How to spend the money on your balance - the basics
How to use the money of your collective?
Below you can find instructions on how to spend money from your collective balance. Tracking and tracing expenses via Open Collective makes it all very easy: everything is transparent, and reports are automatically generated.
Reminder: All for Climate has an unincorporated partnership with all collectives. Collectives operate with autonomy on their budget and full ownership of their projects.
This means you can never invoice or bill All for Climate for activities within your collective, as we do not have ownership of your activities. They are part of your collective, not of All for Climate.
BASICS
These are the basic steps in spending the money on your collective balance:
Someone submits an expense.
There are two main types of expenses:
Reimbursements of a prepaid purchase (with receipt of payment)
Invoices for paid services provided to the collective
A Collective admin (someone on your team) approves it.
All for Climate reviews the submitted expense (confirms that the expense meets legal and fiscal requirements, e.g. having a valid receipt, a clear picture, that the amounts match, the invoice is legally valid, etc.)
They get paid.
STEP 1: SUBMIT YOUR EXPENSES
Any member of the collective that spent money, can submit an expense to the collective page by uploading a receipt or an invoice as proof of payment.
Option 1: Receipts/reimbursements 🛒
Receipts are for things that you buy for the community and for which you need to be reimbursed. Think of groceries, printing flyers, paint for banners etc.
Make sure that you keep the receipt. Take a clear photo of it (make sure it's clearly and easily readable) and submit it to your collective (click on "submit expense" on your collective page).
A valid expense must contain the name and address of the vendor, the amount, the date, and the description of the items purchased, with any sales tax (such as VAT) clearly defined. More info here.
Option 2: Invoices 📄
Invoices are used to pay people for a service (a vendor, a company, a freelancer). They directly charge the admins of the collective for this service. When you upload an invoice, you are considered an independent contractor or freelancer.
The invoice needs to contain following essential information:
The invoice cannot be addressed to All for Climate (they did not do a service for A4C).
You have to include the legal name of the collective admin and their legal address (usually the person in the collective that has the relationship with the vendor).
The invoice must include the legal name, address, and tax number of the beneficiary (the vendor or freelancer who issues the invoice).
The invoice must include a sales tax rate or, if you are not obliged/allowed to charge VAT, a reference to the law that clarifies that. See below for more on VAT.
Finally, just in case, make sure that you can of course legally issue invoices (you are a registered freelancer or company).
We advise you to use qualified accounting software for your invoices, as they make it easier for the details above to be included on your invoice in a way that is legally accepted in your country. If needed, we also have a useful template to create an invoice that is checked for validity in Belgium (where All for Climate is registered), but please double check that it is also legal in your country.
More on VAT
The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption in the European Union. Thus, goods which are sold for export or services which are sold to customers abroad are normally not subject to VAT. Read more details about VAT on the dedicated webpage of the EU.
Do I have to charge VAT on my invoices?
VAT is charged at the point of sale. In short, this means that if you are the legal entity that issues an invoice, you should charge VAT according to what the law says in the country your legal entity is registered. Double check the following with an accountant in that country:
If you are registered for VAT (i.e. if you have a VAT number) then you most likely have to charge the standard VAT rate in your country. Make sure you know the conditions under which you need to register for VAT in your country (and would therefore be obliged to charge it).
If your VAT rate is 0, then include a reference to the law that clarifies that (why your tax rate is 0?) on your invoice.
If you are not obliged or allowed to charge VAT (in many countries this is different from a VAT rate of 0% so make sure to double check that as well) then include a reference to the law that clarifies that.
If you are registered in any EU member state, any qualified accounting software can ensure your invoices are valid and help avoid double taxation. Usually if you add your VAT number and the one of your client (or specify that the client does not have a VAT number), the software will calculate the appropriate tax rate automatically.
If you are based outside of the EU, then you are obliged to charge VAT, declare it and pay it to the EU. You need to register in the One Stop Shop the EU has created for that purpose in order to do that. Please visit the website and carefully read the instructions on this page. Be mindful that this only applies to legal entities outside the EU. If you are based in the EU then there is specific legislation you should follow.
Always (ALWAYS) double check with an accountant who would know the relevant sales tax laws in the country you are registered, as well as be experienced in international trade (specifically with Belgium and/or the EU).
What if there is no VAT on my invoice?
Often e.g. US tech companies don't charge VAT on their invoices (subscriptions, website hosting, etc.) because US does not have VAT. However, since they are servicing someone in Europe you do need to pay VAT via a special tax declaration if you are a legal entity. However since your collective is not a registered you cannot do that. As a result, we ask you to subscripe in your own name and claim the money back as a reimbursement.
Payout methods and details
We can pay back expenses or pay invoices via bank transfer or PayPal. Every payout method has to include the name of the person being reimbursed.
Final checklist
Are you ready to submit your expense? Please have a final look if everything on this checklist is included.
STEP 2: GET YOUR EXPENSES APPROVED
When a member of the collective submitted an expense (receipt or invoice), its status is PENDING. An email is automatically sent to all the administrators of your collective to invite them to approve it (or comment on it to ask for more information).
The fiscal host has no decision making power on approving your expense (the administrators of your collective are the ones that know you better, are closer to what you do and can better tell if this or that expense is a valid one and helps the collective fulfill its mission).
STEP 3: GET PAID
Once approved and if there is enough balance to cover for it in your collective, your expense will show up in the list of expenses that are READY TO PAY . One of the administrators of the fiscal host (https://opencollective.com/allforclimate) goes through this list every week and reimburses the approved expenses. As long as the receipt/invoice is legal and approved by one of the admins of your group and comply with the transparency and accountability rules (i.e. it is not a lump sum amount sent to an intermediary to hide how the money is spent), it will be paid.
Once the payment is done, the status of the expense will go to PAID and the balance of your collective will be automatically updated.
Note: whenever you edit your expense, its status will go back to PENDING so that the admins can review it again. Once paid, an expense can only be edited by the administrators.
Once your collective grows, we recommend you to define your own expense policy so that everyone in your community knows what can be expensed, up to what amount and who gets to approve expenses. You can also create sub collectives for different working groups and each can have their own administrators to approve their expenses.
See for example the expense policy of XR-Belgium.
FAQ
To whom should we address invoices?
They need to be addressed to the collective and use the address of any of its members (usually the person in the collective that has the relationship with the vendor).
How many expenses can we claim in one time?
You can upload up to 15 different tickets on one expense. You do not need to create a different expense for every ticket you need to see reimbursed.
Can we hire people?
Only as contractors (freelancers). They need to be able to submit an invoice.
Can bank statements serve as proof of payment?
We cannot approve bank statements as proof of payment. We need valid receipts or invoices to process a payment.
Can we sumbit upfront payment as expenses?
For every expense we need a proper proof of payment as in either a valid receipt or invoice. We cannot process advances of payment if there are no receipts or invoices.
What if someone finds it difficult to claim an expense or does not want to work with Open Collective?
You can also prepare expenses for other people/organisations that need to be reimbursed. More on how to invite a third party to submit expense step by step can be found here. There is also a general step-by-step guide from Open Collective on how to submit expenses here.
Can we spend the money outside of Europe?
Spending money outside of the Eurozone is difficult. To EU countries with different currencies (Sweden, Poland, etc.) we do not experience issues, but if you need to buy a product from elsewhere (e.g. an online subscription), one of you will have to pay for it and then submit it as a reimbursement to your collective. In all cases, we highly recommend to spend the money of your collective in the local and sustainable economy. Read more on this here.
Can I ask to be reimbursed for less than the amount of the expense?
Yes. When you file the expense, you can enter any amount lower or equal to the amount visible on the actual receipt. This is useful when you go grocery shopping and you end up with a total bill with things for your collective and things for you.
What about VAT reimbursements?
To keep the administrative overhead to a minimum, your collective can only receive donations (on which there is no VAT), and you cannot get the VAT back from the purchases that you are making. Whenever a vendor needs to issue an invoice to your collective they need to add the VAT as if they would invoice you as an individual.
What payment methods do you support?
The fastest and most versatile one is PayPal as it allows us to click on button and the payment is made. If PayPal fees apply, they are paid by the collective (see PayPal fees).
Otherwise, the second best option is doing a simple European SEPA wire transfer using your IBAN number.
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