[Foundation-discuss] Re: [OpenAFS-announce] Foundation Update 3

[Jeffrey Altman]

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[This e-mail was originally sent on 16 Feb 2013 but due to a
misconfiguration of the foundation-discuss mailing list was not seen by
the public.  The mailing list has been fixed and this re-send is
intended to permit public discussion.]

On 2/18/2013 8:38 AM, Roman Mitz wrote:
> On Feb 16, 2013, at 10:16 AM, Jeffrey Altman <jaltman@your-file-system.=
com>
>  wrote:
>=20
>> I have two concerns which I hope the committee will address.  The firs=
t
>> is the choice of 501c3 status.  I am fairly sure that you are aware of=

>> the challenges that FOSS organizations have had in the last couple of
>> years obtaining approval from the IRS as a 501c3 charitable non-profit=
=2E
>>
>> What you may be unaware of is that on 20 Dec 2012 the IRS published IR=
M
>> 7.20.1 which states the current opinion of the IRS with regards to the=

>> evaluation of Exempt Organizations.  Under this IRM "Applications from=

>> organizations providing free open source software in which the provisi=
on
>> of free software is central to the organization's exempt purpose." mus=
t
>> under go a mandatory Technical Review to ensure that the organization =
is
>> not organized or operated for the benefit of "private interests".
>=20
> While I was not aware of the Dec 2012 IRM, since this decision was made=
 before then, we were certain that there would be a technical review give=
n the current climate.  To sum up the thinking, it seemed worthwhile to t=
ry for the harder status first; while the final determination of any prob=
lems in doing this would be reviewed by our lawyers, I don't see a downsi=
de to trying for the status and being turned down, then filing for c6 or =
another status.

The distinction between a 501c3 and a 501c6 is quite significant because
each requires a completely different definition of what a "member" is
and whom the "beneficiaries" are.  The distinction has a huge impact on
the required and allowable funding sources and on the mission.

>> My second concern is that there is no mention of the business plan for=

>> the organization without which it will be impossible to judge how the
>> organization will carry out its mission as described in its Articles o=
f
>> Incorporation and Bylaws.  When the MIT Kerberos Consortium plan was
>> shopped to the relevant community it included a seven year road map
>> including goals, projects, staffing, budgets, membership, and funding
>> raising targets.  I do not believe the viability of the Foundation can=

>> be judged without such a plan.  A business plan will also be a key
>> document necessary to argue to the IRS for whichever tax exempt status=

>> the Foundation eventually pursues.
>=20
> Quite right; this is on the timetable but it is one of the later steps,=
 for us.  The c3 filing documents we have been using do not seem to inqui=
re much about the details; some broad strokes about the business plan is =
implied in answering certain of the questions, but nothing very specific =
seems to be needed.

While the IRS may not require a detailed business plan until the EO
Technical Review, your first audience is the OpenAFS Community (the
entity you wish to represent) and those individuals or organizations
which you want to raise funds from.

Jeffrey Altman





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