[OSGeo-Conf] Tax Implications of FOSS4G

[Steve Swazee]

All,
In response to the question below, I will try to keep this as simple as I
can.

Early on in the Minneapolis FOSS4G effort, David Bitner requested that
SharedGeo serve as the entity that was legally supporting the event.  In
effect, SharedGeo would be OSGeo's "boots on the ground" for signing
contracts, managing funds, hiring bodies, etc. - as directed by the LOC.  To
formalize that relationship, OSGeo and SharedGeo signed a contract in August
of 2012.  A clause in that contract was specifically designed to allow
OSGeo, through The Committee, to take advantage of SharedGeo's 501 (c) 3
federally tax exempt status.  It reads as follows:

"OSGeo and SG acknowledge that no offer of Federal or State tax-exempt
status has been specifically extended by SG to OSGeo by this Service
Agreement, nor is such status expected by the OSGeo from SG through this
Service Agreement. However, both parties acknowledge that OSGeo intends to
create a "FOSS4G NA Conference Committee Project" ("The Committee"), to
which SG will assign a mutually agreed individual to serve as a volunteer
"no cost" project lead. As such, SG anticipates it will be able to extend
tax exempt status to all donations given to The Committee under a
"Pre-Approved Grant Relationship", provided The Committee so applies to SG."

Probably unknown to many in receipt of this discussion, nonprofits commonly
extend their tax exempt status to other organizations and "projects" which
do not enjoy that tax privilege under U.S. tax law.  One of the more
succinct descriptions of those arrangements is available on, of all places
(ha), Wikipedia:  http://en.wikipedia.org/wiki/Fiscal_sponsorship.  In
simplest terms, by making an event like FOSS4G-NA 2013 a project of an
entity with nonprofit status like SharedGeo, all proceeds received would be
considered tax exempt.  In the extreme, making OSGeo a sponsored entity of
SharedGeo, would make substantially all funds received by OSGeo tax exempt.
Obviously, the last scenario is something that flies in the face of the
independent nature of OSGeo and why the organization has been trying so hard
to achieve nonprofit status on its own.  Per Minneapolis, the thinking by
The Committee was the event would not make enough money where taxes would be
an issue.  Thus, The Committee never applied to make FOSS4G-NA 2013 a
SharedGeo "project", and close -out proceeds sent to OSGeo will be taxable
because it does not enjoy nonprofit status.  

FOSS4G is here to stay, and stay in a big way.  Your events are going to get
bigger and bigger with more and more money coming in through attendance and
sponsorship.  That's a great position to be in and if those "excess" funds
are properly managed by OSGeo leadership they can be used in meaningful ways
to further promote FOSS4G - Regional events, OSGeo Live, booths, promotional
materials, etc.  However, my personal advice to this esteem group would be
this - before visioning rebates and ticket costs just barely enough to cover
costs, I would suggest the real issue that needs to be tackled is: taxes.
Given Denver generated approximately a $120,000 profit, I don't think it is
at all unreasonable to believe 2014 will generate at least $150,000.  That's
a tax bill of approximately $41,750.  You can buy a whole bunch of USB's,
student admissions, OSGeo banners, code sprints, etc. for that kind of
smack.  It's a $41,750 question that all boils down contract construction.
The trick on that last point is making sure you crawl in bed with the right
party.

FWIW.

Best Regards,
Steve




-----Original Message-----
From: Darrell Fuhriman [mailto:darrell at garnix.org] 
Sent: Monday, July 08, 2013 5:00 PM
To: sdswazee at sharedgeo.org
Cc: conference_dev at lists.osgeo.org
Subject: Re: [OSGeo-Conf] Conference_dev Digest, Vol 70, Issue 18

> 
> talking about how to cut up the pie. Far more important to the discussion
> is, as profits rise, how to reduce the tax impact on the funds coming back
> to OSGeo.  That feature was built into the Minneapolis contract, but was
not
> utilized.  

For my own edification, could you expand on this some more?

> Both teams should also know that per SharedGeo discussions with Digital
> Globe, they have already offered their interest in sponsoring in 2014.

Great news, indeed!

Darrell