Re: [gentoo-nfp] Delegating project expenses to Council

[Alec Warner]

On Mon, Oct 11, 2021 at 1:59 PM Robin H. Johnson <robbat2@g.o> wrote:
>
> On Mon, Oct 11, 2021 at 10:00:32AM -0700, Alec Warner wrote:
> > Hello Nonprofit folks,
> >
> > In a recent Council meeting, the council agreed to take on the duties
> > of vetting project-spending. The Foundation nominally has two types of
> > spending:
> >
> >  - Mandatory spending. These are things like phone, mail, taxes,
> > accounting, etc. This spending will remain in direct control of the
> > board. This spending is used to keep the *foundation* alive (note it
> > has nothing to do with Gentoo the project in any way.) Eventually we
> > would like to see the Foundation replaced by an umbrella, in which
> > case this spending would be replaced by fees paid to the umbrella
> > company.
> >  - Project spending. Pretty much anything not mandatory at this point.
> > Note this includes infrastructure spending. So hardware, servers,
> > reimbursements, posters, etc.
> I think some clarity around "Project" is needed here. Where do some of
> these fall? Into the "project" sense that evolved from ebuild herds, vs
> as a "task" conducted by a group of people.

Mandatory spending is spending that is required for the operation of
the Foundation.
Project spending is literally everything else.

>
> Various groupings of expenditure that stand out from Bugzilla [1]
> - Infra CapEx (new/replacement server & parts we own somewhere)
 Project

> - Infra OpEx (rented servers)

Project

> - Development servers, CapEx & OpEx [e.g. catbus.sparc, new $ARCH]
Project

> - PR OpEx: consumables, e.g. flyers, DVDs
Project
> - PR CapEx: re-usable banners
Project
> - PR OpEx: GSOC reimbursements
Project
> - ?? NitroKey "project" (OpEx per accountant)
Project
> - ?? Memorial donations (fmccor, avenj, ??)
Project, but slightly more debatable.

>
> None of these are mandatory spending, but they all have various degrees
> of paperwork and complexity. The PR consumables are frequently very
> short deadlines, because they get left to the last minute.
>
> Historically, Infra has an unofficial annual budget of $1K for
> replacement parts, that didn't include any of the OpEx (Hetzner, AWS).
> - Past that budget point, funding approvals were needed. Is that likely
>   to stay the same?
> - Would other projects have baseline budgets in the same way?

I'm not the council; so I'd ask them. Generally speaking I think
pre-approved spending limits are mostly a means to avoid doing
additional approvals / paperwork.
I assume the council does not want to:
 - approve random infra spending below a certain limit because we may
have lots of txns.
 - approve monthly spend on leased hardware when the amount does not fluctuate.

>
> > I'm looking for feedback from the community and the board on this as
> > we will change the board procedure if the board votes to make these
> > changes (we have not yet voted.)
> >
> > The ultimate goal is to operate a more of an arms-length arrangement
> > with the Foundation; the eventual outcome being that the Foundation
> > will cease to exist at some point and be replaced by an arms-length
> > umbrella holding company.
> To what degree/spending level will the approval of BOTH bodies be
> required? E.g. Sparc project wants to spend $50K on a top-of-the-line
> Oracle server.

Technically, the board dispenses funds (and reimburses, etc.) So we
exercise some approval just by doing that.

Structurally that approval should be pro forma (e.g. all judgement of
whether we should spend money is made at the council level.)
Some ideas of transactions the board may decline are things like:
 - Transactions that do not appear to be legal in our Jurisdiction.
 - Transactions that result in significant risk to the Foundation.

I think the primary risk (besides legal risk) is fiscal risk. So we
might say something like:
 - The board reserves 3x Mandatory spending as a fiscal reserve.
 - The board will approve purchases until the reserve is reached, then
decline additional expenses (so we can: e.g. pay our accountant and
taxes and so on.)

I think the chances that the council will drop 50,000 on a sparc box
(or other significant expense) is about the same (minute / small /
low) probability as the board doing the same action.

>
> > Do you think this is a good idea?
> Overall yes, because it prepares the council to take on ownership of
> budgetary control in the larger organization.
>
> > Are there more than 2 buckets of spending?
> Do the OpEx & CapEx spending need seperation?

As I mentioned in the council meeting; you and I are Infra and also on
the board (and you are board treasurer) so the amount of paperwork
related to budgeting is low because we all hold similar positions and
share an understanding of the fiscal nature of the Foundation.

My intent in the current bucketing is to say "the council doesn't
approve mandatory *foundation* spending; its approval lies with the
board." I can submit an estimate of all mandatory spending if needed;
and we can summarize it in the annual reports; the mandatory spending
is purchased from the free market in arms length transactions, etc.

Obviously the gentoo *project* itself has mandatory spending (e.g. we
lease 3-4 boxes from hetzner and gentoo would cease to be if we
stopping paying for those) and I would expect the project to vote to
continue to pay for those expenses (and they are definitely opex.) But
they are separate from *Foundation* expenses.

>
> > Looking forward to your feedback,
> Further discussion: I think process improvements are needed regardless:
> The funding requests/discussion should wind up in SEPARATE bugs than any
> confidential details, so that the confidential parts [2] can be locked
> rather than public.
>
> Does the entire Council need to know some of that PII, or just the
> treasurer handling the reimbursements?

I think structurally its fine for the council to know it; but not the
public or developers-at large.

Imagine a hypothetical where the Foundation is gone and Gentoo is,
say, a member of the Linux Foundation.
Now the Liaison (council) will see PII, and the Linux Foundation will
see PII (to disperse funds, etc.)

In the current implementation, the liaison (council) will see PII and
the Gentoo Foundation will see PII (again solely to disperse funds,
etc.)

-A

>
> [1]
> Search all bugs for "finance" in the bug whiteboard, which is part of a
> set of tags I used as part of the financial auditing I did. This list
> has 96 bugs in total, of which 22 are private, most frequently because
> they contain PII.
> https://bugs.gentoo.org/buglist.cgi?list_id=5857395&order=bug_id&query_format=advanced&status_whiteboard=finance&status_whiteboard_type=allwordssubstr
>
> [2] PII such as shipping addresses, payment addresses, names of
> non-developers, as well as business details like things from some
> sponsors.
>
> --
> Robin Hugh Johnson
> Gentoo Linux: Dev, Infra Lead, Foundation Treasurer
> E-Mail   : robbat2@g.o
> GnuPG FP : 11ACBA4F 4778E3F6 E4EDF38E B27B944E 34884E85
> GnuPG FP : 7D0B3CEB E9B85B1F 825BCECF EE05E6F6 A48F6136