Re: [Snowdrift-discuss] Non-Profit Question

2017-11-13 Thread Arc Riley
A point that's often missed is that non-profit organizations can and often
do have employees.

Having an all-volunteer non-profit does cleanly avoid some issues with UBIT
(unrelated business income tax), specifically hitting the "volunteer
workforce" exception. Eg if you were monetizing by selling license
exceptions those sales *could* be considered UBIT *unless* the software is
being primarily developed by volunteers.



On Mon, Nov 13, 2017 at 12:31 AM, jake  wrote:
>
> Is it simply that the developers are not allowed to make purchasing
> decisions for the organization, such as to pay themselves?
>

The "profit" in "non-profit" refers to the corporation, not you as an
individual being compensated for your work. You could easily draw a six
figure salary as a software developer working for a non-profit, assuming
the non-profit had the cash flow to support you.

However, if your non-profit were a 501(c)(3) or similar, serving on the
board and employing yourself would be called personal inurement and is
expressly forbidden.
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Re: [Snowdrift-discuss] Non-Profit Question

2017-11-13 Thread Alyssa Rosenzweig
Glad you understand :-)
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Re: [Snowdrift-discuss] Non-Profit Question

2017-11-13 Thread jake
Thank you. I think you did a good job of answering my questions.


To summarize:

The emphasis is on funding public works.

In theory, it is possible and acceptable to become employed working on a 
Snowdrift-hosted project, even for personal profit. Though, ideally, such 
employees would value the contribution to society over personal profit.

A project hosted on Snowdrift does not have to be a legal non-profit.

A project hosted on Snowdrift may even be closely affiliated with a business, 
provided the project is fully FLO and all monies from Snowdrift go directly to 
the project.





Aside: Project visionaries should keep in mind the option of making further 
Snowdrift-hosed projects related to their originals. Business is not the only 
way of handling growth. Maybe some plugins/modules need a different funding 
base, so they should be their own project(s). When like-minded people come 
together, crazy synergies can happen, i.e., growth. Visionaries coming to 
Snowdrift should be prepared for this and know their options.


Thank you,

Jake


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Re: [Snowdrift-discuss] Non-Profit Question

2017-11-13 Thread Aaron Wolf
On 11/13/2017 12:31 AM, jake wrote:
> Clearly, Snowdrift.coop is non-profit.
> 
> But must all projects funded on Snowdrift be non-profit?
> 

No, but none of the project requirements are set in stone since we still
have to roll out that whole structure.

The plan is *not* to require that all projects be legal non-profits but
that all the work funded from Snowdrift.coop go toward the direct
development of public goods. That means not getting funded from
Snowdrift.coop and just then giving the money to investors or keeping it
as profit without putting it toward new work.

> If so, the developers may be paid as an expense to the non-profit
> organization. But at what point does this become a profitable business
> for the developers?

This seems to be a misunderstanding of the whole nature of non-profit
entities. Nearly all non-profits have paid employees, and some are paid
decently. What makes a non-profit is that there are no investors who own
stock and get returns on their investment. There can still be any number
of paid employees paid to do work.

> Is it simply that the developers are not allowed to make purchasing
> decisions for the organization, such as to pay themselves?

That issue has more to do with who makes decisions. That is not an issue
for non-profits per se (or Snowdrift.coop projects per se), but there
are legal regulations around decision-making when it comes to tax-exempt
organizations (like 501(c)(3) in the U.S.). I'm not a lawyer so can't go
into details there.

> 
> The big question: is it ethical to essentially start a business using
> Snowdrift? There are business models where a company commercializes
> open-source software. Take CodeWeavers and Red Hat, Inc., for example.
> 

Ethical is a philosophical question. I think there are at least ethical
questions about the whole concept of profit. I certainly it's unethical
to put profit *over* the public good in any situation.

As for Snowdrift.coop, we're not focusing on *starting* businesses but
on funding the creative work that produces or improves public goods.

Codeweavers makes a commercial product based on Wine. We would support
Wine itself (and it's fine for Codeweavers to share in the benefits of
the improvements to Wine).

Red Hat provides hardware and support while using free software like
Gnome. We would support Gnome and other free software that Red Hat uses.
Red Hat (or other new companies) are perfectly welcome to do business
providing hardware and support services around the free software we support.

> 
> Cheers,
> Jake
> 

Hope that answers your questions. Feel free to ask more.

Cheers,
Aaron



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