Why Aren't There 'No-Profit' Open Source Companies? 36
kipple asks: "I've been working in a no-profit organization as a volunteer in California, and had the chance to learn something about no-profit in the US (I'm Italian). Now, I was wondering why open-source companies are trying to make money instead of turning no-profit. Let me explain: in a no-profit company, employees can be paid, and the board of directors are paid as well. They can survive. The only 'issue' is not to make money at the end of the year."
"As I understand it, no-profit companies have better chances to put their hands on used hardware which could be donated by other profit companies or the government. Result: more computer hardware 'donated' (companies won't have to pay taxes to 'recycle' their old hardware), better chances to develop drivers for specific hardware, less necessity to make money at any cost and happier people. Any opinion about that? Is there anybody out there who already know a similar situation?"
Re:FSF is a charity (Score:1)
There are a bunch of "No-Profit" OSS companies (Score:2)
Re:you mean non-profit or not-for-profit? (Score:2)
In the US there are a lot of rules for non-profits. At least those that want 501c3 status which is what most universties are. If you are a 501c7 which includes things like social clubs it easer, but then donations are not tax deductable.
IANAL
Problem with this idea (Score:2)
I'm not saying it can't be done, it can be but it won't be easy.
you mean non-profit or not-for-profit? (Score:5)
Non-profit enjoys greater tax benefits - contributions to non-profit corporations are tax deductable. However, as I understand it, the accounting regulations make this a very difficult status to achieve for a small company. This status is usually reserved for churches, universities, and the like.
Not-for-profit is basically just like any old corporation, except that the company can't make a profit at the end of the year. They often get around this by paying their staff large bonuses or spending the "profits" on capital goods (assuming a good year). The accounting regulations are much more relaxed when compared to non-profits, but gifts to the corporation are not tax deductable. This is what many charities are classified as, and what would probably be most likely for an open-source "no-profit" company.
Now, IANAA (an accountant), and I might have the two definitions backwards. But, in any case, the general argument remains. Why are more open source efforts not "not-for-profit"? You got me. Maybe people want a corporation that actually makes money. Maybe people are interested in selling the corporation to a big conglomerate (i.e. Slashdot...). I don't know.
You mean like Debian? (Score:2)
Re:I work for one (Score:1)
Re:I work for one (Score:1)
Re:you mean non-profit or not-for-profit? (Score:5)
Non-profit and not-for-profit are legally the same thing. The name used is dependant on how and where you are registered as an organization. Being tax deductible is determined by the federal government based on what your organization actually does.
The other thing that isn't correct is the statement that they can't "make a profit at the end of the year". These organizations can 'make a profit'. The problem is that you have to explain it to the federal government in order to keep you tax exempt status.
There are plenty of legitmate reasons for 'making a profit', i.e. you are building up a trust fund, you are going to make a large capital investment next year, you get a large indowment to be spent over multiple years, etc. For many organizations it is easier to spend any extra money then it is to explain it to the IRS.
LinuxPPC (Score:3)
http://maccentral.macworld.com/news/0101/25.linux
Re:FSF is a charity (Score:1)
Since VA sell sourceforge installations as a software development solution wouldn't this disqualify them from making sourceforge a charity?
Re:There are a bunch of "No-Profit" OSS companies (Score:2)
Re:LinuxPPC (Score:1)
Re:You mean like Debian? (Score:1)
Re:LinuxPPC (Score:1)
Re:No capital for expansion (Score:1)
Re:you mean non-profit or not-for-profit? (Score:1)
You could have just said 'the
Just go to F---edcompany.com (Score:3)
I work for one (Score:2)
I am about to start working full time for one: Vision for New York. [vfny.org]
And we are looking for volunteer coders. I am sure that there are many reasons for there not being more, including: non-profits do not adapt extremely quickly to new technology trends; there has simply been too much money to fund things privately until very recently; open source is a very new idea in the grand scheme of things; etc.
However, they do exist and I am sure that there will be more. There is not much to VFNY yet, but we are attempting to develop open GIS software systems to facilitate better public planning and use of data about public spaces. There is clearly a need for the non-profit sector in facilitating software that would otherwise never get built because its development and use fits in the category of a 'public good.' We think that open GIS software fits into this category. Feel free to email me: robhranac at yahoo!
Re:LinuxPPC (Score:3)
Oh, you meant intentionally non-profit...
Bingo Foo
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Re:Throw innovation and creativity out the window. (Score:1)
No capital for expansion (Score:3)
Why exactly would other companies (or government) donate hardware (or other capital) to your organization? Sure, they'll do it if it's good publicity for them (like donating to charity) or if the company performs some vital function they like. But Open Source doesn't exactly register on the public radar screen, and doesn't provide anything that's exclusive to Open Source.
Investors aren't going to pitch money in unless they see a return, which they aren't going to get. That leaves you drawing on your own revenue for expansion, which means that ultimately, after paying employees and directors, you need surplus funds for growth, in other words, a profit.
It's a nice idea (in a socialist collective kind of way) but I just don't see it getting off the ground. Unless your employees pitch in their own money and bring their own hardware to work.
Seriously (Score:2)
non-profit = big headache (sometimes) (Score:2)
In the State of New York all of the non-profit orgs have to get approval before they can make any purchases over a certain amount of money. I'm not sure ofthe exact amount, but I've heard that it is an amount that commonly comes up in day-to-day purchases.
I feel confident that 99% percent of the buearacrats don't have any clue what open-source software is and they would have a hard time approving any kind of expense.
There are a couple of examples of non-profit type of groups that develop open-source software. They tend to be university research groups or funded with a grant. lon-capa [lon-capa.org] was one that I could find. lon-capa appears to be funded via the NSF. I'm not sure if they have non-profit status or not.
Re:FSF is a charity (Score:1)
Re:No capital for expansion (Score:1)
it is just an idea, perhaps somebody will join a pure-software open-source company with a no-profit like the one I just described.
Re:LinuxPPC (Score:1)
Re:No capital for expansion (Score:1)
Re:I work for one (Score:1)
If I donate my time and skill in developing software for a non-profit, is it possible to deduct that from my taxes (income)?
Re:No capital for expansion (Score:3)
Tax benefits.
Investors aren't going to pitch money in unless they see a return, which they aren't going to get.
Which means you look for benefactors, not investors.
It's a nice idea (in a socialist collective kind of way) but I just don't see it getting off the ground
The idea of charity or non-profit is not necessarily socialist. As for not getting off the ground, the FSF [fsf.org] has been operating this way pretty much since the beginning.
Ryan T. Sammartino
FSF is a charity (Score:5)
The Free Software Foundation [fsf.org] is a 501(c)(3) charity [fsf.org] (like the Read Cross, apparently).
They use donations and sales of books, CDROMS, etc, to pay developers.
Ryan T. Sammartino
Re:Throw innovation and creativity out the window. (Score:1)
Sourceforge as a Charity? (Score:1)
If anybody from VA or the sub-organizations wishes to discuss this possibility, feel free to contact me.
Re:I work for one (Score:2)
Sorry, but you've got this one totally wrong. You're applying standard business deductions to charitable deductions.
You can deduct out-of-pocket expenses from giving services to non-profit organizations.
From http://www.irs.gov/prod/forms_pubs/pubs/p52602.ht
Out-of-Pocket Expenses in Giving Services
You may be able to deduct some amounts you pay in giving services to a qualified organization. The amounts must be:
Unreimbursed,
Directly connected with the services,
Expenses you had only because of the services you gave, and
Not personal, living, or family expenses.
Church of the Open Source (Score:3)
Why not found a religious order? Get yourself a mail-order D.D. (Doctor of Divinity) and register the Church of the Open Source with the Feds. They youre tax-exempt, but theres no restriction on your turning a profit. Recruit among slashdotters and convince them to tithe to save their souls . . .
I think itd work . . .
Throw innovation and creativity out the window. (Score:2)
Had Henry Ford made the basic design of his automobile "open source", and companies came along and decided to sell their own cars "at cost" with all their employees getting salaries based upon "the going rate" instead of how well the company was profitting... we'd all still be driving Model T's. IMHO