Community Leadership Summit Wiki

Leader: Deb Bryant @debbryant

Notes: Michael Downey @downey

Disclaimer: Nothing here should be construed as legal advice because none of us are lawyers!

Discussion Notes[]

  • Introductions from attendees. Many from projects who (a) have formed, (b) are forming, or (c) waiting for determination for federal non profit status.
  • Recent issues with the IRS scruity of political groups also included open source on their "watch lists". Is someone "out to get" open source, or is it just how IRS makes decisions? Maybe we shouldn't jump to conclusions. 
  • Open Source Digital Voting ( has been waiting on determination since November 2009. Not really a political group -- all parties involved. 
  • IRS concerns often seem to center around private (for-profit) entities who could derive benefit from non-profit open source.
  • Process
    • Org submits application
    • IRS reviews application
    • IRS may send follow-up questions
    • Org responds to questions
    • Additional rounds of Q&A may follow
    • ???
    • Determination
  • CASH Music ( still waiting for determination. Maybe a bad choice of names?
  • OpenEMR's foundation's first iteration might have been too detailed and stalled out. Their second attempt was more generic, and was successful in a few months.
  • Why would a project want to get federal non-profit status vs. alternatives?
    • Can't find an alternative "host" that matches values/needs (license, e.g.)
    • Fiscal sponsors can come with strings attached - fees/overhead, copyright/ownership, etc.
    • Some donors can only work with federal non-profit orgs (based on those donors' charters)
    • IF you ARE doing charitable outreach/work, 501(c)(3) can be a very good fit. Often free services or products if you have this status. 
    • Some perks are available just because you have the status; many orgs refuse otherwise.
    • If you're working with other non profits, 509(a)(3) supporting organizations are designed to serve existing non-profits. OpenMRS is an example (supported orgs are Indiana University and Partners In Health) with determination in progress, docs at:
  • Alternatives to non-profit corporations:
    • Fiscal sponsors
    • Hosted under umbrella organizations
    • State charters for corporations usually have a low barrier to state non-profit status. May just bypass federal non-profit status and keep state only.
    • Many states have public benefit corporations (B corps)
    • Cooperatives (vs. corporations) can often be not-for-profit at the state level (laws differ by state) - e.g. Tillamook cheese sued by Monsanto (
    • You can start under a fiscal sponsor and then as you grow, then later mature into your own organization w/ 501(c)(3)
    • Crowdfunding -- lots of alternative providers
    • Accept donations from users within your software (e.g. NoScript, Wikipedia, et al.)
  • IEEE has a 501(c)(6) member organization called ISTO that provides infrastructure services to other orgs. 
  • It's important to create governance & bylaws appropriate for the type of organization tax status you want to use. Open Source Initiative is changing its structure and faces some of these issues.
  • Every viable org needs revenue. Where is the revenue coming from? Do those sources require a tax deduction?
    • If yes, get non-profit status.
    • If no, may not be necessary.
  • Make sure your org can deal with the regualtory hoops necessary to be a non-profit.
  • You've got 501(c)(3) - now what?
  • Do you have a plan?
  • Do you have a mission? Is it right?
  • If you have a good lawyer, and you are indeed qualified, you shouldn't have too many problems. (??)
  • Example: Free Software Foundation has started a small fiscal sponsorship for projects under the GNU umbrella. They are still very selective about who they bring in.
  • Many non-profit open source orgs are designed to NOT produce software.
  • Why WOULDN'T you want a 501(c)(3)?
    • Legal costs
    • 990 tax paperwork can be more painful

Open Questions[]

  • What is the government's perception of software? Are people in the IRS thinking of Bill Gates and Steve Jobs? Is the "why" of free & open source software getting lost amongst the "what"?
  • Are too many people "taking advantage" of non-profit status for what "should" be for-profit open source projects?
  • Is federal non-profit status necessarily right for "your" organization? Many factors should be considered to understand if it's REALLY beneficial. Don't do it just to do it.
  • Should the Open Source Initiative start a working group on this topic?
  • Should FLOSS groups band together to provide education and advice to IRS?
  • Should the IRS give non-profit status to ANY group that creates a product that COULD then become commerialized by a 3rd party?
  • Where are the puppies and children that are benefitting from FLOSS project activities?



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