[Board] IRS response to OSGeo's 501c3 and discussion of our options

[Daniel Morissette]

Hi Eli,

(Sending response back to board list)

There are two parts to the answer to your question:

1- OSGeo currently has ~30k$/year in regular sponsors that could be used 
to fund those activities. (BTW I have not invoiced those sponsors for 
their 2013 renewal yet because I am waiting on the outcome of this IRS saga)

2- One of the questions that I had sent to our attorney was whether the 
Education/FOSS4G-centric c3 could transfer some money to the OSGeo 
for-profit entity to support its activities. The answer he gave me 
yesterday (and that should be in his written response today) is that NO, 
a 501c3 CANNOT give a grant to a for-profit entity to perform activities 
that the c3 would not have been allowed to perform itself in the first 
place.

So in the end, you are raising a good issue, the for-profit entity would 
be limited to fundss that it can raise itself and could not use FOSS4G 
profits for its activities.

That's one of the reasons why the "single 501c6 entity" scenario sounds 
like a better alternative. More on this shortly I hope.

Daniel



On 13-08-13 1:09 AM, Eli Adam wrote:
> Daniel,
>
> Just a practical budgeting question: how would OSGeo the extremely low
> earning, for-profit entity (server and bandwidth expense, etc) get
> enough money to exist?  Historically, I think that FOSS4G gets a lot of
> sponsorship and OSGeo gets rather minimal sponsorship.
>
> So simply put, does OSGeo currently get enough sponsorship (at the
> exclusion of FOSS4G) to continue existing?  If not, this does not seem
> like a good option to pursue, unless there is some way that form of
> OSGeo can continue to financially exist.
>
> I obviously have no concerns about FOSS4G; it will continue to be a
> successful conference with financially stability, the question here will
> really be what to do with the money.  Perhaps foss4g will be
> substantially cheaper, go to large loss locations frequently, offer lots
> of free admission to students and developers, or otherwise find
> something to do with the money?  I would argue that traditional OSGeo
> functions are good things to spend it on since foss4g minus OSGeo and
> all the OSGeo projects would be a rather bland conference, but that
> argument does not seem to be permitted/acceptable.
>
> I've chosen to share these thoughts privately, if any are relevant and
> appropriate for public discussion, you can bring them up.
>
> Eli
>
> Hi Board,
>
> As I wrote a few days ago, we had a conference call a few weeks ago
> between myself, the IRS agent responsible for our 501c3 application, and
> our attorney David Atkin. In the call we discussed the IRS position and
> our possible options, and I asked David to summarize that in a
> letter/report to share with the rest of the board.
>
> I just got this letter/report form David tonight and attached a copy.
> There are a few points that were discussed in the call that are not
> clear in the document, so I just emailed David to ask for clarifications
> that I will share, but I thought I would share this first version with
> you all right away.
>
> We have until August 31 to respond to the IRS indicating which way we
> want to go, so we need to discuss this now and make a decision on those
> tough questions soon. I realize that timing is not ideal with the
> election but we need to act on this ASAP.
>
> Even if that's not obvious by reading the letter, there is a possible
> path forward that the IRS would agree to and with minimal tax
> implications relative to the accumulated surplus that serves as a
> cushion/seed money for FOSS4G, but that would imply running two
> organizations in parallel as described in the letter.  More on that
> later once I get the response from David to my questions sent a few
> minutes ago.
>
> Finally, David offered to participate in our next board meeting to
> answer any questions we may have. We may also want to hold a separate
> special meeting on this topic alone, perhaps over phone or skype as this
> is what David would be most used to.
>
> Daniel
>
>
>
>
>
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>


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Daniel Morissette
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