Foundation:FoundationFutureState

From Gentoo Wiki
(Redirected from FoundationFutureState)
Jump to:navigation Jump to:search

Current Status: Gentoo is a non-profit organization based in New Mexico. We do not currently hold tax exemption status with the United States Internal Revenue Service (IRS).

TYPES of direction: recognize we're a business; 501{c3,c6} {public,private foundation,umbrella}; [7 directions total] -- cover pros, cons of each -- for the umbrellas, identify list of potential umbrellas for each category, and their pros/cons & COSTS

Current Status: Gentoo is a non-profit organization based in New Mexico. We do not currently hold tax exemption status with the United States Internal Revenue Service (IRS).

Executive Status

Last Updated: 2023/11/05

  • The SFC has soft-rejected the Gentoo Foundation, as they generally accept specific upstream packages, and not Linux Distributions.
  • The SPI did not respond to earlier discussions, however with a change in their board over time, the Foundation hopes to re-engage the SPI.
  • The OpenCollective options were also missing some information from those parties.
  • The Linux Foundation has been ruled out for the time being, as the preference is for a 501(c)3 model rather than a 501(c)6 model.

Goals

Our goal should remain the same as our mission statement which can be derived from our social contract. Please feel free to edit. This will also be useful for our mission statement as a potentially new 501cX or under an umbrella.

"To promote the advancement of free knowledge and Free and Open Source Software (FOSS) through the primary vehicle of the meta-distribution known as Gentoo. These goals are accomplished through relationships with free software authors, technical contributions to external projects, and a thriving community of volunteers that make Gentoo possible."

Assets

[Insert financial assets or link to external page]

Trademarks

  • TODO: link Foundation page on 2 trademarks

Cash & securities

  • TODO: link latest financial statements

Tangible assets

  • TODO: Infrastructure to produce clear documentation on hardware OWNED by the Foundation (vs sponsored hardware)

Possible types of direction

This section should cover what types of direction we might go in future, without specific target orgs.

Each of the directions should briefly capture:

  • Pros & Cons
  • Reasons to consider
  • Reasons to exclude from consideration
  • Ballpark transition costs
  • Possible transitions
    • Some state transitions are easier/harder/legally-prohibited
  • Impact on governance structure

Remain a business (corporation)

Form a new 501(c)3

Pros

1.) The corporation will be governed by an elected body chosen by the Gentoo community which retains it's autonomy. As stated at [1], "Gentoo will never be reigned by a company nor be dictated by an organization."

2.) The corporation may, at-will, contract the required services (e.g. bookkeeping/taxes) as needed to ensure compliance with all United States tax laws.

3.) By retaining services at-will, the corporation may lower overhead costs by selecting among various companies.

Cons

1.) The elected body must continue to deal with the financial and legal matters of the distribution (c.f. Pros 2).

1a.) Historically, there has been a low turnout of nominations for individuals to be considered for election to the board. This may be evident of the technically driven nature of most contributors/volunteers or simply because individuals were hesitant due to the dire tax situation that preceded.

2.) The lack of retained certified legal experts to advise should any potential lawsuits or other legal matters impact the distribution. 2a.) This has historically not been an issue, but threats have been made from disgruntled individuals.

3.) The corporation must ensure that the public support test is met. Currently, there is one donor that has been faithful in their donations which would break the public support test. However, such contributions can be denied (or a request to spread over multiple years) in order to meet such criteria [5] (among other articles available).

Form a new 501(c)3 private foundation

Form a new 501(c)6

Join an Umbrella: 501(3)c

Examples

  • SFC
  • SPI

Pros

1.) The umbrella would manage all tax and bookkeeping related matters while ensuring compliance as a tax-exempt non-profit organization under United States law.

2.) The umbrella, as a broader set of non-profits, would allow for larger contributions while generally meeting the public support test (c.f. 501c3 Cons 3)

Cons

1.) The general electorate is dismissed and the distribution loses its autonomy. As such, interested parties must join the respective umbrella to influence (through voting or other measures) policy (e.g. licensing) and any other relevant legal or financial matters (note: this does not impact Gentoo's earmarked contributions).

2.) Umbrellas differ in the rates charged for sponsoring a project. Some may charge a flat rate (e.g. 10%) or may charge a monthly or annual fee. Fixed percentages may eventually cost more than retained services dependent on contributions while monthly/annual costs are predictable and recurring.

Join an Umbrella: 501(3)c private foundation

Join an Umbrella: 501(6)c

Examples

  • Linux Foundation

Pros

  • See 501(c)3 above
  • Some more flexibility may be possible in what's allowed

Cons

  • See 501(c)3 above
  • Differing tax treatment

Combinations

Combination options certainly exist, and are captured for completeness, but given the relative sizes, they are probably unlikely options.

501(c)3 owning a business

  • Mozilla Foundation 501(c)3 & Mozilla Corporation: the corporation was entirely owned by the 501(c)3.
  • Is the opposite order valid/possible/meaningful?

501(c)6 owning a business

  • Is the opposite order valid/possible/meaningful?

501(c)3 owning a 501(c)6

  • Is the opposite order valid/possible/meaningful?

Umbrella 501(c)3 + business

Umbrella 501(c)6 + business

Umbrella 501(c)3 + 501(c)6

Umbrella 501(c)6 + 501(c)3

Other???

Dissolve everything

Just donate everything we have and give up.

Possible umbrellas

For the umbrellas:

  • identify list of potential umbrellas for each category
  • Capture:
    • Pros
    • Cons
    • Costs
    • Governance structures

501(c)3

SFC

501(c)6

Linux Foundation

  • Notes:
  • Pros:
    • ?
  • Cons:
    • ?
  • Costs:
    • Per document above:

      A General & Administrative (G&A) fee will be applied by the Linux Foundation to funds raised to cover Finance, Accounting, and operations. The G&A fee will be 9% of the Directed Fund’s first $1,000,000 of gross receipts each year and 6% of the Directed Fund’s gross receipts each year over $1,000,000.

  • Governance:
    • ?

Other

Open Collective

Open Collective is primarily a PLATFORM for running finances. It has individual fiscal host collectives, which set their own policies. SFC believes this is a good thing to have more choice: https://sfconservancy.org/blog/2020/jul/09/org-proliferation/

Starting a new collective
  • TODO
Joining an existing collective


TODO

  • Please add more potential umbrellas to evaluate here.

Common application process

The Foundation & Council should have an agreed text to applying to Umbrellas initially with.

Status

The Foundation has sent out initial communications to several entities.

(note: subhead titles used to provide unique links)

Status: SFC

  • User:Mgorny Emailed 2020/08/17
  • User:Mgorny email Reping on 2020/09/16
  • No email response as of 2020/09/16
  • User:Robbat2 reached out on IRC 2020/09/16
  • Promised initial email response within the week to explain that the applying page was out of date regarding timelines.
  • 2020/09/22 email:
    • Subject: Re: Information Conservancy needs regarding Gentoo application [sfconservancy.org #12273]
    • Visible to council & trustees
    • Summary: SFC surprised to get inquiry after so long, as apparently mcummings and g2boojum started a process with last email on 2007/09/28, but never submitted anything, and knowledge of the application was lost to the rest of the Foundation. We can make a new application, but a lot of documentation is needed, and Bradley Kuhn feels that the liability of a Linux distribution joining the SFC means they are unlikely to accept us (none of their present projects are Linux distributions)
  • Required documents for application:
    • Certificate of Incorporation (or analogous document for your org)
    • Existing By-Laws for the Organization
    • List of Directors (and historical list of previous directors, if available)
    • List of Officers (and historical list of previous officers, if available)
    • Minutes from all Board meetings for the last three years
    • All Board Resolutions passed by the Directors
    • Membership meeting minutes (if your organization is a membership organization)
    • All Membership Resolutions (if your organization is a membership organization)
    • All annual reports (published, or filed with any state or federal agency)
    • All audited annual finanicals (if any were audited and/or filed)
    • All financial reports of any kind for the last three years
    • Copy of all state and/or federal filings (particularly including but not limited to tax-related filings) for the last three years. In particular, be sure to include:
      • the IRS determination letter for the status of your filing
      • Your IRS Form 1023 filing
    • List of any ongoing threats of litigation, or other disputes, and documentation of any resolved past litigation
    • A list of all assets currently held by the organization (including backup documentation, such as copy of bank statements, etc.)
      • Include a copy of *all* bank statements for the last year
    • Any contracts that the organization has executed in the last three years (plus any older than that if they remain active)
    • A list of any outstanding loans, leans, or other debts held by the Organization

Status: SPI

  • 2017/06/17: Robin emailed SPI
    • Subject: Re: [Informal Discussion] Gentoo associated project
    • Summary: first attempt to discuss joining SPI; SPI was too busy at the time; discussion about using how SPI was already using Ledger for financials and needed some help.
  • 2018/12/23: Email from SPI treasurer (Martin Michlmayr)
    • Subject: Re: Accounting Firms supportive of ledger-cli?
    • Discussion about ledger, not really about joining SPI
  • Robin Emailed 2020/08/27
    • Subject: [Informal Discussion] Gentoo associated project (take 2)
  • Reached out on IRC 2020/09/16
  • Initial email response 2020/09/16 from SPI, asking some questions
    • confirmation that Gentoo is a "Free and open source project that is deemed to be genuine, substantial and significant"
    • confirmation that there are multiple developers
    • confirmation that Gentoo uses open source license
  • 2020/09/16 Robin provides detailed answers to the above questions; asks return questions
    • clarification request on the 5% fee of donations & income:
      • Does it apply to initial balances for new organizations joining SPI?
      • Structure of fee regarding payment processing fees & taxes and/or unrelated business income
        • e.g. is the 5% on the gross income, or the net income?
  • 2020/09/17 Mgorny asks:
    • are multiple project liaisons permitted
    • How does SPI verify the authenticity of the requests coming from project liaison? (i.e. prevent someone from trying to impersonate the liaison)
  • No further responses from SPI to Robin's questions or mgorny's questions

2021/07/12 Alicef email:

  • SPI moved from ledger to beancount.

Status: Open Source Collective

  • 2020/08/31: User:MGorny emailed Open Source Collective with a number of questions regarding potential fiscal sponsorship
  • They have indicated they would "love to welcome us", so any obstacles on their end are unlikely.
  • The organizations are governed via website, any number of admins are allowed, and IIUC any admin can approve expenses, etc.
  • They did not hold non-monetary assets at the time (but this has changed).
  • They can sign agreements on our behalf.
  • According to the terms, they can terminate sponsorship 30 days in advance but they have offered to sign a separate agreement with us for longer term.
  • 2020/10/14: last contact from OSC, indicating that they have decided to allow holding assets and are in process of updating their terms.

Status: Linux Foundation

  • User:Alicef Emailed 2021/02/06
  • Video Call Meeting with all board member of Gentoo Foundation (bman, alicef, prometheanfire, antarus, robbat2) and some members of Linux Foundation 2021/03/16 organized by User:Alicef
  • Questions emailed 2021/03/22 User:Alicef User:Robbat2
  • Questions replied 2021/03/27 from Linux Foundation User:Alicef
    • Structural:
      • LF have flexibility and can work out an organizational structure following what Gentoo thinks is important
      • LF primary approach is to setup a governing board for the project (e.g. Gentoo Foundation Governing Board), and then most of our communities like to fund a part time coordinator to help them out so the coordinator is one natural contact. The coordinators help schedule governing board meetings, set the agenda with the Governing Board Chair, work with the technical community and the lead maintainers, help coordinate the community around the key goals you're focused on (e.g. planning a Gentoo event)
      • LF have a common set of basic policies that Gentoo must follow. Those are all here: https://linuxfoundation.org/policies
      • The LF Board has approved an events Code of Conduct, but we do allow Gentoo to set its own Code of Conduct policy
    • Intangible Assets:
      • LF can receive trademark assignments and manage these marks for us
      • LF have trademark counsel and manage hundreds of marks around the world
      • LF projects can set their own usage guidelines
    • Financial:
      • LF takes over the financials
      • Gentoo "Governing board" have to approve any budget for expenses
      • LF can provide a monthly report of forecast
      • LF have a CFO, an accounting and finance team, tax counsel, outside auditors
      • Linux Foundation state the G&A fee, on funds raised applied to any revenues as they come in, 9% then 6% after $1M
      • No fee to existing founds during merge with LF
      • LF have multiple models for doing fundraise (also for individuals)
      • LF have a premade crowdfunding platform "LFX Crowdfunding"

Common Q&A

This section serves to collect common followup questions that Gentoo asks of potential umbrellas, or that Umbrellas ask of Gentoo.

Interactions

How does the Umbrella interact with Gentoo? e.g. Does it require a single person as a liaison, or is a small group acceptable?

Costs

Different Umbrellas state that they take various amounts of Income as their fee, but it's not always clear exactly where that amount is charged.

  • Does the Umbrella charge the same fee for the initial balance that would be moved into the Umbrella vs later income after we have joined?
  • Exactly where is the Umbrella's fee charged? gross income, net income, something else?
  • How are fees and taxes on unrelated business income handled? Gentoo has the official CafePress store. However, since selling shirts & merchandise is not core to Gentoo's function, the IRS may consider it as unrelated business income, and apply standard taxes on that income.
    • Is the amount of taxes set aside before the umbrella's fee is calculated?

Licenses

  • Q: The SPI asked about Gentoo's Committment to open source.
  • A: All Gentoo work is required to be under an OSI-approved license per the Gentoo Social Contract

Links

[1]: https://sfconservancy.org/news/2020/may/18/ClojuristsSunset/ (Example of org leaving umbrella)

[2]: https://sfconservancy.org/news/2019/jun/13/welcomerosanne/ (Staff using FOSS for accounting)

[3]: https://sfconservancy.org/blog/2020/jul/09/org-proliferation/ (Overview of various initiatives)

[4]: https://wiki.gentoo.org/wiki/Foundation:Main_Page

[5]: https://www.themuse.com/advice/3-times-when-you-should-turn-down-a-donation-really

[6]: https://opensource.org/node/840 ( needs to be referenced above still )

[7]: https://blogs.gnome.org/jnelson/2014/06/30/the-new-501c3-and-the-future-of-free-software-in-the-united-states/ ( needs to be referenced above still )

Retrieved from "https://wiki.gentoo.org/index.php?title=Foundation:FoundationFutureState&oldid=1267626"