be a dedicated bank account into which funds raised will go.
What fiscal hosting is not
Collectives established with Vigil for Democracy as a fiscal host do not merge with or become owned by our organization, but rather they are associated as an unincorporated affiliate with Vigil for Democracy serving only as a fiscal host. A hosted collective or organization can focus on executing ideas and actions without having to worry about the fiscal and managerial challenges of establishing and running a legal entity. This enables your collective (or movement, event, project or cause) to retain full autonomy and self-regulation while benefitting from the services of the fiscal host.
However, a fiscal host is not responsible for promoting the hosted collective, organizing its events, recruiting participants or soliciting funds for its cause or any other day-to-day panning activities. Each collective or entity hosted by Vigil for Democracy will be responsible for its own fundraising, promotional activity, organizing, event planning, marketing, recruiting and other activities conducted in furtherance of the hosted entity’s purpose.
How does fiscal hosting work?
OpenCollective offers us a great platform to manage fiscal hosting. It provides all the tools and software necessary to track budgets and expenses, to generate monthly and yearly reports and fully automate the bookkeeping. The dashboard provides fiscal hosts with an overview of all transactions and will send alerts about any activity that needs attention.
Each collective creates its own page and working space and determines its own fundraising and expenditure policies. All activities such as donations, expenses, the budget, newsletters, etc., are collected on this page. We advise each collective to assign at least two administrators to manage that space. Their main job is to approve the expenses that members of the collective upload themselves. (see also spending money)
Each collective determines its own finance policy. The fiscal host merely serves as an administrative support.
How much does fiscal sponsorship cost?
Pricing is as simple as a flat percentage of money raised by the fiscally hosted collective or entity. Collectives raising up to $5,000, Vigil for Democracy charges a flat five percent (5%) of gross contributions. Additionally, each collective will be responsible for costs associated with processing payments such as the credit card fees charged by processing companies (i.e. PayPal, Stripe) or bank transfer fees.
Collectives or fiscally sponsored organizations raising in excess of $10,000 may require additional processing fees to cover any legal, accounting or tax liabilities. We will advise collectives if their volume of activities warrants any such additional fee prior to deducting from proceeds. The reason for this is that the larger the volume of contributions, the larger the responsibility of managing them and the greater the liability for the fiscal host.
Net proceeds will then be allocated to pay for the collective’s expenses as determined by that collective. Net proceeds, the amount allocated to the collective after the fiscal hosting costs are deducted, is calculated as the gross donation (or contribution) made minus the fiscal host percentage and any processing fees charged.
Eligibility to apply for fiscal sponsorship
Only very few conditions to apply to be fiscally hosted by Vigil for Democracy. These include:
1. You have formed a collective, citizen initiative, social action campaign, social justice event or social movement aligned with the Vigil for Democracy mission.
2. You agree to our principle and values. [JR, this should be a document? It will need a link on the website somewhere]
3. You are based in the United States. International payouts are not permitted.
4. When you apply, you must assign at least two people to serve as administrators of your collective. We recommend a team of 3 or 4 administrators for collectives intending to raise funds exceeding $10,000 per year for national campaigns.
5. You warrant that funds raised shall be for legal, non-violent purposes only.
How to apply for Fiscal Sponsorship
1. Check eligibility to apply
3. Check your email for a message from firstname.lastname@example.org. This should arrive within a few days of filling in your application. Be sure to add this email address to your contacts to avoid it landing in your email spam folder.
4. We will work with you to schedule an “onboarding” call via zoom to answer questions and assess your goals. If you don’t already have a collective established for your entity, we can then also help you launch your collective.
5. We will guide you through the fiscal hosting setup and help you launch your first campaign.
Fiscal Hosting is set up. Now what?
Once your collective is established with Vigil for Democracy as your fiscal host, your collective will serve as your own workspace, and you get your own URL which will resemble something like this: opencollective.com/yourcausename. This should also be your primary campaign landing page URL to include with your communication to backers and sponsors, and to members of your collective who need to upload an expense. Your administrators will be able to fully manage the collective from this page, approve expenses, change settings etc.
Whenever you have an expense, you can file it on that page. One of the admins of your group will have to approve the expense (up to you to define who should be the admins, you can easily change them anytime. We recommend a policy of two approvals by administrators required for expenses to avoid unilateral decisions on expenses exceeding a set amount).
Once a week, or periodically as needed, your administrators may email us to request review of all the approved expenses and actually reimburse them (or pay directly the vendor if you submitted an invoice instead of a receipt). The fiscal host has no decision-making power. As long as the receipt/invoice is legal and approved by one (or two as recommended) of the admins of your group, it will be paid.
To add money to your collective, people can make one time or recurring donations via the interface on your landing page. Contributors can also control the way they want to be displayed publicly (they can opt to remain anonymous or display their name).
Once your collective is established, people can contribute to your collective by clicking on any fund-raising campaign you set up on your collective landing page. They will have the option to pay by credit card or bank transfer and make single, one-time contributions or recurring payments.
We recommend that brand new collectives starting new fundraising activity have people from their organization make small donations to start the flow. The reason for this is the reluctance for donors to be first to contribute to any new cause.
Please keep in mind that the role of the fiscal host is to support your fundraising efforts by facilitating the way contributions are made. How much money you raise and how you attract contributors is up to you. As your fiscal host, we are not responsible for soliciting funds or promoting your campaigns.
There are numerous crowdfunding portals, but none as transparent as Open Collective. We recommend sharing your collective landing page URL in your social media, online and membership outreach.
Spending funds raised
The primary advantage of raising funds via OpenCollective is the transparency that gives your contributors and donors confidence that their money will be spent for their intended purpose. Tracking and tracing expenses very easy when you follow a few basic steps:
Step 1: submit expenses
Any member of the collective that spent money, can submit an expense to the collective page: by uploading a receipt or an invoice
Receipts are for items or services purchased for your collective’s purpose and which need to be reimbursed. Think of refreshments, software printing flyers, paint for banners etc. Make sure that you keep the receipt (just take a picture of it) and submit it to your collective (click on “submit expense” on your collective page).
A valid expense must contain the name and address of the vendor, the amount, the date, and the description of the items purchased. More info here.
Tip: you can also submit a receipt that you haven’t paid yet yourself. Simply put the bank account of the vendor in ‘communications’ and add a small explanation. The money will be transferred immediately to the vendor.
Invoices are for things that a vendor (a shop, a company, a freelancer) directly charges the collective for. They need to be addressed to the collective and use the address of any of its members (usually the person in the collective that has the relationship with the vendor).
Ask the vendor to submit the invoice on your collective page (click on “Submit Expense”). If needed, here is a useful template to create a proper invoice.
We can pay back expenses or pay invoices via bank transfer, PayPal and TransferWise for international payments.
Step 2: Approval process
When a member of the collective submitted an expense (receipt or invoice), its status is PENDING. An email is automatically sent to all the administrators of your collective to invite them to approve it (or comment on it).
Once approved and if there is enough balance to cover for it in your collective, your expense will show up in the list of expenses that READY TO PAY . One of your administrators will then notify us, the fiscal host, to request review and disbursement of approved expenses. We recommend doing this periodically as needed, but no more often than once per week. Only approved, ready to pay expenses will be disbursed. The fiscal host has no decision making power and will not pay expenses that have not been approved by your administrators. As long as the receipt/invoice is legal and approved by one of the admins of your group, it will be paid within a couple of days of your request email.
Once the payment is done, the status of the expense will go to PAID and the balance of your collective will be automatically updated.
Note: Any READY TO PAY expenses that is edited by the individual who submitted the expense will return to PENDING status until approved again by your collective’s administrators. Once paid, an expense can only be edited by the administrators.
Once your collective grows, we recommend you to define your own expense policy so that everyone in your community knows what can be expensed, up to what amount and who gets to approve expenses. You can also create sub collectives for different working groups or events and each can have their own administrators to approve their expenses.
To whom should we address invoices?
They need to be addressed to the name appearing on your collective and use the address of any of its members (usually the person in the collective that has the relationship with the vendor).
Can we hire people?
Not as employees. Only as contractors (freelancers) who are paid on invoices. Please follow laws of your state that determine at which point a freelance contractor must become an employee.
Can we make spend the money outside of the United States?
No. We can only send money to individuals and companies legally operating in the United States. However, if a member of your collective needs a product or service or online subscription offered by a vendor located in another country, we can reimburse the expenses to that member.
Can I ask to be reimbursed for less than the amount of the expense?
Yes. When you file the expense, you can enter any amount lower or equal to the amount visible on the actual receipt. This is useful when you go grocery shopping and you end up with a total bill with things for your collective and things for you.
What payment methods do you support?
The fastest and most versatile one is PayPal as it allows us to click on button and the payment is made. All bank and credit card processing fees (i.e., PayPal fees) are paid by your collective.
We don’t support crypto currencies at the moment. If you need to pay someone with crypto or any other payment method (e.g. Western Union or other), we recommend you to make those payments directly as an individual and then submit the expense for reimbursement from your collective.