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To: <gentoo-nfp@g.o>
From: "Daniel Robbins" <drobbins@g.o>
Subject: FW: Summary of NFP options
Date: Tue, 13 Apr 2004 12:45:47 -0600
Here's my original post. Apologies for any formatting glitches -- I've been
trying to use Outlook and it seems to do weird stuff with formatting. 

-----Original Message-----
From: Daniel Robbins [mailto:drobbins@g.o] 
Sent: Monday, April 12, 2004 6:40 PM
To: gentoo-nfp@g.o
Subject: [gentoo-nfp] Summary of NFP options

Hi guys,

Here is a very short summary of the NFP progress so far:

1) I have committed to get something going by the end of this month (April.)
This would be either an establishment of an NFP, or some kind of action plan
to set up multiple entities like a NFP with one or more cooperatives to
provide funding.

2) The main issue of concern for me is (obviously) not getting the NFP set
up as soon as humanly possible but making sure that whatever is really best
for the Gentoo community, as it is very hard to change things once things
have been established.

This has been very difficult because I have been trying to meet many
conflicting and contradictory expectations of users and developers:

A) 	Expectation: Gentoo will be competitive against Microsoft
	Reality: Microsoft spends $6.8 Billion USD on R&D every year. Free
software
	is lacking its own internal economic ecosystem, let alone a
significant R&D
	budget. Realistically, Gentoo can do well for HPC (high-peformance
computing,)
	clusters, maybe some grid computing, servers, and somewhat for
embedded.
	It's not viable on the desktop, nor is any other Linux distro (this
is a
	systemic problem of the Linux community, and not the fault of KDE or
GNOME.
	If you don't see why this is so, just please trust me on this that
this will
	be true for at least the next year.)

B)	Expectation: I want to be able to work on Gentoo full-time.
	Reality: As time goes on, Linux and free software is getting
supported more
	and more by large corporations and universities. The economic model
driving
	free software development is not in favor of the establishment of
small
	businesses and self-sufficient local developer communities. This
means as the 	current economic model plays out, it is more and more likely
that people working
	full-time on free software will be employed by big companies and
higher education.
	This is not a model that gives developers the kind of independence
that they may be
	used to from working in their spare time from home.

	"Well why can't we just take money from companies that give it to
us?"

	Good question. These big companies will want some return on their
dollar, so they
	will expect you to do what *they* want and not what you want. Also
see item E) which
	explains why this fact prevents us from taking 501(c)(3) status
without risking
	revocation of that status by the IRS.

C)	Expectation: Gentoo should be representative of user needs.
	Reality: Having an open participatory model makes it easier for
external entities
	(such as the dreaded Microsoft) to co-opt (ie take over) the entity.

D)	Expectation: Gentoo should be set up to protect against co-option.
	Reality: This requires a closed and non-participatory model in order
to implement,
	which is contrary to the nature of having an fair and accountable
open
	participatory model. This kind of system will tend to run much more
like a
	dictatorship, and elections will not be held as elections always
allow for
	co-options to take place.

And how does one get the benefits of C *and* D at the same time? It requires
*tons* of planning and complex regulations. In other words, in an attempt to
get both C and D at the same time, we will end up with a very complex
bureaucratic system that takes a very long time to design.

E)	Expectation: We should have 501(c)(3) status
	Reality: I have learned that 501(c)(3) status is for charities. It
is very popular
	to apply for this status in the US, as it allows donations to Gentoo
to be tax
	deductible. However, it is not the appropriate classification for
Gentoo. If anyone
	gives money to Gentoo and derives some material benefit from it (ie
we do work
	that benefits their company or themselves in some way,) the IRS is
able
	to revoke our tax-exempt status and the 501(c)(3) entity is then
immediately
	responsible to pay all back taxes that would have been collected.
This would
	generally cause the not-for-profit to have to cease operations. I
have learned
	that we should be classified as a not-for-profit trade association
(501(c)(4))
	or NFP support organization. Otherwise the NFP will be a very
susceptible to
	being shut down by the IRS. The rule here is that just because
others have applied
	for 501(c)(3) status doesn't mean that they have made the right
decision and we
	should follow their (erroneous) lead. It has taken me maybe 6 months
to be convinced
	by my lawyer and others that 501(c)(3) status is *not* the right
classification
	in the US code for our future organization, and this has also
significantly
	impeded NFP progress. Again, it is the struggle of trying to find
some possible
	way to meet all developer expectations.

3) Several major universities are in negotiation about setting up some kind
of entity to fund Gentoo development, and I am participating in some of
these discussions.

Based on this, my current plan was to set up a couple of not-for-profit
cooperatives, one for universities and another for gentoo users, that allows
them to pool their resources to help fund Gentoo development.

Several developers like the idea of the coop but wanted Gentoo to have its
own NFP entity separate from the cooperatives. I am perfectly willing to do
this -- just set up the NFP entity alone, and then set up the cooperatives
or leave the NFP to figure out how to fund itself if you want. 

It certainly makes my job easier, and my desire was for the coop to be a
"good thing" for gentoo developers and I was trying to ensure its success by
setting up funding for the entity ahead of time. If you don't want it, I
won't do it. 

Just please understand that NFP status in itself doesn't address any larger
long-term sustainability or software quality or "how do I work on gentoo
full-time" concerns. Thus, NFP status in itself does not necessarily help
Gentoo become a long-term success on the desktop or allow Gentoo to be
competitive long-term with Microsoft. Setting up a NFP does not help you
resolve the problem of how you will be able to work on Gentoo full-time and
quit your miserable day job. This is because just setting up an NFP doesn't
create any ties of accountability between the software users and developers,
nor does it necessarily create a healthy or sustainable software
economy/ecosystem that allows our developers and projects to be funded. 

It doesn't ensure that the board of directors is accountable to your needs.
It doesn't ensure that the NFP will not be co-opted, and it does not ensure
that some company will not be able to make lots of money from your work on
Gentoo without compensating you (your work could always be rewritten under a
non-GPL license, or included as-is in some piece of commercial software that
someone makes millions from due to having lots of marketing resources that
you don't.)

You will need to choose between an "open, participatory" (and co-optable)
and a "closed, non-co-optable" (and non-representative/unfair) governing
model. So let me know which you prefer and I'll get it set up. The other
alternative is to try to find some kind of compromise, where the government
for the not-for-profit isn't too fair or open, but is more bureaucratic and
harder to co-opt. Let me know which one appeals to you.

Sincerely,

Daniel



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