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

[Aaron Bauman]

On Sun, Jul 14, 2019 at 07:25:48PM +0000, Robin H. Johnson wrote:
> On Sun, Jul 14, 2019 at 10:32:29AM -0400, Aaron Bauman wrote:
> > > Before the vote is undertaken, extensive research with comparative costs
> > > should be prepared. They should include costs of ongoing state, costs to
> > > being an Umbrella member, costs to joining the umbrella (e.g. many of
> > > the options will need to pay for trademark & copyright [1] transfers).
> > >
> >
> > This has been discussed amongst the trustees for a bit, but no one has pursued
> > their research of the umbrellas. It is important to note that those supporting
> > such a course of action should conduct this research. No, this is not a matter
> > of "due diligence" for members of the baord who do not support such a move to
> > undertake.
> All of the prior research needs to be collected into one place. This
> includes trustee discussions with Umbrellas (including my own
> discussions about finances with SFC & SPI), as well as council
> discussions, and non-council-non-trustee discussions (there was at least
> one dev that approached an umbrella directly).
>
> This includes all of the ongoing costs that we have, as well as any
> costs that would be incurred in various transition states:
> - dissolution
> - reformation of new nonprofit of different types
> - as members of an umbrella nonprofit
>
> I didn't volunteer you to research the costs of the umbrella itself, but
> I did ask your help in costs that would be incurred in other situations.
> E.g. your hypothetical 501(c)(3) org would still need the trademark
> transfers, as well as paying for book-keeping & tax preparation
> services.
>

Yes, I am preparing these now.  We know the yearly fee would be $1500 for CPA
services.  The one-off costs of transferring assets/trademarks will be sent out
soon.

> > > Question 1:
> > > - Should the Foundation do voluntary OPTIONAL backfiling to the IRS?
> > > Yes, No
> > > This is the filing beyond the present 4 years that we are presently
> > > required to do. If the outcome of a later question makes it mandatory,
> > > then we'd be doing it anyway.
> > I am not sure why we would propose this to the general membership? This is a
> > matter for those elected to consider. Of course, the general membership should
> > be notified of how these things are being handled, what the significance is, and
> > how each course of action was considered.
> Intent matters here. If you have a voluntary filing, what do your
> personal code of ethics say about it? "Always do every optional thing"
> vs "do only what's actually required"
>

My personal ethics don't really matter. If the IRS requires the additional 6 to
gain exemption then they do.  If not, then they don't. 

My *personal* experience tells me that they will require the additional 6 years.

> > > Question 2, ranked choices:
> > > What do you feel should be done with the Foundation entity? If an option
> > > turns out to be disallowed by law, it will be discounted after the poll.
> > > I'm not certain all of the options will be possible, but I want to be
> > > open in possibilities.
> > >
> > > - Remain a for-profit entity
> > "remaining" a for-profit entity is antithetical to the original intent and
> > purpose of the foundation. While there were failures of individuals to file the
> > appropriate federal tax paperwork to gain tax-exemption status, this does not
> > change how we should proceed nor set a precedent for "remaining" a in a
> > for-profit status.
> It's entirely possible to exist as a legal for-profit entity, but
> operate entirely under non-profit principles, with the caveat that
> you're being "good" and paying tax even when you could be exempt, and
> that any donations you receive are entirely voluntary and the donors
> cannot claim charitable contributions for them (I expect somebody might
> accuse me of being a socialist with this description).
>

Why would we do that?

> Article III of Incorporation:
> "The Corporation is organized and at all times shall be operated, on a
> non-profit basis ..."
>
> > The 501c6 idea justs needs to go away.
> The charitable donations only really apply for tax residents of the USA.
> Very few countries permit cross-border charitable donations like this
> (Canada for example permits it only if you earn a US income or the
> recipient is certain universities).
>

So, the justification to choose identify as a business league is based on
residence of members?  I don't see the logic and it doesn't change that a 501c6
does not fit our purpose.

> For the FY2019 that just closed, as a quick analysis, our paypal gross
> donations is approximately USD 15400.00. Of that, at least USD 9000 came
> from non-US sources.
>
> Lobbying is a broad definition: encouraging usage of Gentoo can be
> construed as Lobbying.
>
> At a broader level in IRS definitions:
> 501(c)(3)
> Operated exclusively for charitable, educational, religious, literary,
> or scientific purposes
> 501(c)(6)
> Operated to promote a common business interest, and to improve business
> conditions in the industry
>
> Is Gentoo Linux a:
> - charitable purpose: no
> - educational purpose: no

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

> - common business interest: YES
>

No... see [1].

> >
> > I am not sure why we would even consider dissolving the foundation with a
> > follow-on action of donating the money elsewhere. While I support donations to
> > similar non-profits, the money currently held by the foundation was raised under
> > the premise of supporting Gentoo.
> Raised under that premise is different from being restricted to that
> purpose by law. We have no donor-restricted funds as recognized by the
> IRS [1]. I can speak canonically on that, as the Treasurer, and required
> to keep track of any fund restrictions.
>

You are correct, but my point was that donating those funds outside of Gentoo
goes against the purpose of why they were raised. This is not a law
interpretation or problem, it is a problem of raising money *for* Gentoo and
then donating it elsewhere.

> > The dissolution proposal needs to come from the Trustees and be:
> >
> > 1. direct with purpose (e.g. we will go under an umbrella)
> > 2. a well laid out plan to inform the membership of where
> > assets/trademarks/monies will go
> >
> > Asking the general membership to support a dissolution with multiple endstates
> > is not proper or responsible.
> The two questions can be reformulated:
> - do you support the dissolution of the Foundation
>   - NO => fix existing entity
>   - YES => see next question
> - what should the outcome of the assets be? (new
>   nonprofit, umbrella, donation to nonprofit)
>

The electorate needs to decide on fixed actions based on the proposal from the
board. Otherwise, we will never reach a decision due to the disparity in the
questions.

> >
> > > > 2. Will all candidates explain the reasoning supporting their position
> > > > on their future plans for the existence (or otherwise) of the Foundation.
> > > On the above questions, my answers:
> > > Q1:
> > > No voluntary backfiling [I don't have the time for it, another person will need to work with the CPA on it]
> > >
> >
> > Unless I am missing something here, the intent is to retain the CPA for such
> > book keeping permanently. The trustees will simply interact with them to make
> > purchases etc.
> >
> > e.g. buy a thing, send receipts to CPA.  Done.  This is not complex, as they
> > crunch the numbers.
> The CPA is not a book-keeper. We have retained the CPA for tax
> preparation services ONLY.
>
> We could pay to retain book-keeping services (>$200/month), keep trying
> to do it ourselves, or it would be done by the Umbrella.
>
>

Wait, so the Certified Public Accountant doesn't do book keeping?  Or are you
simply trying to state that we only paid them to file tax paperwork?

If the latter then great... if the former then you should revisit what a CPA is
in the United States.

>
> >
> > > Q2:
> > > - Dissolve & join SPI
> > > - Dissolve & join SFC
> > > - Dissolve & join LF
> > > - (maybe other umbrellas here)
> > > - Convert to 501(c)(6)
> > > - New 501(c)(6)
> > > - Reopen research & voting
> > > - (all other options)
> > >
> > > Q3: Yes
> > >
> > > Why these choices?
> > > As the others have noted, even with the present manpower, we have a bus
> > > factor problem. If I wasn't around doing the financials, we'd be in much
> > > worse state. Not that it would be impossible to fix, just significantly
> > > more expensive (one rough book-keeping quote to "fix" data was $250 per
> > > calendar month of backlog, including end-of-year financial statements).
> > >
> >
> > As I stated above, the CPA should be retained by the board. Also, "expensive" is
> > relative considering the current state of the foundations finances. We have
> > money... lots of it relative to our needs.
> If the book-keeping costs $250/mo, and tax preparation is $1500/year,
> that's already $4500/year just for preparation, before any filing costs.
>
> Our gross income on leaner years is around $15000/year, so we'd be
> spending nearly a third of our income just on preparation costs.
>

I will ping the CPA to find out an estimate for retaining CorpCap for all
services.

[1]: https://www.irs.gov/charities-non-profits/other-non-profits/examples-of-common-business-interests

-- 
Cheers,
Aaron