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

[Alec Warner]

On Sat, Jul 4, 2020 at 8:20 PM Aaron Bauman <bman@g.o> wrote:

>
>
> 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.
>

If there is a problem with the math, please point it out.


>
> >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?
>

https://archives.gentoo.org/gentoo-project/message/106055a4c7b58694172f392e0279ec47

-A


>
> --
> Sent from my Android device with K-9 Mail. Please excuse my brevity.
>
>