The Low Down on IRS status for Free and Open Source Software Nonprofits in the US

longest talk title I think in the program perhaps and I’m excited we have a bit of a raucous crowd today and the talking about the yeah right I’m talking about the IRS tax it you see three suits right we’re gonna have we’re gonna have a little worse here and little little folks and shout outs because the topic is so exciting and so interesting tax situation I want everybody to feel free to heckle feel free to ask questions as we go we need all the help we can get to make tax interpretation interesting but we’re gonna do it I promise that’s piece awesome for the mic before you hate or otherwise Daniel is going to repeat whatever heckle you made and take credit for the cleverness of it so for those of you who don’t know me my name is Terrence Sandler I’m the executive director of the software freedom Conservancy and this is our lovely tree logo with with all of the logos of our member projects in it you’re probably heard of some of them applause for our member project some people are in the room for our participants and thank you so much for working on this really important software I I quit fit if you’re using a computer you are using some of our software most likely so I’m in addition to being executive director of this fine organization I also am a lawyer which point I normally hide behind whatever podium is available so that nobody can throw rotten fruit at me but but I only do pro bono work these days and my clients are the the kinome foundation and question copyright org and also the FSF so I tried to use my lawyer powers only for good I also co-organized the the outreach program for women that is run by the genome Foundation and I was also a mentor with the program and I’m an advisor with the ADA initiative and all of these initiatives that get that helped bring diverse groups into a free and open source software are incredibly important to our communities I am also a cyborg razor hand if you were at Ballarat in 2012 so like like half the audience all right I gave a talk then about how I have a heart condition where I am at a very high risk of suddenly dying my heart is I have a very big heart and I have this pacemaker defibrillator in order to ensure that I don’t suddenly drop dead and I asked to see the source code in my defibrillator and was of course told no and I have sort of made it a project of mine to understand software safety and that’s sort of where I’m coming from with free and open source software as my personal and professional have become completely enmeshed and I realized that we have an Internet of Things where everything is talking to everything else and we’re only as safe as our weakest link and software will only be safe over time if it’s free and open-source software so these are thank you so these are my so this is my Twitter handle and conservancies Twitter handle and if you are using your computer during this talk I totally understand it’s because you’re live tweeting it’s totally cool I got I have an engineering degree and then I went to law school right afterwards and and after I did that I had no idea what I wanted to do with my life and the market was so hot that basically you just basically had to not be an idiot and some law firm would hire you at the time I was really unsure about the whole thing really like had no real direction and I was hired by a by Clifford chance which is one of the largest law firms in the world it’s a Magic Circle firm in the UK and and I was really comfortable with that because as a lawyer in a regulatory field like security so he did like got debt transactions and IPOs and things like that and it was comfortable about that is that I was a regulatory lawyer and so I able to make sure that the document like the the documents that were out there that investors read were good and adequately reflected what was happening at a company and it put you it put me in a really safe position as a lawyer because if my client wanted to lie to the public I I was I could not give them the letter that they needed in order to get their deal done so it was a it was a very convenient place for me to be as a lawyer I worked in London and then in New York and I became like a real serious corporate lawyer like or suits to meetings and you know it was it was

really interesting and overtime I just got a little bit bored well I quit and and Evan Moglen and and Bradley and Dan Robert sure had started the software freedom Law Center and Evan had been my professor in law school and he heard that I had quit which is very unusual to quit with nothing lined up and and he asked if I would want and he said you’re a corporate lawyer and it turns out that free and open-source software and you were an engineer before I actually wrote a like I have my I wrote a a choose your own essay program for him as one of my law school essays in a really ugly sea and I sent him the executable and he asked me why I didn’t send in the source code wait in law school is not what you expected but I thought it was really fun so he said you know we need turns out we need we have all these corporate law needs would you want to come and learn about nonprofits law and become and I was yeah sure totally you know I had no idea what I wanted to do but I knew that I want to do something that I felt more of an affinity to something that maybe would would you know work towards nonprofit areas and and then in the context of finding out about my heart condition all of that kind of came crashing together and here I stand before you as someone who is passionate about software freedom and has this really quirky extremely conservative legal background because of that conservative legal background I have to tell you that this is really not legal advice I am a lawyer but this isn’t legal advice and I am NOT your lawyer and I think that’s probably evident for everybody but you’d be surprised there are some people here to whom who work at organizations that I am a lawyer too but there is no one in this room that I am a lawyer too and that’s sort of like and and this is sort of like insight into my background and why you know the kind of thought that goes into these like legal issues and tax issues it’s all kind of along that same lines and I just thought it wasn’t just kind of to take it away so what is tax exemption mean all right here our volunteer with or or otherwise involved in a leadership role or some other way with a nonprofit organization so like I’d say like more than three-quarters how many people here are contemplating becoming in a leadership role of an of a nonprofit organization I PBL is hiding I didn’t ask how many people are are afraid to join yet another nonprofit organization and how many people are in leadership roles that are regretting it don’t raise your hand so so tax exemption basically means so in the United States and I should note that if this is a u.s. talk right like there’s us in the title that it’s relevant to everybody here because while are all of our projects are very global a very high percentage of our actual organizations are in the United States so for any for for many of the communities that are prevalent in free and open source software if you’re participating in a community there probably is a u.s. entity that’s connected to it I mean maybe there’s there were there it’s actually starting to change a little bit and there are organizations that are forming in other jurisdictions and concentrations and there are good reasons for that but still that I think that the u.s. org for dominates so in the United States we have state law and federal law the states are like New York and California and then we have so you see when you incorporate a document document when you incorporate an organization you incorporate an estate which means like you actually form the legal entity and as a home it has like a domicile and it lives somewhere in this weird corporate fictional world and and and you have to declare it as a non-profit when you I mean all the states in the u.s. have have varying ly different rules for this and you can say you know I want to be a non-profit and I want these things and then if you do that you then have to have some status with the federal government and those have to line up but they can be somewhat different and tax exemption I’m going to talk in this talk primarily about organizations that have applied with the federal like for the main to the top level tax exemption nonprofits and nonprofits means a whole wide range of things how many people here know this alphabet soup I’ve heard of C threes and sixes cool so like three-quarters of the audience again so we call nonprofits are many different things c3 is so so these numbers correspond to the US tax code actually and what’s amazing is that this has become shorthand like everybody who is active in a nonprofit field will say oh it’s a c3 oh it’s a c6 is if it’s like you know anyone should know what that

means but a c3 is a is a charitable organization so it’s a it’s a public good organization and and I see six is a trade association and these are the two forms that are the most common in our field in free and open-source software CC 3s versus T sixes I have this slide which contrasts some of the C 3 and C 6 is the the Linux Foundation is a is a fine example of a c6 which is a trade association and a trade association basically forwards a common business interest its organized or it’s basically companies or individuals coming together to forward of a business field of interest and on the other side you’ve got like the free software foundation and so so Linux iteration eclipses are our RC C sixes and trade associations and then the Free Software Foundation Conservancy and there are many other examples of all of these as I look into the audience and see like like in my head the bubbles are popping up on top of people’s heads with their names of their organizations our examples of c36 charities and they operate in fundamentally different ways in ways that I think a lot of people don’t appreciate because when you have the corporate interest driving the direction of project that has a really or the the resources around a project and organizations in free and open-source software are sometimes set up in a way that the technical direction is not controlled by the foundation of the genome Foundation is an example of that and but but it’s not it’s not always that case and it sort of depends and then a so and then ic3 is basically more you know it’s a charity so it’s basically it has a non-profit mission and it has to forward that mission I put this example of two different conferences that happen in this like overall general region of the world the Linux con Japan has has anybody here been to Linux con depan so a few people have been to linux con japan it’s a it’s a really corporate ii conference like when you go in there it’s in a hotel or in a like a like convention facility and you know the there’s like a like almost like a trade floor sometimes if there’s a lot of motive stuff sometimes there are cars on the you know it in some ways it’s very exciting because it looks like very like trade show ii and if there’s clearly a lot of money around it but at the same time it’s very very corporate ii and it has a lot of you know there are it’s really so it’s it’s extremely well run conference but it’s very very corporate oriented and as contrasted with with this conference which i love because it’s community organized right and these are sort of like the feelings that you get if you have you know a corporate control over over like the meeting place and the discussion the result is a little bit different it’s not to say there’s there’s good conversation that comes out in both they’re really great for different purposes but for example I look forward to LCA it’s one of my favorite conferences and it’s part because it’s community organized conference and you don’t get the same kind of feel you don’t get that dinette like that dynamic feeling and you don’t get all of these hobbyists you know who come and are excited to be any people here afraid to ask this because people who are involved in a in the tax situation of things might tend to be working in that how many people here were sent to this conference by their employer so like actually like how many so there’s discussion about what what that means and how different that is that’s for the recording and be deli saying okay so multiple people here are saying that they told their employer that they were coming and they pay for it and I think that some people wind up doing their employers work here to some extent and pay for it themselves there’s like a real hybrid model but people I think at this conference you get a high degree of people who are sending themselves here and and are fascinating I guess they’re bigger it for the for the recording there are vigorous nods from the audience so it’s a really fantastic a community-oriented conference and and that sort of like starts to give you an example of what the differences are between c 3 and c 6 is does anybody know what icons these are for yeah ATM and pidgin okay so my first job at the software freedom Law Center was to apply for tax exemption for lots of different free software organizations this was like my first thing I had no I didn’t know anything about nonprofit law i sat down with like some big tomes that I read and I did a lot of research and I filled out I filled out the form for a tax exemption and I think the first one I did was the plone foundation it’s very like near to my heart because it was like the first one I did and then the like I started doing a lot of them like I just kept I just kept like once I had

the information like once I had the application form already done and it worked I used that same language over and over again why freedom when source software is important and they were just those applications were going through they were all because I was at the South a freedom Law Center they were all charities not trade associations and that is more of where my expertise lays but so so they were just you know they were they were going in and they were coming out and it was like six months pretty much I would like right the application they would get sent in and then you know and then it would text you know the the determination letter which is the letter that the IRS sends you to tell you that your organization has met their standards would come in the mail and and I would confidently you know be able to do this process over and over again and and I I got the instant messaging freedom Association started or instant messaging Freedom Foundation started and I corporated them and I as I said that way that I was thinking you know I wonder how this is gonna go right instant messaging it’s different than some of the other software that I was writing at tax-exempt with applications for it’s the messaging freedom is the corporate umbrella home for ATM and for pidgin and you know identifier code trademark work for for pidgin at that point and I was or I guess it was maybe even game still and you know I I felt invested in that project and so up but I was like I I didn’t really think twice because I said you know it it’s the same application that we’ve been sending it and so we said to him and and it’s the frit was the first time I ever got questions from the IRS and you could when you read the questions you could basically see the examiners brain working like my you know 13 year old child spends a lot of time instant messaging how is that charitable right like you could sort of see that see that question starting to form but but then in the responses we talked about all of the great things that that online communication and that free and open source software brings to that and we talked about encryption and and free speech and protests and coordinating really important things and villages in Africa that and all this real use that that pigeon was being used for and it sailed her and I thought to myself if if we can really explain why free and open source software is important and charitable for the instant messaging Freedom Foundation then we’re set like we’re we’ve we’ve done it but then one day things slowed down I would send in an application and not share back within six months I wondered what was going on there during that time how many people here have heard of yerba urban fundation I like about hot well here you shot well so okay like third so yerba is the organization behind shot well it’s um it’s a California us-based nonprofit and and they came to the ethical see and they asked us to write their tax exemption application like no problem but you know things you know things don’t move as quickly as they used to but we’ll just do the same thing and we submitted it and with this time when we got back questions they were different the questions that we got back were were really intensive some of them were quite we did several rounds of questions the first round of questions was the kinds of questions that you know I would have expected before questions like funny questions like do any of your directors or officers sleep in the office space of the organization but but the questions that we got back the second time we’re really getting to sort of really like is free and open source software charitable and and we had a few back and forth and eventually I got a call from the examiner that said if that we’re going to reject your VA’s application and I said what do you mean you’re gonna reject service we’re gonna we I we have no evidence that this software you know that this activity is a proper appropriate charitable mission and I said well you haven’t really been asking me to explain why directly its charitable so can I provide you with you know with a you know with a memo that explains this fully you know I’ve been answering your questions which have been really limited and the ignominy said well I guess now this is in the United States I don’t know if people know about there’s a very important holiday american thanksgiving which is really like this was the this was the Tuesday or Wednesday before American Thanksgiving Thanksgiving is on a Thursday nobody like most people don’t work Thursday or Friday and and a lot of people it’s a family obligation and you travel so this was like the Tuesday or Wednesday before Thanksgiving maybe it was like yeah I mean she’s dead before Thanksgiving and she said if you know what if I have something on my desk by Monday I read it otherwise I’m just assuming

the rejection so huh so so yeah so there have been a few moments in my career where I’ve worked really really hard and that’s left and this is one of those and it was really funny like Justin colony know who used to be at the software freedom Law Center as well worked with me on this and we basically like had a lot of family obligations and we traded this document back and forth between us the entire weekend we’re like I would write it in the car while I drove six hours to to a family and then I would email it to him and then he worked on it while he was on the train and then you know his dinner was early and mine was late and we just kept like I could chat all weekend we worked really really hard but but what we came up with was a really great you know a pretty good explanation of why free software is charitable and and and we went through the entire reasons why and it was a very good formative experience to sort of like really you know think about why free and open source software was and as I’m writing it I’m getting really it’s like like you know excited and I’m writing it and I’m like yes free software is so charitable and I really really get into it you know the the our main rationale is that is that it benefits the general public in in many ways there’s really to the foreigner privileged because if because if you know if if free and open source software solutions are available then it means that people who don’t have money won’t have to pay for licensing fees and and in there I had I felt like I had a real zinger because I talked about the charitable organizations that had the term the organizations that were recognized already as being charitable organizations who were providing discount licenses to proprietary software and I could you know really rant on that and say that’s just marketing for future customers and what we’re doing here is providing real solutions in the long run I felt really excited that we came up with this idea that we were creating a public work and and Justin Colin you know really jumped on this one he was he’s a really great lawyer and so you know we talked about how if you know in the United States a swimming pool that is available for anyone to use can be charitable under 501 C 3 because it creates a resource that everyone can share and is sort of like well this is totally completely analogous to that if further scientific purposes because if you can study source code you can learn so much probably all the things that most of us already know and and and in this room and and and drive us to feel inspired and continue to contribute to free and open source software and then there’s an educational purpose you know the organization has an educational purpose for teaching about and going out and speaking about their software but also the sheer software itself and documentation is educational and and the the part that it really got us sort of like really excited and feeling like we’d really nailed it was that we quoted at Jacobsen be Kassar which was a court case that evaluated whether free software licenses should be treated under contract law or or retreated undercover at licensing and or as a copyright license and basically that has a very different impact on how the cases are treated and what the remedies are that in the introduction to the decision by the court of appeals in the Federal Circuit they actually said like when they explained the judges into their decisions claimed what what free software licensing was they predicated on it I’m saying that they were you know that the licenses were the whole point was to create collaborative projects and dedicate certain works to the public and so I was like yeah we’re using like US government language the US government we’ve really nailed it and then we never got a response for a long time and any application that was sent in to the IRS basically never like it wasn’t coming out and it was really strange and in that time I left the software freedom Law Center and became executive director of genome you know I stopped being a lawyer friend a lot of things happened in the years that happened that took place after that it was really interesting we talked about there some remedies that you could take under US law to bring lawsuits to speed up some of that activity but if you’re not sure about how those things are gonna go it’s a real risk you know like to find that kind of legal strategy and so while there were several organizations that were hanging in the balance it didn’t necessarily make sense to take a lot of action and what we found out was that in the United States there is this whole scandalous situation happening and and what what happened was that the that there were applications going in for political that the Tea Party in the US and other political organizations or political yeah packs and and before but but also like just the the the things that were related to

these political situations were you know people were filing charitable organizations and other things and what the IRS had done is they had created a short list of key terms that would cause further review and inside the IRS the examiners were afraid to touch any of the organizations that had those sports in it yeah boo because I see this is a heck of the booing there’s booing here booing for this scandalous situation at the IRS which when it came to light when it came to light the the you know things started to change but what we found out was that open source software was on the list of keywords boo right everybody boo because I’m but there were also a lot of things on Thank You Carol there are a lot of things that were on that list including journalistic related terms there are a lot of really important organizations that were getting held up simply because of this weird situation at the IRS and then the fear of or you know or the the unwillingness of the agents and the IRS to really move on it and free and open source software got got kind of caught up in that and and I have to I’m gonna confess this even though it’s being filmed that I feel kind of like a chump because I only wanted to call these organizations free software initially but I thought that today there’s a yay coming from over here Thank You Bradley I wanted to call them only free software because I was at the software freedom Law Center and this is sort of where I was coming from but I thought that it was so much clearer to say free and open source software that whether the applicants in their sarahbooth booting going on here really am it’s exciting and so and so I wanted to you know but I felt like being inclusive was more explanatory and clearer and since there’s no real real legal distinction in in a fundamental way between free software and open them some people is there gonna be heckling for this I’m looking at Richard Fontana for a no real legal distinction between free software and open-source off now that booing into same towards me bad lawyer he’s been it keeps this so I’m sorry no I’m just stupid so I’m feed Alan’s telling me to take a deep breath and I will meditate here up here Vonnie on the IRS and so I so I I said free and open source software every frickin time because I wanted to make sure that it was inclusive that people knew it we were talking about and that it wouldn’t be confusing but if I had only said free software based on this list it probably would have these organizations would have simply been been granted instead of held up which is a really interesting in my mind like kind of perverse result ok so P Dell is saying that they would have probably added it to the list it’s possible but I don’t think the list got edited a lot from the oh I don’t know there’s a big scandal the head of like various IRS officials were were booted is it was a really interesting situation and then one day we we did get a response and and what was interesting is that your bow was kind of the one that I the last organization that I know of that we logged in sort of confidently and then that got held up and it was one of the first ones that finally even though it was many years later it was one of the first ones that came out and it was it was rejected for tax status this guy is Jim Nelson who’s the executive director of yerba and and he went ahead and he blogged about it so I so and luckily he’s done that because now I can talk about it in detail which as a lawyer I wouldn’t be able to disclose my clients secrets otherwise and I can give this play-by-play because he he went forward and he wanted people to know about this because he thought it would have real implications for free and open source software organizations overall and he published the rejection letter which basically a response point-by-point to that what I thought was that really fantastic like free software’s charitable yeah and and it basically is very confused and I think you know your BA is multimedia software it’s a photo editor and and the the Yerba guys were so focused on having free software applications that address needs that are it were in you know proprietary software use cases and I thought it was very important for a free and open source software generally to have these applications but but for for various reasons I think the IRS was very reluctant in the same ways that they had hesitated over instant messaging I think it was sort of the same thing and in their letter it’s really interesting because it really shows how far they don’t like how much they don’t understand what we’re doing and you know looking at the yeah so this is kind of a dystopian quote I should probably talk

about this so so in this is my favorite quote in the in the IRS letter where effectively says that we have not found any authority for the proposition that the world is a community within the meeting of 501 C 3 the world is not a community like amazing right boop boop the world is not enough and so it’s really interesting there’s like such a disconnect between what the IRS is looking at and I I I totally understand this how many people here have watched the TV show Silicon Valley so like like half of us so in this Silicon Valley I actually enjoyed it I don’t watch a lot of TV but but I felt like it was kind of about our field so I wanted to see what it was about and I really enjoyed it and an in it in every episode there is some reference there’s some like you know investors some somebody who’s like a CEO of a company or somebody who has a new start who says I’m making the world better through blah blahdy blahdy blahdy blah insert whatever product they were creating here and we’ve become really you know we’ve that’s become really prevalent in in our community in a technology in general to say that we’re making the world better but free and open source software when done in a charitable way it is actually making the world better but because a lot of the language has been co-opted I don’t blame the IRS for being confused you know there’s a lot of reason for them to be hesitant to say well how do I know when this person says they’re making the world better that they really are and you can read that if you want to read the your burro ejection you can feel that in their ejection and this idea that the world is not a community is is sort of a part of their struggling you know they’re trying to figure out what makes sense to be charitable and what doesn’t anyway so word got out on a street in this we saw for a legal community that the hey everything’s terrible for charitable organizations now free software charities are not really a safe way to go and then we have another famous rejection for the OpenStack foundation and what was interesting about that so OpenStack is a trade association it’s a c6 and and they were refused for for the for their c6 status their trade association status and this amazing rejection which actually was signed by the head of exempt works like the person who was appointed following the scandal and what she says is anyone here involved in the OpenStack foundation so a few a few people um and what was interesting about the about this rejection is that the the OpenStack board had published their board meeting minutes and and clearly the examiners had read those minutes and exerted a lot of coats so this one is your that the board had taken a unanimous position that successful commercialization within a certain year remain the highest priority for them and and a trade association has to be a common business interest it can’t be creating a particular product it can’t be working together to basically be a company like a competitor existing business you know even if it’s collaborative even if multiple companies are working together on it and and so what was interesting about the fact that they had read all the minutes is that they exerted all of these quotes from the your president said this and so it was a really interesting thing and I think this is not I think the OpenStack people are still appealing it and it still correct me if there’s anyone so yeah so opens this it’s done it it’s not a final thing your but the Yerba organization decided not to bother they chose not to appeal or to follow the additional steps but OpenStack is their question so question is how do you appeal it how is it straight far how do you argue with this statement well the thing is that is that you know this statement is simply a quotation from a board meeting does it reflect necessarily so this is where you as a lawyer I would say does does it did that statement in the board minutes does that actually reflect the mission of the organization or was it something that that the board decided in one meeting that was a piece of a baro larger picture and and you there are different mechanisms for appeal I know that they that one of the the the ways of doing this that I think the OpenStack board was doing was they had meetings planned with with the IRS any show you can go and you could talk to them you can try to change their minds and then if that fails you can bring a lawsuit so there are different ways that you can do it and maybe the way that the IRS so like for example I think it was I’m much more in the c3 world you know I think your boat was really the wrong result for yerba if I had thought otherwise I certainly would not have pulled all-nighters on my Thanksgiving weekend forever for something that I didn’t believe was was truly charitable and you know it you know it’s the kind of thing where you might want to bring a lawsuit to basically clarify when to me when you

read the laws and the case law on what is charitable to me free software went done in a community-based way is you know fits squarely within that the way we have our our charities in the way we do things that Conservancy like Conservancy we have an evaluations committee that looks at conservancies mission looks at our mission to support and defend free in open source software so the so OpenStack foundation has to show the IRS that they are a common business interests rather than forwarding a specific product and they’ll be interesting to see where that goes now there’s new staff at the IRS it’s a different situation now than it was before however you know there is a clear skepticism for free and open source software and as I said based on the you know it’s a weird way that you know and I blamed the co-option of terminology just a few slides ago for for why it’s so confusing I said oh those companies that is they’re using they’re are making the world better and co-opting it for their for their you know for their for-profit initiatives I blame them but it’s more than that it’s also that one sometimes when people participate in free and open source software they get clumsy they forget who they’re working on behalf of they don’t I have another talk about like conflicts of interest and you know and and and and these things are really real and when and the more public situations there are of people who are working in foundations whether it’s C sixes or in in charities and are really forwarding their companies interests only or product or you know those muddy the water isn’t confused and they distract and it’s tough because because sometimes those corporate initiatives are very successful but they distract from our certainly from our charitable initiatives and our drive to make the world better through our free software community which is the very basis and foundation of free and open source software so so there have been you know new rejections but but a lot of orcs are getting approved too so it’s very confusing one thing that the IRS was very clear about when I would talk to them on the phone was that the rejections don’t impact existing organizations so these are this is just analysis for organizations that are new that are being set up but the organizations that have already been recognized is charitable they are not subject to re-examination right but it means that they need to be acting according to their mission but in a you know if there see three in a charitable way and if there are see six in an appropriate business interest way so so it doesn’t affect so it’s not like this catastrophic thing that some people had been portraying it as where suddenly we don’t have our charities or trade associations anymore but you know but people were then saying well we have no new no ability to make new organizations but that’s not quite true either so now a lot of the organizations that have gone through with approval have been ones that have sort of a you know a taste of public goodness or rightness so these are all all charities you know the things that where you can say sort of like in the way that with the instant messaging Freedom Foundation I was able to say you know there are these here are all these great uses that the work has been you know that the software has been used for that have provided real public good and that sort of thing so it’ll be interesting to see where this goes forward there’s a a working group that Conservancy launched with with OSI and there’s a wiki and a mailing list you can sign up to that guy is aaron williamson who is an awesome lawyer who also used to be with the software freedom Law Center and is now at a law firm and he is the chair of this committee and and the committee meets and and is basically watching a situation and also putting together materials to explain the situation and to help organizations that are starting to think about funding founding and one of the interesting parts of this initiative has been exploring different kinds of corporate forms so there are all clears like different kinds of forms in the United States for companies that for organizations that have like kind of a you know a public benefit in some ways but are for-profit entity and there are all these kind of hybrid models that might be useful should our C 3 and C 6 you know organizations prove not to be useful in the long run although I don’t see any there’s no real reason to get alarmist over that everything seems very positive for the existing organizations and since some new organizations have been approved I think it’s not really the problem we had previously thought that it might be so what should I do don’t form your own organization join an existing one there are situations where you might need to form your own organization but there are some great umbrella organizations I work at the software freedom Conservancy but when I was at this Carroll tier CIA will cheer I’m partial to the software freedom Conservancy but but but there are what’s so cool about free open-source software in our umbrella organizations is we’ve got a whole suite of umbrella organizations that do that have different functions they provide different services so software in the public interest for example since v-tail is sitting like right in front of me is

another is another umbrella organization where it’s sort of a little bit more lightweight than Conservancy so you’ll get you know basically with different organizations that you might join you know if you would join the Apache Software Foundation for example you you know there’s a license choice implicit in that and which is not true of SPI or or Conservancy so everything is sort of like a what are you looking for there we have a whole set of foundations that might possibly answer your you know like answer your need so that’s really useful and and you can even do you can even do the kind of thing where you join an organization while you contemplate an existing umbrella organization while you contemplate your own foundation so you can sort of experiment the waters we at Conservancy you know for example help the Midwest Foundation get started as their own organization and they joined us and now they’re their own independent organization and that worked out quite well so so I would say think about it before you before you go out and and try to form your own organization because it’s a lot of work for a very low gain and we have a lot of benefit in in our communities by saving and there’s some people nodding in a ceremony I know I’ve had a bad experience with trying to maintain yeah yeah and now Keith is raising his hand on behalf of X actually coconuts and series decide they just done it’s not a bad read just that it’s a lot of work to maintain in your own organization and that our fiscal sponsor organizations umbrellas like Conservancy are doing this for everyone so we only have to file one tax you know one tax form we only need one board at the top level and then we can have subcommittees for each of our projects so it really gives you a lot of flexibility and I’m available I don’t know whether we’ll we have time for questions okay so uh to say that that we like the other many of the other fiscal sponsors that I noted our charitable organizations ourselves we just a Conservancy launched a supporter program which I’m super excited about and as a charitable public facing organization we need to have diverse support from individuals because in order to be sure that we’re free from the kind of corporate control that we’re trying to avoid by having these organizations in the first place it will help us in general to state or mission if we’re funding is coming from a wide group of people who are you know who have every right to pressure us to stay focused on the public need so so that’s cool and if you if you can for it to become a member you should and if not you should and thank you because there are many actually supporters already in the room and if you’re and if you aren’t then please just help us spread the word it really means a lot and thank you guys you were all pretty much everyone was paying attention during the tax talk which is super awesome so applaud yourselves question we have maybe time for a couple of questions and there’s a break coming up so maybe we can stretch a little bit I suspect the answer is that I’m terribly naive you’re terribly naive thank you isn’t the rational response to simply incorporate in a different jurisdiction why are we so obsessed with America it’s a really good question and frankly I don’t know no I’m so it’s a good question and there have there are organizations so I think the document foundation is a good example of an organization that sort of said we don’t want any part of incorporating in the u.s. there have been all these problems we’re gonna go outside of the US and it sort of depends what your organization is trying to accomplish so if a lot of the things that you’re trying to do are outside of the United States if you’re trying to take in donations for an if you’re a charity and you want to have tax deductions which you can get then you probably want to be based in the jurisdiction where most of your donors are because they’ll be able to take taxes there are some jurisdictions where you can take deductions off your taxes from donating to foreign entities but but that’s I think the exception rather than the rule and so so that’s one of that’s one of the reasons the other thing is that in a lot of other jurisdictions it’s very difficult to and charitable organizations in particular have a lot of oversight and so there are some countries that have like different levels of of corporate form for a charitable deduction and I’m only I’m only a u.s. lawyer but free and open-source software is on such a global stage that that all these things become relevant but but you know having negotiated for example for one of the organizations I was involved with to do a partnership with a German charity there are a lot of very comparable levels of review and and problem I know of German charities that have had their tax status in trouble and some of these issues are analogous in different jurisdictions so what’s excited what’s good about the u.s. is that we’re starting to have this all played out so we’ve learned we’ve learned a lot because we’ve had so many organizations in the US and their organizations that exist already kind of know what they’re doing and then what we’re learning

through the whole process of going through this with the IRS and seeing which projects are getting which organizations are getting tax approval and which are getting rejected we’re going to have a much better knowledge of like where the limits are in our laws and if we start incorporating another jurisdiction we’re gonna have to find that out all over again again it might be worth it but I don’t know Karen like you I always refer to free and open-source software rather than just open-source software or just free software for the reasons that you describe I often also accused of being religious in my use of those terms a zealot and things like that and that’s got me thinking here in New Zealand you can be declared a charity on the basis of four criteria one of which includes promoting religion and there’s no there is no oversight there is no oversight as to what that actually means that I’m thinking that the one of the last freedoms in America is the freedom of religion and I’m just wondering what it would it make all this a lot of easier if you just simply declared free and open source software religion and then just tried to create organizations on that basis you’re not the first person to ask this question but you asked it extremely eloquently so so you could do it in the US tax code there is also religious organizations or you know our a category of care of a you know of nonprofit organization but you know from where I’m sitting while I think that some people do feel religiously about software freedom I I personally don’t think it’s going to forward our movement to newcomers to categorize ourselves as religious so for me and there are there downsides they don’t have to actually religious organizations don’t have to report in the same way that the charitable organizations do so there are some benefits potentially doing if there are a lot of downsides to and the the laws are just like you know are just different because they’re structured for religious organizations so it’s a good question since all my legal work at this point is predominantly pro bono and I you know I probably would choose that time to work on other things you want to it let me know what you find so you talked a little bit about the differences between say C agency sixes but mostly in terms of the criteria used to qualify and you’ve spoken about like difficulties and getting the IRS to recognize that you are such an organization can you say little bit more freely initiated about what it means to be such an organization like my understanding is that as C 3 gets to pay no income taxes and also gets to donors get to deduct the donations from their taxes but I imagine that might not be true for a c-46 for example okay so I totally glossed over a lot of the specifics of this stuff and and this is perhaps a moment to plug the odd cast so that I do with Bradley called free as in freedom where we talk we geek out a lot on nonprofits issues raise your hand if you’ve listened to this odd cast so so like a lot of people in this room there’s a joke that as somebody once asked me if or said to me oh that’s the the podcast that three people listen to so I sometimes like to ask because they’re almost always three listeners in the room and somebody wanted to make up a t-shirt that said I’m one of the three so we so we do talk about this in greater detail on a more specific basis between us c c 3 and c 6 in terms of the charity versus the trade association and what those differences are the biggest difference aside from their overall structure and what their direction is and what their mission is and how there’s their structured ac3 can if you donate to ac3 you can get a tax deduction if you donate to a c6 you can’t a c6 is necessarily controlled by its members so you know sorry so it has members treatises well it depends so a charity and a charity can have members or so like an example of this is the kinome foundation it has members that then elect the board but it doesn’t have to be like that the software freedom Conservancy from a corporate perspective doesn’t have members it has you know member project but it doesn’t have have members and it’s its board is is appointed and self-perpetuating and there are a lot of different hybrid masters and the same on the trade association you owe the trade association insertive also everything so there’s a lawyerly answer it depends yet you can’t buy you can’t buy board seats you can’t buy control of a charity for example but you you buy it you you almost always by definition can in a trade association on that point i’m you come come from obviously a c6 charitable oriented perspective what would be the great what would be the great policy problem or tragedy of the c6 model became non-viable for free software what would be the tragedy if c6 if your associations became non-viable if tax exemption for trade associations became a non viable model for nonprofits in the free and open source software space like i understand your view on on the

charitable side yeah charitable side it would be yeah i don’t know what your view is on the decision on on the open stack foundation but if that model becomes from the IRS is perspective they are if the IRS starts rejecting all of those kinds of applications what’s really the big deal because i mean what’s your view on that yeah i think that’s also a really good question i think you know i’m i’m not sure i mean i think part of it is that in our field we’ve come up with ways that we expect to collaborate from business perspective and so we have to figure out a different way and learn a new way i would worry that if there were in trade associations then C 3 organizations charitable organizations would start to get abused to try to accommodate some of the C sticks people will go through contortions to try to make really corporate-controlled free software projects fit within a charitable organisation role because there are some areas of abuse already in our field you know that asks why they don’t just offer na and they they click and they probably and there are some organizations the open invention Network is an example of a for-profit collaborative initiative that is is happening that means that if you look at oh IM doesn’t have any public filing so like for example you could so this is something i recommend to everybody is go check out the filings of organizations you’re interested in bradley wants to make a comment on oh yeah there’s a ‘get aureus repository that has the collected form 990 s which is the I know report with all the numbers and it’s cool you should go look and see how much people make check out their salaries it’s fascinating and you can check out things like how much did the organizations pay on legal fees and and it’s really it’s kind of dorky in a nonprofits way but it’s fascinating and it really tells you a lot about an organization and what they’re set up on what they’re doing with their resources so so you know I mean it took a question I mean I I don’t have a crystal ball so looking into the future it’s really hard for me to predict but you know I I agree with you that the situation were were the the c6 option to go away it would be less tragic than a charitable association we do have to wrap it up for now sadly and I’m sure we can just continue the discussion in the hallway and in the following days thank you thanks