How Collectives Innovate Finance by Setting Their Own Salary
For Economic Empowerment, Choose Your Own Compensation.
Photo by Gio Bartlett on Unsplash
Transparency is Queen.
It’s not easy to stay true to your values as an social entrepreneur operating in capitalism. Social entrepreneurs worth their salt know we do NOT claim to have or to be THE answer. We look for ways to expand upon good ideas, or partner to create something improved, not just new.
One way is to not waste precious resources, including your own energy: Find organizations who already figured “it” out by building on and with others. Seek out those willing to build in public and share what they’ve learned for the common good. coFLOWco is intentionally becoming one of them.
My research into socially-responsible businesses was spurred by my desire to for pay parity. This led me to explore the viability of worker-owned coops. I learned (academically) about co-governance and transparent finances back in 2018, though plenty of orgs I’d worked with operated like this.
Sharing a startup’s books with everyone in the organization is a no brainer for equal pay. It’s obvious to anyone trying to break old business norms that hiding money is one of the biggest factors driving toxic workplaces.
As a social entrepreneur, learning about those who are steps ahead is always a lovely “discovery.” While researching Collectives and Coops, and how they operated democratically, specifically around the money, I went deeper into Open Collective’s (OC) platform, and subsequently learned about Open Collective Foundation (OCF). As an ecosystem, they provide solid options for collective projects and social justice initiatives to get up and running quickly to start collecting money now.
OC provides tools for communicating with donors and sponsors and a transparent budget tool for co-managing money. If you are looking for a digital tool to compliment your community or collective, to co-govern budgets, and to stay accountable to your members, I encourage you to check it out. You can see FLOWLab⁵’s budget (and donate!) here.
Many on the OC team were pioneers of “platform cooperatives” having previously worked on Enspiral and Cobudget, including their COO, Alanna Irving. As an operations consultant, I fully bow down to their documentation and operating processes. It’s clear how every single piece was considered; it seems to run very smoothly, from their platform, to blog, to the payout of expenses.
Founded by engineers, activists, and those obsessed with Open Source, OC’s operating team is less design and more tech-led. As such, OC can be a cumbersome for non-techies on the automation and UX side, but that’s not my focus. It’s not Alanna’s either, “The software and technology is really helpful. But some of the most exciting stuff is actually the legal and financial tools we’re building, like the way we set up companies.”
Building a purpose-led business authentically is challenging. Most “biz for good,” as I found in my research, has not led to gender and racial equity. Social impact orgs are often more performative and PR than ethical and changemaking. The OC crew is anything but.
Like coFLOWco, they continually question the “way it’s always been done.” We have a similar approach to building the Future of Work: remove barriers to economic and social progress and share the tips and tools that worked for us.
No Money, No Mission.
Another positive result of the considered way OC operates, stuff doesn’t break because nothing moves TOO fast. Without money, no one can make their mission happen. This is where fiscal hosts like OCF come in.
I learned about “fiscal hosting” when my first official LLC was a newborn, back in 2019. Fiscal hosting means someone else manages your money. It can be a game changer for any collective pool of money.
Fiscal sponsorship from a foundation means they “sponsor” a group of people operating together based on a set of criteria in order to grant them non-profit status. Newer organizations can quickly and easily acquire 501c3 status with low to no cost. Typically they have to be mission-aligned though requirements vary. We pay a small host fee when money is processed and write a recap 1x a year.
Fiscal hosts sponsor a collective, community, group, or organizations to give them formality needed to attract donors and apply for grants, bypassing the need to set up a new, complex, formal legal structure.
They manage ALL things money related that are draining for small orgs and we get to manage our budget and expenses. It saves mountains of paperwork, time (from recruiting to forming a board), legal fees, articles of organization and by laws, compliance, and the annual reporting and taxes (990s).
Open Collective Foundation (OCF) currently hosts (manages finances for) over 600 projects, including two organizations I co-manage.
We didn’t want to start a nonprofit but avoiding philanthropy altogether in a capitalist economy is tough. When we finally bit the bullet, it made sense for OCF to be our fiscal host. Moving money is my mission, afterall. Distributed, remote teams is our jam. I would say we’re pretty damn aligned.
With the help of OCF, FLOWLab⁵ and Rage2Rainbows both became nonprofits expediently—each org launched within a few days, back in 2021 and 2022, respectively.
FLOWLab⁵ is a nonprofit community for social entrepreneurs (back up, support, upskilling, and funding). To learn about our first year, you can read our update here.
Rage 2 Rainbows, co-founded with Madison Butler, is a social impact project working to turn rage (online hate) into rainbows (back up, support, safety, and funding orgs that support the targeted community AND money). Donate and learn more here.
Getting and managing money as a community can be hard, stressful, and inequitable. That OC makes it easy, more equitable, and accessible is what makes them an exceptional host. For smaller, grassroots organizations, to acquire 501c3 status with fewer hoops was a goddess-send.
Practice What you Preach.
OCF and OC consider, analyze, document and share ALL they learn, in real time, as they grow. I cannot overstate how much value they add to “business for good” and the influence they have on “future of work” trends.
Besides being a rad fiscal sponsor, OCF is ahead of the curve with how they approach business ethically and authentically internally, modeling how to make it work for the common good. In addition to accessible, kind and smart, the team is 100% straight up that equity and labor is about money.
Equitable finances and transparent bookkeeping is needed in every business but especially ones claiming to be equitable. If compensation is kept secretive, power remains imbalanced. Work is work. It’s always about the money, honey. There is ALWAYS a number.
It’s not surprise then that Open Collective Foundation’s (OCF) new-ish compensation policy is truly innovative. It’s one of a billion reasons I ran for a board seat, and while I did not make it that go round, I still (clearly!) sing OCF and OC’s praises.
The blog posts, Part One “How the team sets its own salaries at OCF” and Part two, demonstrate the value these experienced futurists bring to approaching “business for good.” Like coFLOWco and FLOWLab⁵, they are grounded in serving with compassion. Their work, like ours, is rooted in Collectivism, Mutualism, Open Source, and they champion Community-led businesses.
How the team sets its own salaries at OCF (part 1)
“Open Collective Foundation is one of many Solidarity Economy organizations exploring collective pay-setting. We are sharing the behind the scenes details of how we came up the new collectively-created compensation model that we announced in part one. Open Collective Foundation serves a community of over 400 Collectives that each have their own decisions to make about paying people. We hope this helps others on a similar journey.”
This is the way. 🎯
Do you still wonder what open finances actually looks like? Have you considered a reparations model in your comp plan? O Compensation plan is an example of Leading with Purpose, aka how to walk the walk.
Even if you don’t use OCF as a fiscal host or OC to raise and co-manage capital, tap into their experience and documentation. You will benefit simply by reading any of their articles, their open source handbook, or watching OCF’s videos.
Here are 6 things I learned from their leadership, their documentation of the process, and the open tools and policies they created to “decide your own pay.” If you care about pay equity, this is the way.
1. Hold open peer-to-peer conversations.
OCF arrived at how to their own pay through ongoing dialogue, and they do it in for each person’s pay. The pay policy allows each human to to consider their intersectional identity, disability, and other factors to be used as levers for pay increases.
2. Processes can have collaboration and autonomy.
How we work doesn’t need to be one or the other in social business, but a hybrid. Binary is stupid patriarchy anyway. You don’t have to throw everything to make work better; we can evolve it.
3. Share a step-by-step outline and be clear AF.
“Compensation working group:
…is an opt-in ongoing role held by 3 people on the team. The working group is responsible for the compensation process as a whole, facilitating iterations and changes to the model, participating in individual compensation conversations, and being a resource for questions and feedback. Working group membership will rotate over time, but we intend turnover to be slow, to bring some experience and consistency to our compensation process as a whole.”
4. Publish your results.
They don’t make you guess or dig for their salary results or do the math. There’s a chart in the article for every staff members’ new salary, right there, open to all. Why? Because pay transparency is equitable. Budgets shouldn’t be nebulous when you are building ethical and inclusive organizations.
5. Provide clear metrics for success.
“…these changes resulted in a 14% increase in payroll costs, with raises for the majority of staff, especially lifting the floor on the lower end of the pay scale. This makes sense in light of rapid growth OCF has undergone in the last couple years and the results the team has delivered. Overall, our payscale seems to more or less align with other similar nonprofits we have researched.”
6. Remember, documentation FTW!
We’ve modeled FLOWLab’s open source guidelines on Gitbook after observing OC’s open source policies. Learn how to co-create processes, policies, and model best practices of participatory governance on their blog and in their handbook. Don’t know where to start? Start here with Open Collective’s page, “How it works.”
7. Always share next steps.
“Our initial 3 month trial is up at the end of February. This whole model is experimental, and we fully expect it will evolve, so we’ll keep transparently sharing what we learn.”
Final thoughts
As a social entrepreneur and brand advisor, I am always looking for ways to divest from Big Tech. I seek out THE BEST of social impact work, with talent and tools. I usually find both. OCF is the best in community-led, ethical collective business platforms and are at the forefront of cooperative finance and alternative funding. I am grateful to have their knowledge and support as we grow our Collective for good.
The Collective is our own ecosystem for an equitable economy. Learn how we support you to build your brand, project, or program to work for everyone.
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