Open Collective, aVenture Capital backed start-up posing as a charity has stolen $20,000 from a homeless East Austin African-American community during a COVID crisis.
Dear Open Collective,
I write on behalf of approximately 20 of the most marginalized and forgotten citizens of America. A community rejected from society, of mostly older African-Americans from impoverished backgrounds, raised in segregated neighborhoods, torn apart by decades a long crack epidemic, who are homeless, many with severe mental health issues. Several are part of a Texas state care program previously known as “Mental Health Mental Retardation”. This community only survives through the continuous kindness of strangers. They call themselves “The Springdale Park Neighbors”, because they all live in tents together in Springdale Park, on the East Side of Austin, TX
On the other side of this theft we have “Open Collective” – a Venture Capital backed start-up of remote “tech” workers and administrators living very comfortable upper-middle class lives as “musicians and activists” in Queens, New York and “Yoga Instructors” in Oakland, California.
This is about a bunch of rich people arguing over money online while black people die in parks next to million dollar homes.
I write this open letter to bring attention to the very real harm Open Collective is inflicting upon The Springdale Park Neighbors.
The Springdale Park Neighbors entrusted Open Collective, the “non-profit with a tech platform”, with $20,000USD in donations. Donations the neighbors had raised independently and then entrusted to Open Collective. As a result of this trust in Open Collective this unhoused community has now lost $20,000 in donations.
Despite multiple requests and demands by the Springdale Park Neighbors, Open Collective is refusing to release these donations. This is preventing the Springdale Park Neighbors from being able to by essentials such as medications, shelter, clothes, food and transport.
Open Collective has not provided a legitimate reason as to why they are refusing to release these donations to the unhoused community.
Open Collective has now removed all evidence of the Springdale Park Neighbors fund raising efforts.
At this point the Springdale Park Neighbors have no choice but to ask for external help to resolve this matter and to publicly point out the deep flaws and hypocrisy within Open Collective and the emerging “charity tech” sector in the hope that no other communities will be harmed by another “non-profit with a tech platform”.
Open Collective claims their platform supports transparency, collective decision making and trust.
But it is designed from the ground up to do exactly the opposite. Open Collective enables volunteers to submit and get paid for expenses working on behalf of charities – but their tech platform lacks the most basic of safeguards to protect the parties involved. With just a cursory glance at other expense platforms you notice they allow finance admin to set a limit on the size of expenses that can be submitted before requiring prior approval. This change alone could eliminate any potential for conflict or abuse on large transactions.
Open Collective states that they “can’t possibly get involved in all the financial conflicts arising on the platform” but they aren’t prepared to take responsibility for the risk and potential for abuse this policy creates. By absolving their responsibility Open Collective has created an environment where predatory administrators can hustle passionate volunteers and donors out of thousands of dollars.
That’s exactly what’s happened to the Springdale Park Neighbors. An Open Collective administrator made promises and assurances that everything was fine with the neighbors money, including statements such as “it’s not about the money” and, “there’s more than enough in the bank”, only then for the Springdale Park Neighbors to discover there wasn’t enough “in the bank” to cover all the expenses the administrator had already authorized. When the Neighbors realized they weren’t getting reimbursed they complained and were immediately removed from all Open Collective platforms.
Open Collective claims that “Each administrator makes their own decisions about their expenses” and “In the absence of published expense policies, the policy is “whatever is approved by the administrator“. However when an admin doesn’t publish their own expense policies (which is the majority) the default expense polices are ones written by Open Collective.
The really troubling thing here is Open Collective is just a start-up posing as a charity. Open Collective claims that their software platform and the “charity” Open Collective Foundation are two entirely independent entities. But support emails from both entities come from the same firstname.lastname@example.org email address. How can a for profit company also call themselves a charity and get away with it?
In addition multiple employees hold the same job titles and start dates at both entities.
Open Collective claims they are not responsible for the actions of the administrator assigned to the Springdale Park Neighbors – not the decisions the administrator makes nor the expenses they choose to pay. Open Collective claims that they are just a “financial host” there solely to ensure compliance with 501(3)(c) status. But in the same breath they also claim they are solely responsible for how the donations are used. The reality is Open Collective are responsible for creating an environment where a group of predatory admins can work together to profit from a COVID crisis. These administrators get donations from concerned citizens, only to then have those donations fraudulently siphoned off with expense claims for things like “Cash”, “Cigarettes and Snacks”, “$2400 Electric Bikes”, and “Amazon gift cards”.
Open Collective claims the transparency of their platform is the secret sauce that builds honesty, reinforces trust, and prevents abuse. But their so-called “transparency” only serves to build false trust while actively hiding predatory behavior.
A very specific example of how Open Collective builds false trust
An expense of $2,400 was submitted for an “Electric Bike for disabled houseless person” from a fund that raised over $450,000 in donations from Texans for emergency shelter during the 2021 “Snowpocolypse”. Certainly the “transparency” of the Open Collective platform ensures that everyone can see that this expense was submitted, approved, and paid for. But looking at this screenshot you’ll also notice the expense was submitted and approved by the same administrator – and only that administrator has access to that receipt.
Do you start to see the problem now?
Open Collective charges 5% in management fee to decide if $11,000 in expenses incurred in the middle of a crisis is valid or not. Then when challenged on the integrity of Open Collective’s decision they cry foul – claiming they are a “small team that can’t possibly be aware of all the specifics of every transaction on the platform”. However at no point in their decision making process (which is inherently biased to their interests) do they insist on a mediated call between the conflicting parties. At no point do they bring in a 3rd party mediator who’s job is to do a fair and thorough investigation.
As a defense for not helping the Springdale Park Neighbors Open Collective claims that they “can’t possibly support all of the human misery out there”. But what’s their position when Open Collective is the source of the misery? Open Collective justifies their existence by stating that their platform does “more good than harm”, but that’s admitting that they still do harm and sets a very low bar.
The reality is that Open Collectives business model is insidious and dangerous. They take 5% of all transactions in management fees, but when when something goes wrong and people are actually harmed in very real and permanent ways by their platform – harm such as long-term financial damage, to break-downs in valuable relationships, to very real physical harm and violence – they do nothing about it
As a Venture Capital backed start-up Open Collective now needs to do the right thing and immediately release the funds owned by the Springdale Park Neighbors.
I think the best way to end this letter is to let one of the neighbors share their thoughts around this issue. When I informed the neighbors of my intentions to write this letter, they at first strongly objected. They didn’t want any more trouble and were prepared to accept the loss of their funding to Open Collective. I had to assure them that things had changed a lot recently and that if we just let the world know what was happening good caring people would come to their aid.
They didn’t believe me.
This is a Neighbors initial text response to this open letter…
⬛️⬛️⬛️ person he is referring to was recently pistol whipped by a gang member who was retaliating against the Springdale Park Neighbors for starting to clean up the surrounding streets and turn their lives around. The dealers are seeing this as a threat to their business and are retaliating by keeping the neighbors scared and addicted.]
When the neighbors shared this story of gang abuse with Open Collective, in the hopes of trying to find some empathy, Open Collective proceeded to immediately block the neighbors from their internal Slack channels as it was “too disturbing”. Open Collective is showing their true colors and reinforcing their privilege by being able to turn their back on this mess at the push of a button. Unfortunately the people they are hurting can’t turn their their homelessness, addictions, mental health issues, or society’s neglect.
The Springdale Park Neighbors will not be taken advantage of by a faceless tech company hiding behind their policies.
Antony Mcgregor Dey
A proud neighbor of the Springdale Park Neighbors.
If you are reading this and don’t agree with what’s happening and want to do something about it please email email@example.com and let them know what you think of their behavior.