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Foundations.md

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Foundations in Open Source

  • Project growth eventually finds a need for the project to become its own entity
    • Accepting donations on behalf of the project
    • Purchasing things on behalf of the project
      • Web hosting
      • Servers
      • so on
    • Enforce trademarks
    • Disconnect from the founding company/person
      • Shows the project is stand alone
      • Helps avoid concerns about a single interest commandeering the project
  • Enter: foundations!
    • See definition of foundation (non-for-profit)
  • A legal "entity"
    • It is it's own person in legal terms
    • Similar to a corporation in this respect
    • Gains the benefits of being its own entity
      • Can have bank accounts
      • Can own trademarks/copyrights
  • As a legal entity, has legal requirements
    • Helps separate concerns about money coming in/out
    • Accounting and auditing laws, etc
    • Some foundations (non-for-profits) have specific requirements (more on that later)
  • Important things about such a structure...
    • This requires a lot of management
      • A foundation generally has a board
      • Auditing and tax requirements
      • Legal/trademark knowledge
    • Pull the concerns apart
      • Let the developers develop
      • The foundation needs folks to manage it separately
  • Generally advised for projects to join an already established foundation
    • The foundation has figured out the rules
    • The foundation has gotten into their groove
    • Trying to do this on your own is really hard
  • Most OSS foundations exist to absorb the work that developers don't want to do

Most popular US non-for-profit types

  • Different types have different requirements
  • Common 501(c) things
    • non-for-profit organizations
    • Can receive unlimited contributions from individuals, corporations and unions
    • Exempt from some or all federal income taxes
  • 501(c)3 - Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations
    • Types
      • Public charities
        • Receive most income from general public or gov't
        • At least 1/3 must come from a broad base of public support
      • Private foundations
        • Non-operating foundations
        • Typically exist to support other charities through grants
      • Private operating foundations (a hybrid of the first two)
    • Highly regulated
      • No activities nor the net earnings can unfairly benefit any director, officer, or any private individual
      • Must avoid political involvings
    • Software foundations such as this are "for the public good"
    • Can operate outside the US
    • Donations are tax deductible
    • Highly regulated
  • 501(c)(6) – Business Leagues, Chambers of Commerce, Real Estate Boards, etc.
    • Not organized for profit and no net earnings go to any private entity
    • Exempt because they promote business interest that improve business conditions rather than actually conduct the business
      • Would not qualify if activities secure benefits for particular members (must be all)
      • Not applicable to hobbies
    • Are allowed to participate in political activities (lobbying)
      • Can attempt to influence legistlation related to the business interests of the membership
    • Membership dues...
      • Tax deductible generally as a business expense
      • Not all tax deductible if the main purpose of the nonforprofit is political influence

Popular OSS foundations

  • Apache Software Foundation
    • 501(c)3
    • All volunteer - even the board
    • Currently the largest foundation
  • Software Freedom Conservancy
    • 501(c)3
    • All volunteer - even the board
    • Will fight license violations
  • Linux Foundation
    • 501(c)6
    • Corporate member driven, plus committers and fellows
    • Trade association
  • Eclipse Foundation
    • 501(c)6
    • Corporate member driven, plus committers and fellows
    • Trade association

Vocabulary

  • Foundation - a legal category of nonprofit organization that will typically either donate funds and support to other organizations, or provide the source of funding for its own charitable purposes.