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Why Aren't There 'No-Profit' Open Source Companies?
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?"
VA should make sourceforge a charity too. that would mean setting up something like a trust fund.
VA Linux, RedHat, TurboLinux, Corel...
Actualy you can end the year with more money than you started with (in fact its a good idea if you want to be around long term) the major difference is that in a traditional for profit company that money or at lest some of it gets sent to the stock holders, in a non-profit it can't be. It can be saved for the future to build an endowment or for other things.
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
Erlang Developer and podcaster
You still need a source of money. If you are going to have non trivial operations that would warent forming some form of corprate body you are going to have expenses. These could include office space or people working for you or a newsletter etc. All of these things cost money. That money has to come from some where. So if you are going to form a Non-Profit you are going to need to convince a rather steady stream of people to give you money. Yes the FSF does it as do other people (EFF, SysAdmin guild etc) but I'm thinking the the room for Computer charities to raise funds in is rather small.
I'm not saying it can't be done, it can be but it won't be easy.
Erlang Developer and podcaster
I think you've got some terms confused here. There's no legal category called "no-profit". There's non-profit and not-for-profit.
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.
--Be human.
(eom)
The short answer is: no. Basicaly if you do not make money on a deal, you can not write that money off on your taxes. At least that is how guru.com explains it.
Thanks, I appreciate the correction.
LinuxPPC announced its intentions on becoming a non-profit company earlier this year. Here's the link:
p pc.shtml
http://maccentral.macworld.com/news/0101/25.linux
Ok stadard disclaimer: IANAL
Since VA sell sourceforge installations as a software development solution wouldn't this disqualify them from making sourceforge a charity?
Alameda calafornia? where is this place, I live in fremont and that sounds like fun.
iRepairIT - iPhone, Mac, & PC Repair
You'll find tons of "No-profit" companies there. Some are even open source ones.
I am about to start working full time for one: Vision for New York.
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!
OK, so maryR's a troll, but I'll bite... Mary, if Ford had made his design open-source (and it was -- Ford's genius was in creating a manufacturing process, not the internal combustion engine he copied from some Europeans) we'd all be driving "Tuckers" version 30. They'd run on fuel cells, leave virtually zero pollution, and dust anything that actually had to worry about ignition and gear changes. Oh, and btw, all those headaches from the Middle East? No one who have to care.
He put his boots up on the table and made a face. "The sig," he smirked. "You can waste your life in search of the sig."
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.
the real question is, why are there so many no-profit companies? If you're an investor, that is.
sulli
RTFJ.
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 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.
Keeping
since VA OWNS sourceforge, it disqualifies sourceforge from being a charity/non-profit organization AFAIK
The Free Software Foundation is a 501(c)(3) charity (like the Read Cross, apparently).
They use donations and sales of books, CDROMS, etc, to pay developers.
Ryan T. Sammartino
Ryan T. Sammartino
"Ancora imparo"
oh ya, and you wouldn't have among the richest people in the world arab princes who can be dumb as rocks but happen to own land.
--how long till the operators are jailed for anime-induced pedophelia and
People replying to this have made valid points, however, they are missing one thing. IMHO, VA *COULD* fairly easy turn SourceForge (not to mention some of their other properties) into a non-profit, get them off their own books, increase their profitability, decrease their losses/expensenses, and generally (probably) benefit their stockholders in doing so. I currently am afiliated with a non-profit and have also thought about doing something more computer/information related (probably with a slightly different organization) and have previously examined this possibility.
If anybody from VA or the sub-organizations wishes to discuss this possibility, feel free to contact me.
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 . . .
In principio creauit Linus Linucem.
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