Grantmaking Policy
This grantmaking policy (“Policy”) lays out how initiatives (“Initiatives”) fiscally hosted by OpenCollective Foundation (“OCF”) may make grants to individuals.
For more info on this policy, helpful tips, and advice about equitable grantmaking, see About Grantmaking. If the person you wish to fund can provide receipts before payment and/or is ok with getting a 1099 for this income, they can submit normal expenses instead of going through this grant process.
If you wish to fund another OCF-hosted initiative or donate to another 501(c)(3) entity, you don't need to go through this grant process (contact us for details about what to do in those cases).

About this Policy

This Policy enables fiscally hosted Initiatives under OCF’s umbrella to become grantmakers in their communities, a variation from traditional grantmaking where a foundation or other grantmaking institution makes a grant directly to a grantee.
Grants, in the context of this Policy, mean financial gifts from an Initiative hosted by OCF to an individual (the “Grantee”), which further the Initiative’s mission, and are aligned with the overall mission of OCF.
We use the Open Collective platform to support both transparency and agency for grantmaking Initiatives and their Grantees, as well as to support OCF’s role in compliance, reporting, and expenditure responsibility.
As a fiscal sponsor and 501(c)(3) nonprofit entity, OCF holds ultimate responsibility for compliance and IRS reporting for its fiscally hosted Initiatives. The relevant IRS regulations and requirements concerning grants largely determine the details of this Policy.
Within these bounds, OCF aspires to ground its approach to grants in its key values of trust and transparency. Therefore, we seek to empower Initiatives in their role as grantmakers, and center their expertise about and relationships with their communities and grantees.

The Grantmaking Process

    1.
    The Initiative decides to make a grant to an individual.
    3.
    OCF staff reviews the proposal form and, if it determines it has been completed in accordance with the terms of this Policy, approves the proposal.
    4.
    OCF, the Initiative admin, and the Grantee sign a grant agreement (“Grant Agreement”).
    5.
    The Initiative admin allocates the grant funds to a Project (“Project”), a feature on the Open Collective platform for segregating funds within an initiatives overall budget.
    6.
    The Grantee submits expenses to the Project in order to withdraw grant funds.
    7.
    The Initiative admin approves submitted expenses for payment.
    8.
    OCF reviews grant expenses and processes payments to the Grantee.
    9.
    The Initiative admin and/or the Grantee publishes required updates (“Updates”) in accordance with the terms of this Policy (see Reporting, below).
    10.
    At the conclusion of the grant, any unspent funds are returned to the grantmaking initiative’s balance.

Grant Agreements

A ‘Grant Agreement’ is a legal contract that includes the terms by which OCF enables Initiatives to make grants, and references the details submitted in the grant proposal form. A Grant Agreement will be signed by OCF, the Grantee, and the Initiative admin at the outset of the grant.
In cases where a grant has not been completed by the end of the timeframe specified, and the grant will proceed with an extension of time: OCF, the Initiative, and the Grantee will enter into a signed amendment to the Grant Agreement evidencing the parties’ agreement to such extension. An Extension Update is also required to explain why the extension is necessary (see Reporting, below).

Grants Allowed Under This Policy

The activities funded by grants must be in alignment with the IRS definition of charitable purposes. Grants under this Policy may only be given to individual Grantees, not to groups or incorporated entities.

Non-Taxable Grants

This Policy is intended to enable grants that are not taxable as income to the Grantee, and therefore allowed grants are narrowly scoped to what the IRS has specified can be tax free (as detailed for each grant category below).
If an Initiative wishes to fund activities outside this narrow scope, instead of giving a grant, the Initiative may invite the payee to submit a regular invoice or reimbursement expense, understanding that receipts will be required or the payment may be considered their taxable income.
Please note: OCF does not offer individual tax advice, and all Grantees are advised to consult with their own accountants to confirm the taxability of any grant funds received.
As this Policy is designed to fit the IRS’s guidelines for tax free grants, OCF does not issue an IRS Form 1099 to Grantees in relation to the grant funds they receive, as long as all requirements are adhered to. We collect an IRS Form W-9 from all Grantees at the time the parties enter into the Grant Agreement as a precaution only, for cases where grant funds are misused and OCF needs to reclassify related expenses and issue an IRS Form 1099 to the Grantee.

Grant Categories

Initiatives may make grants under the following categories (see more detail about each one below):
    Study: A scholarship or fellowship grant for candidates for a degree at an eligible educational institution.
      A scholarship is generally an amount paid to a student (whether an undergraduate or a graduate) to be used at an educational institution in pursuit of their studies.
      A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research.
    Award: A cash prize or award recognizing an individual's past accomplishment in a particular field.
    Hardship: A payment to an individual as a result of a disaster or emergency hardship. Hardship grants may be made to ensure victims have basic necessities, such as food, clothing, housing, transportation, or other necessities.

Study Grants

A Study grant is tax free (and allowed under this Policy) only if the Grantee is:
    1.
    A candidate for a degree;
    2.
    At an eligible educational institution; and
    3.
    Uses the grant funds for qualified education expenses.
To be considered a candidate for a degree, the Grantee must:
    1.
    Attend a primary or secondary school or a pursue a degree at a college or university; or
    2.
    Attend an educational institution that:
      1.
      Provides a program acceptable for full credit toward a bachelor’s or higher degree or offers a program of training to prepare students for gainful employment in a recognized occupation; and
      2.
      Is authorized under federal or state law to provide such a program and is accredited by a nationally recognized accreditation agency.
An eligible educational institution is one whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it regularly carries on its educational activities.
Study grants may only be used for “qualified education expenses” which include expenses for tuition and fees required to enroll at or attend an eligible educational institution and course-related expenses (such as fees, books, supplies, and equipment required for the courses). Study grant funds may not be spent on room and board, travel, research, clerical help, or equipment and other expenses that aren't required for everyone enrolled in the course.
For more details about Study Grants, see IRS publication 970, beginning on page 5.

Award Grants

Award grants do not need to be included in the Grantee's gross income for tax purposes (and are allowed under this Policy) if:
    1.
    Such prize or award was made primarily in recognition of past achievements of the recipient in religious, charitable, scientific, educational, artistic, literary, or civic fields; and
    2.
    The recipient was selected without any action on their part to enter the contest or proceedings; and
    3.
    The recipient is not required to render substantial future services as a condition to receiving the prize or award.
For more details about Award Grants, see 26 CFR § 1.74-1 - Prizes and awards, specifically subsection (b).

Hardship Grants

Hardship grants which are made as a result of a disaster or emergency hardship are considered to be gifts and are excluded from the Grantee’s gross income for tax purposes (and allowed under this Policy). Grants for emergency hardship are to only be made to individuals who are financially needy or otherwise distressed.
IRS regulations define a person in need as one “who lacks the necessities of life, involving physical, mental, or emotional well-being, as a result of poverty or temporary distress”.
Examples include a person who is financially impoverished as a result of low income and lack of financial resources, a person who temporarily lacks food or shelter and the means to provide for it, a victim of a natural disaster or civil disaster, and a person who is temporarily not self-sufficient as a result of a sudden and severe personal or family crisis, such as a crime or violence.
Under this Policy, OCF will only approve Hardship grants to individuals who meet the relevant IRS definition.
For more details about Hardship Grants, see the IRS Publication on Disaster Relief, beginning on page 8.

Not Allowed Under This Policy

The following activities may not be funded through grants under this Policy:
    Political lobbying, influencing legislation, influencing the outcome of elections, or voter registration drives.
    International activities and payees outside the United States.
    The purchase of goods or services for the benefit of the grantmaking Initiative. For example, if a grantmaking initiative wishes to hire a contractor or intern to further its own purposes, they may not be paid via a grant. However, the grantee may use grant funds to purchase goods and services to further the grant purposes.
    Cash assistance payments. Grant expenses must be submitted by the Grantee and paid from OCF directly to the Grantee (see the Cash Assistance Policy).
    Grants to for-profit companies, nonprofit corporations, other incorporated entities, or to unincorporated groups or associations. Grants under this Policy may be to individuals only.
The following types of grants are not covered under this Policy:
    Grants to 501(c)(3) nonprofits—OCF is usually able to facilitate such donations, but they occur under a separate process from this Policy. Please reach out to the OCF team for assistance if you wish to make such a donation.
    Grants to other Initiatives hosted by OCF—simply make a contribution on the Open Collective platform to the recipient, selecting your Initiative’s balance as the source of funds.
    Taxable grants—types of grants that must be reported as the Grantee’s taxable income (see Taxes). Instead of giving a grant, the Initiative may invite the payee to submit a regular invoice expense, understanding that the payment may be considered their taxable income.

Grant Expenses

All grant payments to Grantees are made via grant expenses, which are submitted by the Grantee on the Open Collective platform. Invoice expenses and reimbursement expenses (the other expense types available on the platform) are not accepted for grant payments.
Only the Grantee may be paid from grant funds, as specified in the grant proposal and Grant Agreement, and expenses must be submitted using the Grantee’s specified Open Collective profile.

Expense Roles

    The Grantee submits grant expenses and receives grant payments; and
    The Initiative admin reviews and approves grant expenses; and
    OCF reviews and pays valid grant expenses.

Expense Details & Evidence

All grant expenses must include a description of what the payment is for and an amount, along with the Grantee’s payment information. Further details may be required depending on the grant purpose, as follows.

Study grants

    A document confirming the Grantee’s enrollment in a degree program at an eligible institution is required to be on file before any grant expenses are paid.
    Each grant expense submitted should include line items listing a description and amount for each intended use of funds, e.g. tuition, books, etc.
    If payments have already been made and grant funds will serve to reimburse the grantee for these costs, receipts should be uploaded at the time of submission of the grant expense.
    If funds are being requested in advance, receipts confirming use of funds in line with the expense details should be attached to the relevant expense as soon as they are available.

Hardship grants

By definition, someone receiving a Hardship Grant is facing extenuating life circumstances and we understand they may not always be able to submit paperwork. We have to demonstrate to the IRS that our policy makes a reasonable effort to gather all required evidence and reports. We will work with grantees and initiative admins to adapt to situations on a case by case basis as needed.
    If payments have already been made and grant funds will serve to reimburse the Grantee for these costs, receipts should be attached at the time of submission of the grant expense if they are available.
    If funds are being requested in advance, receipts documenting the subsequent use of those funds should be attached to the relevant paid expense as soon as they are available.
    Especially in cases where receipts are not available, other available evidence should be attached to the expense, such as payable bill statements (e.g. utility, rent), photographs of items purchased, statements from the Grantee or Initiative admin about how funds were used, etc.

Award grants

    No further documentation is required for Award grants, beyond that already contained in the grant proposal and Grant Agreement.

Reporting

OCF endeavours to minimize the amount of time and effort Grantees need to spend on reporting. However, we must report certain information about every grant to the IRS, which the grantmaking process is designed to gather.
To proceed with a grant, Initiative admins and Grantees must consent to OCF reporting the required information to the IRS. OCF is responsible for all reporting about grants to the IRS. Neither Grantees nor Initiative admins are required to submit grant reports to the IRS directly.

Elements of Grant Reports

OCF will base its reporting to the IRS about the grant on the following:
    Grantmaking proposal (the data submitted via the form).
    Signed Grant Agreement between OCF, the Initiative, and the Grantee.
    Record of financial transactions on the Project budget, showing grant expenditures and associated details and evidence.
    Qualitative/narrative reports and confirmations via published Updates (see below).
    Any available other supporting evidence and documentation about use of funds and grant outcomes.

Updates

Initiative admins agree to post Updates on the grant Project page on the Open Collective platform (or to facilitate Grantees to do so). Updates may be public (visible to anyone on the internet) or private (visible only to admins of the Project and its parent Initiative and Fiscal Host).

Required Updates

    Final Update: Must be posted prior to the final grant payment. Final Updates must include, at minimum, confirmation that the Grantee has complied with the terms of the Grant Agreement and a narrative description of how the grant funds were specifically used in furtherance of the grant goals and purpose. If a grant only involves a single payment, the Final Update may be the only Update for the grant, and it must be posted before that payment will be processed.
    Study Grant Update: For Study Grants, a report verified by the educational institution of the Grantee’s courses and grades must be submitted at least once per year. If the grant only involves a single payment, this information may be included with the Final Update, above.
    Annual Update: If the timeframe of a grant spans more than 12 months, an Update must be posted at least once per year, with a narrative description of how the grant funds were specifically used in furtherance of the grant goals and purpose during the preceding year.
    Extension Update: If a grant is not completed by the end of the timeframe specified in the grantmaking proposal, an Update must be posted to explain the status of the grant, state why an extension is required, confirm that the grant will still proceed, and specify a new date by which the grant is expected to be complete.
    Cancellation Update: If a grant is cancelled, an Update must be posted confirming the cancellation, describing how any grant funds paid out were specifically used in furtherance of grant goals and purpose (also see Returning Funds, below).
We welcome rich information about grant progress and outcomes, and encourage initiatives to use Grant Updates as a tool for storytelling and communication about their activities, where appropriate. More Updates than the minimum required, and more information per Update, may be posted at the discretion of the Grantee and Initiative admin.

Returning Funds

At the conclusion of the grant, the Initiative admin shall return any funds remaining in the grant Project budget to the parent Initiative’s budget.
If a grant is cancelled before its intended purpose has been fulfilled, the Initiative admin shall return any funds remaining in the grant Project budget to the parent Initiative’s budget, and the Grantee shall return any grant funds not spent on achieving the intended outcomes of the grant to OCF, which OCF will credit to the parent Initiative’s budget.
Last modified 28d ago