on nonprofit status and financial transparency

[Jo Walsh]

dear all,

About the most interesting talk i heard at the FLOSS Foundations
meeting last week was Justin Ehrenkrantz, the ASF's treasurer, on
nonprofit finance managment. He was parachuted into the position as a
new board member after ASF had been without a functioning treasurer
for a long time, spent 6 months picking up the pieces, and was full of
pragmatic advice, the most stellar piece for me being:

* Keep your quickbooks in subversion 

Financial transparency is going to be key to making the foundation
sustainable, and also to a successful application for nonprofit status. 

http://flossfoundations.org/index.cgi?ManagingTheFinancesOfAnOpenSourceNonProfit
Notes here are brief. My addenda are:

* Keep all your legal documents in the foundation's web space. This
  includes 990 letter, 10-23[sic?] forms, etc. cf 
  http://www.apache.org/foundation/records/
  
* There has been lobbying in Congress to extend Sarbannes-Oxley rules
  on corporate governance to nonprofits. This involves establishing an
  'audit committee' to oversee finances - directors + at least one
  financial expert - with open process. Wise to start preparing now.

* 501(c)3 really restricts what you can do. There is the 1/3 public
  support test; of that no more than 2% can be from any individual
  donor; you have to demonstrate proof of faith in seeking widespread
  public donations.

Mike Milinkovich from Eclipse also strongly recommended 501(c)6 - the
'trade association' flavour of nonprofit. He suggested that there is
much less heavy / intrusive pre-inspection from the IRS for a 501(c)6
as well as much more freedom to accept larger amounts of corporate
sponsorship without having to balance against public donations.

I have no idea how "project-directed funding" would impact on this -
if money flows through the foundation, it is the foundation's?

I think that Lisa, Autodesk's new consultant who Mark and I and others
got to meet at OSCON, who also has a background in nonprofit
management, and is 'tasked' to dedicate time to us, would be motivated
to help OSGeo set this on a stable basis. Scott Emmons from UNBC who was
also helping at the OSGeo booth - his group supports the FIST mapping
toolkit project - also has a nonprofit management background and
seemed really interested in helping. Perhaps we could think about
starting a working group to dig into these kinds of issues.

Overheard at lunch one day, someone asking a Python Foundation guy "is
your foundation active?" "Well, the board meets once a month." 
"Oh, so you're *really* active." This gave me pause for thought - a
lot of stuff is bottlenecking with us - not that bottlenecking is a
bad thing - but perhaps we can collectively offload more priorities to
different committees / working groups than we are doing - and i hear
it's best practise to keep fundraising and finance managment as
separate activites (though not always plausible in a small org) -
which is why i'm not also cc'ing this to FunCom...

cheers, apologies for my burst of dull pragmatism... it won't last :)


jo