[foundation-board] Fwd: foundations Digest, Vol 64, Issue 6

Jo Walsh metazool at gmail.com
Thu Nov 25 12:37:28 UTC 2010


Below, an interesting discussion about suitability different legal 
vehicles for non-profit FOSS foundation activities in the UK.

http://okfn.org/about/ - OKF is a not-for-profit company limited by 
guarantee, like ORG; what special obligations does the non-profit part 
incur?

The "Community Interest Company" vehicle looks interesting - would there 
be a benefit to OKF in this status? http://www.cicregulator.gov.uk/


----

Today's Topics:

    1.  LibreOffice / UK foundation ... (Michael Meeks)
    2. Re:  LibreOffice / UK foundation ... (Ben Laurie)
    3. Re:  LibreOffice / UK foundation ... (Ross Gardler)
    4. Re:  LibreOffice / UK foundation ... (Charles-H. Schulz)
    5. Re:  LibreOffice / UK foundation ... (Karanbir Singh)
    6. Re:  LibreOffice / UK foundation ... (Elin Waring)


----------------------------------------------------------------------

Message: 1
Date: Thu, 25 Nov 2010 10:27:06 +0000
From: Michael Meeks <michael.meeks at novell.com>
Subject: [Foundations] LibreOffice / UK foundation ...
To: foundations at lists.freedesktop.org
Message-ID: <1290680826.19831.71.camel at linux-3bmr.site>
Content-Type: text/plain; charset="UTF-8"

Hi guys,

	We're looking at setting up the LibreOffice foundation; and there are a
number of interesting issues, advice appreciated.

	Firstly - much as I like the US as a jurisdiction, some
	communities (such as Brazil) strongly prefer somewhere else.

	Secondly - we have a semantic problem where 'Foundation' means
	different things: to the Germans it means a vast pile of cash
	that you only spend the interest on; to much of the rest of the
	world it is a meaningless designation for 'independent
	non-profit' if that (the Symbian Foundation seems to just a
	company).
		+ AFAICS no company is going to give money annually if
		  it is just going to be piled up, and not spent,
		  do others concurr ?

	So - I'm trying to dig into UK non-profit setup; it seems that the best
effort is a "Charitable Company limited by guarentee" - limiting the
liability to it's trustee/board-members to $1 or so, being tax
deductable, and so on.

	My question (wow it took a long time coming) - is, does anyone have a
nice template for this in the UK ? - definition of Charitable Purpose (I
assume 'education' is sufficient - but might that cover writing code ?),
and Public Benefit. Clearly having something to build from would be
extremely helpful.

	Investigations by others are going on for a French, and German
'foundation' - though these would take different legal structures
variously. Advice much appreciated,

	Many thanks,

		Michael.

-- 
  michael.meeks at novell.com  <><, Pseudo Engineer, itinerant idiot



------------------------------

Message: 2
Date: Thu, 25 Nov 2010 10:57:53 +0000
From: Ben Laurie <ben at links.org>
Subject: Re: [Foundations] LibreOffice / UK foundation ...
To: foundations at lists.freedesktop.org
Message-ID: <4CEE4131.3070005 at links.org>
Content-Type: text/plain; charset=ISO-8859-1

On 25/11/2010 10:27, Michael Meeks wrote:
> 	So - I'm trying to dig into UK non-profit setup; it seems that the best
> effort is a "Charitable Company limited by guarentee" - limiting the
> liability to it's trustee/board-members to $1 or so, being tax
> deductable, and so on.

There's also the relatively recent invention, the community interest
company. Haven't decided quite what I think about these, but they are
more flexible than charities.

-- 
http://www.apache-ssl.org/ben.html           http://www.links.org/

"There is no limit to what a man can do or how far he can go if he
doesn't mind who gets the credit." - Robert Woodruff


------------------------------

Message: 3
Date: Thu, 25 Nov 2010 10:40:23 +0000
From: Ross Gardler <rgardler at apache.org>
Subject: Re: [Foundations] LibreOffice / UK foundation ...
To: "michael.meeks at novell.com" <michael.meeks at novell.com>
Cc: "foundations at lists.freedesktop.org"
	<foundations at lists.freedesktop.org>
Message-ID: <41A2A070-5A91-4090-9CED-77B38D83C793 at apache.org>
Content-Type: text/plain;	charset=us-ascii

Mongols for a detailed response right now, but I wonder why you feel a 
CLG is preferable over a charity?

One key difference is that a charity cannot generate revenue and thus is 
often seen as more neutral. On the other hand being able to generate 
revenue can be handy.

Either way, I run a publicly funded (i.e. free at point of use) FOSS 
advisory service in the UK and have access to lots of free resources 
that may be able to help here.

I'll make some enquiries when I'm next in the office and get back to you.

Ross


Sent from my mobile device.

On 25 Nov 2010, at 10:27, Michael Meeks <michael.meeks at novell.com> wrote:

> Hi guys,
>
>    We're looking at setting up the LibreOffice foundation; and there are a
> number of interesting issues, advice appreciated.
>
>    Firstly - much as I like the US as a jurisdiction, some
>    communities (such as Brazil) strongly prefer somewhere else.
>
>    Secondly - we have a semantic problem where 'Foundation' means
>    different things: to the Germans it means a vast pile of cash
>    that you only spend the interest on; to much of the rest of the
>    world it is a meaningless designation for 'independent
>    non-profit' if that (the Symbian Foundation seems to just a
>    company).
>        + AFAICS no company is going to give money annually if
>          it is just going to be piled up, and not spent,
>          do others concurr ?
>
>    So - I'm trying to dig into UK non-profit setup; it seems that the best
> effort is a "Charitable Company limited by guarentee" - limiting the
> liability to it's trustee/board-members to $1 or so, being tax
> deductable, and so on.
>
>    My question (wow it took a long time coming) - is, does anyone have a
> nice template for this in the UK ? - definition of Charitable Purpose (I
> assume 'education' is sufficient - but might that cover writing code ?),
> and Public Benefit. Clearly having something to build from would be
> extremely helpful.
>
>    Investigations by others are going on for a French, and German
> 'foundation' - though these would take different legal structures
> variously. Advice much appreciated,
>
>    Many thanks,
>
>        Michael.
>
> --
> michael.meeks at novell.com  <><, Pseudo Engineer, itinerant idiot
>
> _______________________________________________
> foundations mailing list
> foundations at lists.freedesktop.org
> http://lists.freedesktop.org/mailman/listinfo/foundations


------------------------------

Message: 4
Date: Thu, 25 Nov 2010 12:29:32 +0100
From: "Charles-H. Schulz" <charles.schulz at documentfoundation.org>
Subject: Re: [Foundations] LibreOffice / UK foundation ...
To: foundations at lists.freedesktop.org
Message-ID: <20101125122932.3edf233a at documentfoundation.org>
Content-Type: text/plain; charset=ISO-8859-1

Hello all,

I thought I might jump in this discussion.
I am quite interested as well in the UK option.
It plays well along the two other candidates, now being the French and
German foundations. I don't know much about the german ones but for the
french foundations a new form of entity -still a foundation under the
law- has been invented in 2008 and is called a "fonds de
dotation" (dotation fund) that combines some of the flexibility of a
non profit while still remaining a foundation.

What's interesting with European continental foundations -these are, as
Michael pointed out, a distinct legal construct from non profit
corporations or simple associations - is their rigid structure and
their fundamental goal: to collect donations, most of the time covered
by a generous tax break, and to spend the donations while retaining a
large capital expressed either in currency or in holdings (real estate,
securities, etc.).
European Foundations thus tend to be a financial instrument more than
an entity bearing the name and title of a FOSS project. I thought I'd
be mentioning this in passing if there were any interested takers of
such an option here.

Cheers,

Charles-H. Schulz.


Le Thu, 25 Nov 2010 10:57:53 +0000,
Ben Laurie <ben at links.org> a ?crit :

> On 25/11/2010 10:27, Michael Meeks wrote:
> > 	So - I'm trying to dig into UK non-profit setup; it seems
> > that the best effort is a "Charitable Company limited by guarentee"
> > - limiting the liability to it's trustee/board-members to $1 or so,
> > being tax deductable, and so on.
>
> There's also the relatively recent invention, the community interest
> company. Haven't decided quite what I think about these, but they are
> more flexible than charities.
>



-- 
Charles-H. Schulz
Membre du Comit? ex?cutif
The Document Foundation.


------------------------------

Message: 5
Date: Thu, 25 Nov 2010 10:58:47 +0000
From: Karanbir Singh <kbsingh at centos.org>
Subject: Re: [Foundations] LibreOffice / UK foundation ...
To: foundations at lists.freedesktop.org
Message-ID: <4CEE4167.1080304 at centos.org>
Content-Type: text/plain; charset=ISO-8859-1; format=flowed

On 11/25/2010 10:27 AM, Michael Meeks wrote:
> 	So - I'm trying to dig into UK non-profit setup; it seems that the best
> effort is a "Charitable Company limited by guarentee" - limiting the
> liability to it's trustee/board-members to $1 or so, being tax
> deductable, and so on.

Did you also look into Community Interest Companies ?
http://www.cicregulator.gov.uk/

Earlier this year I had the opportunity to meet with a couple of guys
from the Charity Commission, and they were not all that keen on
recognising 'development of open source software' or 'promotion of open
source process, methods and ideology' as a Charitable purpose.

They do, however, recognise advancement of science as something
suitable.
http://www.charity-commission.gov.uk/Charity_requirements_guidance/charity_essentials/public_benefit/Advancement_of_the_arts.aspx

Regards,

-- 
Karanbir Singh
+44-207-0999389 | http://www.karan.org/ | twitter.com/kbsingh
ICQ: 2522219    | Yahoo IM: z00dax      | Gtalk: z00dax
GnuPG Key : http://www.karan.org/publickey.asc


------------------------------

Message: 6
Date: Thu, 25 Nov 2010 06:37:45 -0500
From: Elin Waring <elin.waring at gmail.com>
Subject: Re: [Foundations] LibreOffice / UK foundation ...
To: michael.meeks at novell.com
Cc: foundations at lists.freedesktop.org
Message-ID:
	<AANLkTi=84AkuRQSxvUWsv5fx5tTDc3KAZQy6Y0=ieZ-b at mail.gmail.com>
Content-Type: text/plain; charset="iso-8859-1"

I don't have advice about the UK but here are some other things to think
about. It's really great that you are doing this research first because
there are definitely serious implications.

Foundation is definitely a problem word internationally and in the US as
well (just read the tax code on what a foundation is to see). Also in some
places (Germany is one) the idea of a not for profit being incorporated is
considered bizarre since that is a term used for for profits. Where ever you
end up plan on having to provide explanation to your community members from
other countries about terminology and rules.

Also, in many locations it is not just country but also region that has
implications on the rules. For example in the US each state has its own
rules for incorporation and for the operation of non profits and
charitable solicitation specifically. From experience I can tell you that
you should never incorporate a non profit in New York if there is any way to
avoid it, as one example.

Non profit law and non profit tax law are both very complex and as an
organization you could end up with assets worth millions of dollars if you
are successful,  your trademark(s) being the most obvious but also your
domain, your mailing list,   and any contracts you make that leverage those
(for example the Joomla! project earns money by having a contract with
Pearson for a Joomla! Press imprint; Mozilla Foundation has its contract
with Google.). So you should think carefully about what the implications of
that are under various legal systems and what that means in terms of the
fiduciary responsibilities of board members and what flexibility you have to
leverage those assets for the benefit of your project.  Even on licensing
you should consider that some countries have a set of legal precedents about
free software licenses and others do not.  One of the main purposes of a non
profit is to take care of licensing issues so you want to also make sure
that where ever you end up you have access to legal counsel that is skilled
in that and that it is affordable for you.

If you think there are some companies that might give annually then you
should consider talking to them about how this decision might impact their
thinking. Many companies do not do FLOSS support as part of charitable
giving, not only is there no tax advantage to it for companies (in general
charging it as a business expense is better in the US for example) it would
be very questionable for them to claim supporting a project that they
receive benefit from as charity. So having the possibility of tax
deductibility may not actually be that important. Further, if you have
individual donors from around the world the issue of deductibility turns out
not to even be meaningful in many countries.

You might also want to consider issues like how hard it is to get and
maintain "charitable" status. For example in the US it's not automatic that
you get approval from the IRS to be a 501c3 even if you are incorporated as
a non profit. You have to meet certain standards annually and then there are
in fact many different ways that can play out especially if your support is
not mainly from the public. You need to make sure you understand the rules
in whatever country you choose.

So some questions you might have in your decision matrix:
1. What are the legal obligations and risks for board members of a non
profit located in this country and with this specific non profit form?
2. What are the limitations on allowable income generation activities?
3. What are the rules for soliciting support in that jurisdiction?
4. What are the annual legal filings going to be and how much are they going
to cost? That includes preparing taxes but also any regulatory filings (e.g.
in New York a charity has to file certain paper work with the state each
year).
5. How friendly is the legal jurisdiction for FLOSS licensing.
6. What are the rules for carrying out business electronically? Do we have
to have physical meeting annually or possibly more often?

LibreOffice has special opportunities and challenges  because of starting
out essentially as a mature product and because it is an end user oriented
product. It's tricky because you're not two people in a dorm room making
this decision on your own, you already have huge constituencies which is
both a blessing and curse. So it's great that you are attempting to do this
thoughtfully and taking concerns seriously. It sounds like you are limiting
yourself to EU countries so you might want to invest in some consultation
with an EU firm that specializes in non profit issues.

Elin

On Thu, Nov 25, 2010 at 5:27 AM, Michael Meeks 
<michael.meeks at novell.com>wrote:

> Hi guys,
>
>        We're looking at setting up the LibreOffice foundation; and there
> are a
> number of interesting issues, advice appreciated.
>
>        Firstly - much as I like the US as a jurisdiction, some
>        communities (such as Brazil) strongly prefer somewhere else.
>
>        Secondly - we have a semantic problem where 'Foundation' means
>        different things: to the Germans it means a vast pile of cash
>        that you only spend the interest on; to much of the rest of the
>        world it is a meaningless designation for 'independent
>        non-profit' if that (the Symbian Foundation seems to just a
>        company).
>                + AFAICS no company is going to give money annually if
>                  it is just going to be piled up, and not spent,
>                  do others concurr ?
>
>        So - I'm trying to dig into UK non-profit setup; it seems that the
> best
> effort is a "Charitable Company limited by guarentee" - limiting the
> liability to it's trustee/board-members to $1 or so, being tax
> deductable, and so on.
>
>        My question (wow it took a long time coming) - is, does anyone have
> a
> nice template for this in the UK ? - definition of Charitable Purpose (I
> assume 'education' is sufficient - but might that cover writing code ?),
> and Public Benefit. Clearly having something to build from would be
> extremely helpful.
>
>        Investigations by others are going on for a French, and German
> 'foundation' - though these would take different legal structures
> variously. Advice much appreciated,
>
>        Many thanks,
>
>                Michael.
>
> --
>  michael.meeks at novell.com  <><, Pseudo Engineer, itinerant idiot
>
> _______________________________________________
> foundations mailing list
> foundations at lists.freedesktop.org
> http://lists.freedesktop.org/mailman/listinfo/foundations
>
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