Re: [gentoo-nfp] Questions For Gentoo Foundation Trustee Candidates

[Robin H. Johnson]

To file for a 501(c)(?), the articles of incorporation and bylaws MUST have
a "Purpose" that matches the valid classes of 501(c)(?):
=> SPI & SFC's purpose both cover Charitable, not Educational or Scientific.
=> LF's purpose as cited in their bylaws does match their 501(c)(6) business league.

The Form 1023/Form 1024 have a SPECIFIC question, where you have to
reference the exact part of bylaws/articles that shows the purpose.
And the Bylaws & Articles must be included with the Form 1023/1024
filing.

On Mon, Jul 15, 2019 at 12:00:22PM -0400, Aaron Bauman wrote:
> > > Educational, yes. If you want examples then look at the public filings of SPI,
> > > SFC, etc.
> > > > - religious purpose: no
> > > > - literary purpose: no
> > > > - scientific purpose: no
> > > Scientific, yes. c.f. public filings of said companies above for an example
> > What filings are you referring to? Please do also note that each of
> > these 'purpose' types have specific definitions to the IRS.
> >
> > Neither Scientific nor Education appear in the PURPOSE of the SFC's
> > bylaws (which are articles of incorporation as well):
> > https://sfconservancy.org/docs/conservancy_by-laws.pdf
> It is not in the by-laws. It is in their public filings.  That is, their IRS
> forms.
Can you be REALLY specific about which filing you are reading, link
to it instead of just saying "read their stuff", and show me where
you're seeing scientific or educational referenced? Charitable IS
referenced, but the others aren't.

SFC's 990:
https://sfconservancy.org/docs/conservancy_Form-990_fy-2017.pdf
"Conservancy promotes, improves & defines Free and Open Source Software
(FOSS) projects & provides a non-profit home & infrastructure for them.
We directly handle many key tasks for our projects, which are mostly
created by volunteer developers, improving FOSS for the public good"

Nope, no education or scientific there.

SFC's Form 1023 filing:
https://sfconservancy.org/docs/conservancy_Form-1023.pdf
And referenced Articles of Incorporation (which again mirror bylaws):
https://sfconservancy.org/docs/conservancy_certificate-of-incorporation.pdf

In my reading, the SFC qualified for 501(c)(3) under the Charitable
Purpose, not the Educational or Scientific Purpose.

> > The SPI's bylaws only mention Education halfway down their PURPOSE, and
> > in an oblique way:
> > https://www.spi-inc.org/corporate/by-laws/
> > "to provide information and education regarding the proper use of the
> > Internet;"
> Reference their actual filings.  Not by-laws.
Their IRS determination letter?
https://www.spi-inc.org/treasurer/SPI_501c3_status_letter_IRS.pdf

SPI's most recent 990 filing
https://www.spi-inc.org/treasurer/2017-990.pdf
"Software in the Public Interest, Inc. ("SPI") is a not-for-profit
organization which was founded to help organizations develop and
distribute open hardware and software. SPI encourages programmers to use
the GNU General Public License or other licenses that allow free
redistribution and use of software, and hardware developers to
distribute documentation that will allow device drivers to be written
for their product."

The closest thing that covers education is their certificate of
incorporation, issued by the state of New York, rather than the IRS
https://www.spi-inc.org/corporate/certificate-of-incorporation/
Don't confuse the "Education Law" part of their incorporation with
having "educational purpose". This also has the exact same
"educate"/"education" usages as the bylaws I previously referenced.

Also of interest is to follow that X.Org was it's own 501(c)(3) that
dissolved and joined the SPI:
https://www.spi-inc.org/meetings/agendas/2015/2015-01-08/

X.org's purpose definition was MUCH more clearly 501(c)(3):
Here's their actual Form 1023 filing:
https://web.archive.org/web/20160108193504/http://www.x.org/foundation/irs-form-1023/4-ExhibitC.pdf
And the referenced articles of incorporation that DO cite the correct
purpose:
https://web.archive.org/web/20160108193510/http://www.x.org/foundation/irs-form-1023/5-ExhibitD.pdf

The Gentoo Foundation's existing articles of incorporation don't match these.

More of their past 501(c)(3) stuff here:
https://web.archive.org/web/20160102050433/https://www.x.org/foundation/



>
> > > > - common business interest: YES
> > > >
> > > No... see [1].
> > Promoting the use of Gentoo Linux as a common business interest between
> > the members.
> >
> > The Linux Foundation 501(c)(6) PURPOSE on the other hand:
> > https://www.linuxfoundation.org/bylaws/
> > "The purposes of this corporation include promoting, protecting, and
> > standardizing Linux and open source software."
> >
> > Gentoo's existing stated PURPOSE in the Articles of Incorporation, for
> > reference:
> > "The Corporation is organized and at all times shall be operated, on a
> > non-profit basis exclusive far the advancement and education and
> > promotion of software development in an open environment." (including
> > the spelling error).
> Yes, the LF has a more "business league" like purpose hence the 501c6 standing.
> If you look at their public IRS filing you will most likely see they have
> defined it as a business league (I have not looked at them yet).


I haven't been able to find a public copy of the Linux Foundation's Form
1024, determination letter, or Articles of Incorporation. The bylaws I
linked previously.

Also of interest I did found the Kernel Foundation's determination
letter, where they wound up as a Private Foundation:
https://www.kernel.org/static/corporate/irs-nonprofit-ok-redacted.pdf

> I have only started these discussions to hopefully get us to a choice soonest.
> As the CPA advised, it would be wise to start *now* on whichever path is chosen
> by the board and the electorate.
Help me narrow down the ranked vote then so we can run that to the
electorate.

> The paperwork required to transfer assets/trademarks is not fun and will take
> quite some time.
On the plus side for the trademark paperwork, we have the complete
transfer records for the previous transfer from Gentoo Technologies Inc
to Gentoo Foundation.

> > The quote that the CPA provided, of $1500/year, does not include
> > any book-keeping at all. The book-keeping they would provide would not
> > be in open formats keeping with our social contract.
> >
> > The CPA did review the financial statements I prepared, and beyond due
> > diligence requests to verify numbers (the trustee email you've seen
> > asking for copies of specific bank statements and reconciliation
> > records), they are being used to prepare filings.
> >
> > If the foundation were to retain book-keeping services, I'd want it to
> > be kept in open formats per the social contract, and try to find
> > somewhere cheaper to do it (possibly excess capacity from the SFC's new
> > book-keeper, who is also not a CPA).
> >
>
> Unless we find an umbrella who will take us then we need to let go of this whole
> "open source" is required to be our accountants idea.
Tell me, outside of the SPI & SFC, how much detailed transparency of
non-profit financial reports do you see?

> c.f. the crazy skillset that SFC was looking for in order to hire an
> accountant [1]. It only took them 4 months to find someone.
>
> Maybe her hiring will allow them to take us on!
Yes, outsourcing the book-keeping to the SFC was a point I have raised
with the SFC before, but they wanted to finish onboarding and get some
initial projects done first before making the capacity available.

> If they do the accounting and provide PDF files then I would be quite alright
> with that.
I would not be satisfied with that from a transparency perspective.

> Please do not misconstrue my statements as anti-open-source ideals. In my
> opinion, this was most likely the #1 reason the RFP process failed.
I differ, and believe the RFP process took longer than it would
otherwise because the organizations/people we initially approached took
a look at the mess and decided NOT to bid on cleaning it up.

Corporate Capital's rates for the tax preparation ARE higher than other
amounts we had seen discussed, but as they are the only ones who
ultimately gave us a quote, that's what we are going with.
https://www.jwjaccounting.com/fees for an example of a CPA that provides
clear estimates, showing $600-$1200/year for 990 filings (our rate from
Corporate Capital is $1500/year).

-- 
Robin Hugh Johnson
Gentoo Linux: Dev, Infra Lead, Foundation Treasurer
E-Mail   : robbat2@g.o
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