# Understanding the Types of Funds we Handle

As a 501(c)(6) nonprofit fiscal host, Open Source Collective (OSC) receives and handles funds on behalf of our hosted projects. While we support a wide range of funding types, all funds must be used to advance the mission of the project in a way that aligns with OSC’s purpose: supporting the sustainability and health of the open source ecosystem. 

This page explains the most common types of funds we handle and how we approach them from a compliance and operational perspective.

## Contributions (General Support/Donations)

These are voluntary contributions made by individuals, companies, or foundations to support an open source project’s mission and activities. These are not charitable donations (and therefore not tax-deductible), but they are still made without the expectation of direct benefit or a specific deliverable. 

**Key characteristics:**

* No exchange of goods or services
* Intended to support the project’s general mission or community impact
* Not subject to sales tax or refund
* Donors may receive public recognition, but not a transactional benefit

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## Payments with Deliverables (Contract or Agreement-Based)

Business payments, or contract-based funding, on the other hand, involve a transactional exchange. These funds often arise when a hosted project engages in activities that directly benefit a customer or client (in some cases, though, they might also come from a grant, which may have a broader scope and have a larger impact base). These can still be received through OSC and must

* Be used in ways that serve the open source project that we host
* Be documented with a written agreement (grant letter, contract, etc)

An example of this could include grants, which OSC can assist with. These often require a signed agreement to ensure accountability for certain deliverables. While OSC, as a nonprofit, does not have a 'No Outside Money' policy, we ensure that any expenses that we process are ultimately used to benefit the open source side of the project, adhering to our nonprofit mission.

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## Why this Matters

As a 501(c)(6) nonprofit, OSC must ensure that all funds we manage support open source. Properly classifying and handling incoming funds helps us:

* comply with IRS and nonprofit law
* maintain transparency
* uphold the trust of contributors, hosted projects, and funders


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