Greetings all.
First it seems we miscalculated the amount it will cost to run the Art
scholarship. Since both of our applicants are outside the united
states, where our financial reserves reside, we will be responsible
for paying a withholding tax on the payment of approximately 30%. This
may well come to $450 of each scholarship, but we're seeking some
advice now on our actual liability.
For the time being it does not seem any way to avoid paying the tax,
but there is an opportunity for us to offset the losses through an
alternate opportunity. Presently Wesnoth's finances are tied to the
personal account of our lead developer David White. Given the
circumstances of his personal finances, a significant portion of the
program's revenue is expended in taxes. We believe that by
incorporating as a non-profit we can drop our tax rate by half. There
are other options, including joining a pre-existing non-profit
institution designed to give open source project legal status like the
Software Freedom Conservatory. However there are limitations to this
method, particularly considering we are not a pure programming
organization that has a multitude of unique organizational needs. Our
scholarship efforts (GSOC and WSAS in particular) and the fact we run
a multiplayer server with advertising revenue may complicate our
status within their organization. In discussions with one organization
we found they could not answer specific questions on certain issues of
critical importance to us, like our tax liabilities on scholarships.
After discussions with several parties, including a member of SPI (an
non-profit involved in promoting open source software,) I and several
developers have decided to push for the incorporation of Wesnoth as a
non-profit foundation. We are a mature project with an robust
organizational culture; incorporation is a better option for us as it
would build on our already strong administrative structure. This gives
us immediate financial advantages, including dropping our tax rate to
15%. It would also allow us to develop a firmer institutional
foundation for our project, including the development of a
organizational competence on its legal status. It would have no effect
on day to day development; in reality I think some people would be
surprised to know that we didn't have non-profit status already.
Considering this aim, we found that using an online service would be
the most efficient method to obtain incorporation. After an
comprehensive search, Turuk and I have settled one which we think
suits our needs best;
http://www.incfile.com/
We have been quoted a price of $395 USD for incorporation as a non-
profit organization with several advantages. It includes the entire
registration process, toll free support and expedited filing in Texas.
We can expect our status to be obtained within a week. The individual
who would be responsible for registering our project in incfile also
has significant experience in this field, so this should be a fairly
smooth process. If we follow down this path, our project requires the
creation of an established government structure, which we would file
in Texas (for simplicity sake.) According to the law;
The Texas Non-Profit Corporation Act and the Texas Business
Organizations Code require a nonprofit corporation to have at least
three directors, one president, and one secretary. The same person
cannot be both the president and secretary. Officers and directors
must be natural persons.
The President and Secretary has defined roles under law, but I would
propose that the third director be nominated as a treasurer to ensure
financial matters are handled properly. The Texas law also requires us
to hold regular meetings, but this should not be a problem given our
present organizational structure. I suggest we use developers as a
voting group if we need to adjudicate issues and for appointments. It
does not need to be a stringent voting system. I think we can use a
simple acclamation system unless there seems to be real deadlock over
an issue or appointment.
Now non-profit incorporation does not immediately include tax exempt
status; our tax rate will only drop to 15% (the corporate tax rate for
an organization making less than $10,000 a year). Exemption requires
what is called 501(c)(3) status, which costs an additional $1,000 USD.
A 501 filing does not need to occur simultaneously with incorporation,
it is common for groups to do so sometime afterwards. Nevertheless we
should consider it as soon as possible to ensure obtain the maximum
benefit. I suggest that we might consider soliciting donations for
this stage.
I'd like to get moving on this as soon a possible, so unless anybody
has some immediate concerns as to why we shouldn't go down this path
we should start implementation by monday of next week. We would need
to appoint the three positions asap, so let me nominate two
individuals right now; David White for President and Turuk as a
director and unofficial treasurer. Dave is an obvious choice for that
position. Turuk has the best understanding of our legal status in the
U.S. (having experience in this field and working in preparation of
this proposal) and is among the most consistent individuals in
dispensing his administration duties.
Thats that... Comments and criticisms are welcome.
Noy
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