Ask Slashdot: How To Get Open Source Projects To Take Our Money? 301
New submitter wkaan writes "Last financial year, we had an underspend at work, and it was suggested and agreed that we should give some cash away — $20k to be exact — to open source projects. Four projects were selected. A management catch was that it could not appear to be a donation and it had to be for something we had notionally received in the current financial year. At that time it was early June, our financial year finishes at the end of June. The four projects were emailed using the most relevant looking contact address on their website. Often this was 'Finance' or 'Donations' contact. What do you know, none of the projects that were contacted could work out a way to accept our money. We were unable to give a cent of the twenty grand away, not even a cent. All somebody needed to do was invoice us for something (perhaps 'support' or whatever) and they'd have received $5000. Of the projects contacted, two never replied to our mail — perhaps they thought it a scam? The other two contacted couldn't work out what to invoice and just went away. Is open source too rich to need the money? Have you got a funny donation story? Better still, do you have a way this can be streamlined when we have our next underspend? The goal was not to have a funny (sad) story, but to support the projects that support our business." For those of you with open source projects for which would you would like to take donations but sometimes cannot, what complications get in the way?
IRS (Score:2, Informative)
"For those of you with open source projects for which would you would like to take donations but sometimes cannot, what complications get in the way?"
Why? Because IRS, that's why.
tax fraud (Score:4, Informative)
Re:Try actually donating? (Score:2, Informative)
The problem is that being setup to do what the company was asking can take a lot of work. A group of developers working together to push out a project is a simple thing to organize. As soon as you start turning it into a business, you need to incorporate or form some other legal entity and that usually involves lawyers and such. Going through all that hassle for a 1-off contribution is probably not worth it.
When contacting the organization failed, the company should have contacted the individual developers and offered to pay them as a 1099. There's money lost to taxes that way, but it's a much easier setup for part-time developers to deal with.
501(c)(3)'s CAN CHARGE FOR SERVICES!!!!! (Score:4, Informative)
Where is this BS that a 501(c)(3) cannot bill or send invoices? They are not donation only entities.
As long as the billed service is for volunteered work/services and the 'profit' goes to furthering the 'cause' its COMPLETELY ACCEPTABLE to send an invoice.
Re:$20,000 hammer (Score:5, Informative)
From you:
!" I won't even bother digging back through years and years of older postings; the answer is always the same ... SUPPORT. They pay you to support your program. You know, with technicians, and bug fixes, and the expertise to solve break/fix issues.
From TFS:
All somebody needed to do was invoice us for something (perhaps 'support' or whatever) and they'd have received $5000.
So, I shall leave the last quote from you:
It's depressing how Slashdot has rapidly descended...
Re:Try actually donating? (Score:4, Informative)
Well, the invoice part is not that odd – non-profits do it all of the time. When they buy something they get a invoice. When they sell something they generate a invoice. And it is not odd for non-profits to sell stuff. For example my local botanical garden, which is non-profit, will send invoice you if you hold a wedding on the grounds.
When you make a donation you should get a receipt – proof for the IRS.
When you donate you might be able to specify a very specific project. Real life example – “Richard Johnson Memorial Urinal. “ (I hope he had a sense of humor)
You might be able to demand a review of the accounting for a project. This is generally done for people who have made large donations and will likely make more donations if they know they money is well spent. Heck, sometimes they hire outside auditors.
However, I have never heard of a donator asking for a specific invoice. In my example, the plumber’s bill.
Re:Non Profits (Score:4, Informative)
The Girl Scout Cookies I bought disagree with you. Yes, I know those are goods and not services, but a car wash fundraiser would fit. The question of whether you are non-profit has everything to do with what happens to surplus proceeds.
Re:$20,000 hammer (Score:5, Informative)
All of the answers here seem to be coming from people who have never worked (or don't understand) how the commercial world works and are saying "scam" "fraud" and accusing you of all sorts of nonsense. They are full of it, ignore them.
I get it - your department has a budget for software. Your budget is annual, and at the end of the year, you realized you hadn't spent your entire budget. Someone goes, "hey, let's support open source - we use it!". You then try to find open source to support, and pick four projects, and have zero success getting people to take the money. You have to get them to take it quickly, because if you don't spend the money by the end of your accounting year, it is gone. This is totally normal.
I think the issue is, (a) the people who work on open source sometimes don't understand how businesses work and (b) they are (like everyone should be) tuned into the fact that there are scams out there and things that sound too good to be true sometimes are. But at the end of the day, all you want is a receipt from them saying "we took your money", because otherwise your company will think you created a shell company and paid yourself. You don't care if it is a donation - you don't want the tax credit - you just need a receipt to satisfy your corporate anti-fraud processes. There is no fraud in paying someone for having done something in the past, i.e. having written open source software.
My suggestions, having never done this - you need actual human contacts set up in advance who believe your story. They need to understand how businesses work (it sounds stupid to people outside of large companies that budgets go away if you don't spend them, but unfortunately the world does work that way regardless of whether it sounds stupid). Maybe posting to a mailing list / support forum, instead of trying to email individuals, would get your more traction. You literally just need one prominent developer on the project to take the money - it doesn't have to be the "project", which may not even exist as a traditional legal entity. They will have to pay taxes on the money as income, which isn't a scam, but it also isn't your problem if you are paying them, it's theirs (legally).
Re:Income Tax (Score:4, Informative)
Just like Warren Buffet says (paraphrased), just because you'll have to pay tax on it, doesn't make anyone stop trying to earn an extra dollar.... except apparently you.
But paying tax so you can earn nothing more is often a reason not to earn more.
Some company with a few extra bucks wants to "donate" money to you in exchange for "services". Since you weren't before, you now need to become a business and start paying self-employment taxes. And taxes on income. To the state, to the feds, and maybe to your local city. You need to spend the time on the paperwork, and sometimes a mid-year surprise payment (like at June 30) will trigger penalties for failure to pay quarterly taxes.
That last one bit me when I was let go from my last job. I had a pile of options that were bought back, I had a sudden influx of taxable income. I spend most of the year unemployed, but when I filed my taxes I wound up having to spend a lot of time explaining to the friendly IRS that I had no way of predicting I was going to be fired and thus no way of knowing I was going to need to pay estimated taxes in the quarter before the actual yearly filing date. It took a lot of my time getting this straightened out. Time an OS developer might want to use to develop software, and a cost of getting "free money" that you've forgotten to include in your "extra dollar" calculations.
And then, now there is a company out there that has an official receipt for money in exchange for "support". Hey, we need these things included in your software. We're paying for support ...
I tried something like that a while back. (Score:2, Informative)
I tried to get David Harris to let me pay him to do stuff on Pmail. I tried to get Red Hat to let me pay them to do stuff on Red Hat. I offered to give them signed contracts that said they weren't responsible if they ran out of (my) money before they finished. I offered to give them non-competition agreements and non-disclosure agreements. I offered to execute a contract to their specifications and requirements in Delaware (with its famous chancery) or their choice of other country or state. Everyone I contacted (except the Samba Team) reacted with apathy or belligerent distrust. I never asked for anything at all from them, just offered to give money with a suggestion of what new features or bugfixes I'd like pursued.
But basically, only the Samba team seems to be able to handle this sort of thing. Everybody else involved in Open Source is apparently too busy coding to make gainful, responsible financial decisions. Ballmer is laughing somewhere in a solid gold armchair, because samba's basically a part of the MS software ecosystem.
And as for the people who are so untrusting that they won't even try to investigate the legitimacy of offers (lots in this thread) I really pity you. That's all sad and terrorized.
I ended up having to let many thousands of dollars get handed out in bonuses to (six-figure) executives instead of using it to fund FOSS. Those same executives were more than ready to sign off on a FOSS project but I could only find one that would take our money.
Re:tax fraud (Score:5, Informative)
There is an amazing lack of understanding of what being a 501(c)(3) non-profit means. Non-profits most certainly can (and regularly do) invoice for services rendered. They are not "non-revenue" corporations, simply non-profit.
There is no fraud involved if a non-profit performs services in return for an agreed fee, or contracts to perform those services in the future in return for a fee either paid up front or after the services have been rendered.
The only thing the non-profit cannot do is take the surplus funds over and above their expenses at the end of the year and distribute those as dividends or ownership distributions to its "shareholders" or board members.
Now, if the non-profit has what's called "unrelated business income," that is income generated from activities it conducts that are not really connected, other than financially, with its mission, then it may have to pay taxes on those (for example, if a non-profit devoted to supporting a university buys commercial property as an investment, and leases that property out to businesses, that rental income may be "unrelated business income"). But that does not destroy their non-profit status for the rest of the funds they receive.
This is not, of course, definitive tax advice, but your post is about the 10th in this thread I've seen that has the very, very, very wrong idea that being a 501(c)(3) means you can't charge for services provided. They can, and they do all the time.
Re:$20,000 hammer (Score:3, Informative)
It's not about illegally avoiding taxes, it's about spending earmarked money for an unauthorived purpose and doing it so that accounting is unaware of the transaction that is probably embesselment.
Re:$20,000 hammer (Score:5, Informative)
My suggestions, having never done this - you need actual human contacts set up in advance who believe your story.
No, more important is being honest. Asking for a receipt that isn't honest is trying to push your corporate shady ethics off on an OS developer. It's not much different than going to bar for a "business meeting" and buying rounds until everyone is sloshed, and then asking the bar for a receipt that says you bought dinner because your corporate policy won't reimburse for liquor.
If they'd asked for a receipt that said "donation" instead of "services rendered: support", the chances are better the offer wouldn't have been viewed as a scam. As it was, it was a scam -- scamming the company auditors into thinking an expense was a valid expense and not a voluntary handout. From the description of the issue ("an underspend") it sounds like there was a contract from an outside party that still had money left over, and instead of saying "it didn't cost us the full amount to do the work for you, you don't have to pay it all", they decided to pad the expenses with a few donations. We don't know for sure, but that's the impression I get.
They need to understand how businesses work (it sounds stupid to people outside of large companies that budgets go away if you don't spend them,
I think most of them understand how business works, know that asking for a phony receipt is unethical, and know that accepting a large cash donation from a corporate vendor will create tax implications that they may not want to deal with. Every year I have to deal with a self-employment schedule C (IIRC) that I'd rather not have to deal with, all because some money I make comes in as royalties instead of in my normal paycheck. It makes my taxes much more complicated than I'd like them to be. Especially if you're talking about a group of developers and expecting one of them to accept the money (and tax liability) for money that they'll all benefit from. I mean, you only need to be paying a 10% tax rate and have ten developers to share the donation for it to be a loss for whoever accepts the money.