Re: [gentoo-project] Questions for Council candidates: Future of the Foundation

[Aaron Bauman]

On July 4, 2020 8:57:33 PM EDT, Alec Warner <antarus@g.o> wrote:
>On Sat, Jul 4, 2020 at 2:44 PM Rich Freeman <rich0@g.o> wrote:
>
>> On Sat, Jul 4, 2020 at 12:33 PM Andrew Savchenko <bircoph@g.o>
>> wrote:
>> >
>> > This is one more aspect to this: some companies double donations
>> > for 501c3 organizations. A friend of mine works in a large
>> > corporation with HQ is the US and told me that his employer doubles
>> > any donations made to 501c3, so he made no donation for Gentoo,
>> > because that will mean loosing money for community which otherwise
>> > can be doubled. So it is likely that 501c3 will increase incoming
>> > donations.
>>
>> That is a really good point and I'll expand on this.
>>
>> Some organizations will only donate money to 501c3 organizations.
>> Basically they're letting the IRS do the due diligence around whether
>> the organization is actually charitable.  They can potentially also
>> receive tax benefits this way.
>>
>> If you want to receive grants/donations from other 501c3
>organizations
>> you will be far more likely to get them if you are yourself a 501c3
>> organization.  These transactions receive far less scrutiny than
>> transfers from 501c3s to other types of corporations.
>>
>
>This can be problematic for us in some cases.
>
>Currently our annual revenue is approximately 10,000 (All USD in this
>example.) If we are a 501c3 public charity, we are required to source
>1/3rd
>of our revenue from the public; and the public is determined by a
>complex
>set of rules. Generally this is "donations less than 2% of gross
>receipts."
>So e.g. in our current funding model, 2% of 10,000 is 200$; and we need
>to
>gross at least 3,333$ in donations < 200$. I can tell you the Gentoo
>Foundation easily passes this test[0]. However, if we were to be a
>501c3
>and suddenly donations increased, when do we need to start worrying?
>

You should really double check this math. 

>For example; assume gross receipts tripled in the new system, to
>30,000$.
>Now we need 1/3rd of this new total (10,000$) to come from donations
>less
>than 600$ (2% of 30,000$). Plugging in our 2019-2020 data, our support
>level here is not sufficient[1] and we will fail the public support
>test.
>Obviously the real numbers would be different but we might want to be
>careful in terms of how we tell people to donate and how we account for
>donations[2].
>
>For example if I donate X and my employer donates X, I assume that
>counts
>as 2 donations (not 1) and we can influence the recommended value for X
>(e.g. we want X to be less than 2% of of expected gross revenues for
>that
>year, so it counts toward public support for the majority of
>donations.)
>
>The other challenge is that we have no actual plan for spending money.

Many have suggested ways to do this. 

>Feedback from the community has not been very positive when I have
>tried to
>engage with them on how to spend the money. This presents an ethical
>problem in terms of raising funds we have no existing need for; the
>existing public donations from individual contributors already exceed
>our
>expenses by a fair margin. I suspect in addition to moving to a
>tax-exempt
>non-profit we would need clearer guidance from the community on how to
>allocate the potential increase in revenue.

When exactly did you engage the community on how to spend this revenue/income?

-- 
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