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The Scholarly Publishing and Academic Resources Coalition (SPARC) was founded in 1998 as a program area within The Association of Research Libraries (ARL). Since then it has gone on to become the world’s most influential open access advocacy group.
As SPARC’s activities grew, however, there were concerns that its success could jeopardise ARL’s tax-exempt status. In 2014, therefore, it signed an administrative agreement with New Venture Fund (NVF), a non-profit fiscal sponsorship organisation located in Washington, DC.
Although this change took place eight years ago, I have seen little or no commentary about it until recently (although I may simply have missed it).
At the end of last year, however, a disgruntled OA advocate pointed me to some tweets critical of SPARC and its association with NVF; and earlier this month I was alerted to a post published in 2018 that also seems to be critical of SPARC. (It is paywalled).
Dark money
Recent interest in SPARC’s relationship with NVF appears in part to have been sparked by news coverage of an unsuccessful bid for Tribune Newspapers by Swiss philanthropist and billionaire businessman Hansjörg Wyss.
Last year, for instance, the New York Times published two (paywalled) articles (here and here) about Wyss and his funding activities. Wyss donates to politically liberal and environmental causes in the United States through the Wyss Foundation, a charitable organisation he founded in 1998 and which has more than $2 billion in assets.
In its coverage the NYT noted that The Hub Project – an organisation started by the Wyss Foundation in 2015 – “is part of an opaque network managed by a Washington consulting firm, Arabella Advisors, that has funnelled hundreds of millions of dollars through a daisy chain of groups supporting Democrats and progressive causes.”
NVF would appear to be part of that network. As the NYT, put it, “The Hub Project it is not a stand-alone organisation for tax purposes, but is housed within two Arabella-managed non-profits, New Venture Fund and the Sixteen Thirty Fund, which pay Hub Project employees.”
In a second article, NYT noted that Arabella Advisors and the organisations it manages operate a funding model that uses so-called dark money. This sees donor money channelled through non-profit organisations like NVF, which in the US are not required to disclose their donors. Arabella’s network, said the NYT, is a leading vehicle for doing this on the left.
As I understand it, this allows funders to donate to a non-profit that then distributes the money to different groups without it being publicly known who the donor was. As part of this process Arabella Advisors provides administrative services to organisations like NVF, much in the way that NVF provides such services to SPARC. Unlike NVF, however, Arabella is a for-profit organisation.
The money channelled through NVF is not insubstantial. “Between 2007 and last year,” the NYT reported, “the Wyss Foundation donated roughly $56.5 million to New Venture Fund.” (This figure is based on tax returns and voluntary disclosures).
Neither NYT article mentions SPARC, but it is one of around 150 “projects” that have administrative agreements with NVF. In doing so they become part of a non-profit mother ship that confers non-profit status on them too.
Referred to as fiscal sponsorship this practice has been increasing in popularity in recent years. And it is a model that a number of open access organisations have begun to use.
What is not clear to me is how many OA advocates are aware that OA organisations have started to use fiscal sponsorship and, if they are, whether they fully understand how it works and are comfortable with it.
I confess I had myself barely registered the fact that SPARC had decoupled from ARL. And as I think will be apparent, I do not fully understand how fiscal sponsorship works, or the implications it might have for the OA movement if widely adopted by OA organisations and initiatives. I do, however, have some thoughts on it.
Wikipedia says this of the model: “Fiscal sponsorship refers to the practice of non-profit organisations offering their legal and tax-exempt status to groups – typically projects – engaged in activities related to the sponsoring organisation’s mission. It typically involves a fee-based contractual arrangement between a project and an established non-profit.”
I think it is worth repeating that while the groups it manages are non-profit, Arabella Advisors is itself a for-profit organisation.
Small organisations can undoubtedly benefit from outsourcing their administration in this way. However, Wikipedia points out that there are risks too. For instance, it says, “the benefits of immediate tax-exempt status and administrative support must be weighed against the lack of autonomy and fees typically charged by the sponsor.”
It seems to me that any OA organisation signing a fiscal sponsorship agreement that wishes to remain true to its principles ought really to make a special effort to be transparent about its finances and activities. The risk is that it could end up embracing a degree of darkness that belies its commitment to openness.
