how-to

Ten ways to make decisions about money

Alanna Irving

Jun 23, 2021 • 5 min read

Open Collective is home to thousands of collaborative communities raising and spending funds transparently, giving us a front-row seat to observe many diverse examples.

Each group is different, and one size does not fit all. But we can say that understanding different options and consciously choosing between them makes for healthier communities.

Here are some examples we've seen across the platform.

Technocracy

Defined as "control by an elite of technical experts", technocracy is the most common form of governance in open source software projects, where a small group of core maintainers make decisions about the project and its resources (sometimes with informal input from the wider community).

Examples: The budget expenditures of Webpack are determined by a small group of the project's core maintainers.

Individual

Funds are controlled by a single person. When the focus is really centered around an individual, this can be fine. But if there's risk of that person burning out, or not welcoming wider community input, it can be an unhealthy dynamic.

Example: Sindre Sorhus raises money to fund himself as an open source creator, and he decides what to spend it on (which makes sense because the focus of the funding is on him individually).

Bounties

Tasks or goals have attached amounts, and anyone who completes one gets paid its associated bounty fee.

Example: Jhipster has an active bounty program, with 400+ payouts of $100-$500 so far.

Devolved

Anyone involved in the community can be an admin, and anyone can submit payout requests, which can be approved by any admin. Simply trust the community to make good decisions, without overall coordination.

Example: Secure Scuttlebutt Consortium has 15 self-selected admins who approve expenses.

Consensus

Use a group decision-making tool like Loomio, or a protocol in a meeting, to make collective decisions about expenditures.

Example: Social.coop expenses are submitted to the group as a Loomio proposal, and are paid only once approved.

Delegated

A committee or working group holds responsibility for use of the funds. The power ultimately sits with the wider community (unlike the technocratic model), which can withdraw or change the delegation.

Example: Bushwick Ayuda Mutua has a working group of volunteers who make budget decisions.

Board/Steering Committee

A structured group with formal responsibility for resource allocation.

Universal Viewer has a steering group of its major sponsors who have donated to the project at a certain level. Open Collective Foundation has a formal governance board with legally fiduciary responsibilities.

Contractual

An explicit legal agreement determines how the funds will be used, often defined by the funder (e.g. for a grant).

Example: Digital Infrastructure Research Grants are funded by a consortium of foundations who designed the process for selecting grantees.

Participatory

A process by which a large number of people can co-create a budget together, often through many individuals allocating dollars or prioritization points to what they think is important.

Example: Cobudget makes an open source tool for participatory budgeting, so of course they use it to set their own budget, too.

Circles/Projects

Different groups are responsible for different parts of the budget, related to their focus area or expertise.

Example: The EHF Community has multiple different projects, each with its own leader who decides how to spend its budget.

This is by no means an exhaustive list!

We've only scratched the surface. A great resource for exploring more governance models is Community Rule.

Want to share how your Collective makes financial decisions? We'd love to hear about it! Reach out to info@opencollective.com.