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Mozilla Foundation Now IRS 501(c)(3) Approved

Posted by Hemos on from the get-out-the-donations dept.

jesus_X writes "We at MozillaNews have discovered that the Mozilla Foundation is now officially 501(c)(3) approved by the IRS, meaning you can now deduct donations made directly to Mozilla.org from your income tax returns. This is separate from, and obviates the Open Source Applications Foundation donation method mentioned in August on MozillaZine."

37 of 116 comments (clear)

  1. Hah! by SeinJunkie · · Score: 5, Funny

    Let's see Microsoft do that!

    1. Re:Hah! by Anonymous Coward · · Score: 5, Funny

      Actually IE users would use the tax code section that covers Gambling Losses.

    2. Re:Hah! by magefile · · Score: 3, Funny

      Good $DEITY, two tax attorneys in one thread? Wait, did I just violate some corollary to Godwin's law?

    3. Re:Hah! by ZipR · · Score: 2, Interesting

      Microsoft may not be 501(c)(3) approved, but they do get some nice tax breaks, which I'm sure help:
      Microsoft enjoyed more than $12 billion in total tax breaks over the past five years. In fact, Microsoft actually paid no tax at all in 1999, despite $12.3 billion in reported U.S. profits. Microsoft's tax rate for the past two years was only 1.8 percent on $21.9 billion in pretax U.S. profits.
      Taken from here: http://www.ctj.org/html/corp0402.htm

  2. This is great... by mp3LM · · Score: 5, Insightful

    I think this is going to make a lot more people donate, because it has double benefits.

  3. All the cool people are doing it... by LostCluster · · Score: 5, Informative

    Roll calling a few of our other favorite groups...

    Free Software Foundation: Yep, say they're tax-deductable.
    Electronic Frontier Foundation: Yep, they say they have 501(c)(3) compliance.
    FreeBSD Foundation: Yep, section 2.5.1 on this page says they're tax-deductable too.

    Seems like it'll take some work to find an OSS-supporting group that can't accept tax deductable donations.

    1. Re:All the cool people are doing it... by RLiegh · · Score: 2, Informative

      Here's one.

    2. Re:All the cool people are doing it... by FooAtWFU · · Score: 5, Interesting

      Wikipedia is not... YET. (they're applying, however. At least, I think that's the status, anyway. From what I remember,

      --
      The World Wide Web is dying. Soon, we shall have only the Internet.
  4. I bought a shirt.... by croddy · · Score: 4, Funny
    I bought a t-shirt from mozillastore ... does that count?

    (fingers crossed)

    1. Re:I bought a shirt.... by LostCluster · · Score: 4, Informative

      Not usually. If you get something in return for what you paid, then you didn't make a donation. However, if the ammount you paid is dramatically more than the value of what you got in return, you can deduct the overage.

      So, how overpriced was the shirt?

    2. Re:I bought a shirt.... by strike2867 · · Score: 2, Funny

      Actually you get dramatically more money in return, considering all those girls who won't date you for wearing it.

      --

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  5. Very stupid question... by Midnight+Thunder · · Score: 4, Interesting

    At a business level, what is the technical difference between a non-profit organisation and a traditional business. Maybe better: to what extent can it non make a profit? Surely a non-profit organisation still needs to assure it has money in the bank and pay its employees.

    --
    Jumpstart the tartan drive.
    1. Re:Very stupid question... by afidel · · Score: 5, Informative

      Non-profit's typically have to burn off their cash within a year of aquiring it if it is not for a specific aproved capital function (like buying a new building to house the organization). There are also rules as to executive compensation (often flaunted) and other operational differences. But most importantly a not for profit entity can not go to the stock market for funds because they are not able to return the money to investors that they investors would be looking for.

      --
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    2. Re:Very stupid question... by marnargulus · · Score: 4, Informative

      Exemption Requiredments: none of the earnings of the organization may inure to any private shareholder or individual.
      it may not attempt to influence legislation as a substantial part of its activities and it may not participate at all in campaign activity for or against political candidates.
      The organization must not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. No part of the net earnings of an IRC Section 501(c)(3) organization may inure to the benefit of any private shareholder or individual. A private shareholder or individual is a person having a personal and private interest in the activities of the organization. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any managers agreeing to the transaction.

      That is from www.irs.gov basically saying that:
      1: No making money for yourself.
      2: No political funding as a main purpose.

    3. Re:Very stupid question... by alexatrit · · Score: 4, Interesting

      Part of it is about the goals of the organization. It's easier to receive 501(C) status if you give back to the community, so to speak. Free publications, software groups, churches... these organizations provide something without expecting anything in return. They are allowed to report income and expeditures. This includes salary to the management of the organization. But at the end of the year, the books (in theory) shouldn't be too far in the black. Historically you're less likely to be sued as a 501(C) non-profit, since it's on the books that there isn't a lot of extra money floating around. There are tax benefits to incorporating as well.

      --

      Nothing but the finest in meaningless drivel
    4. Re:Very stupid question... by LostCluster · · Score: 4, Informative

      The key difference is that a non-profit doesn't have "owners" and therefore there's nowhere to send a dividend. When a non-profit makes more income than it's spending, they either have to spend more on whatever they do, or put the money in the bank for a rainy day.

      The IRS 501(c)(3) standard takes that definition a bit further to require that the non-profit must be doing something for the public good, rather than just giving money to the people who set it up. Here's the IRS.gov page on the matter.

  6. Where does the money go? by Anonymous Coward · · Score: 5, Insightful

    WHen you donate to Mozilla, where does the money go, is it purely on the server, does any of it go to the programmers? Who decides where the money goes? If we donate money to them, can we get any say as to where it goes?

    1. Re:Where does the money go? by Anonymous Coward · · Score: 5, Informative

      Usually, it goes to whatever the folks running the Foundation want it to go to. Their expenses include servers, and also the programmers, and other staff.

      Doesn't look like they have anything set up for it, but in general with non-profits, you can restrict your donation. They either have to obey your condition, or refuse to accept the contribution.

      If you're giving them $10, then restricting it is just going to be a pain the arse, and cost more to administrate than your donation than it's worth. If you want to give a larger amount that's restricted, drop them a line (address is on the donations page) and ask.

    2. Re:Where does the money go? by alexatrit · · Score: 4, Informative

      Part of requesting 501(C) status is presenting a copy of your organization's corporate resolutions. It should outline the answers to these questions, although I haven't been able to find it online.

      --

      Nothing but the finest in meaningless drivel
    3. Re:Where does the money go? by guacamolefoo · · Score: 4, Informative

      Usually, it goes to whatever the folks running the Foundation want it to go to. Their expenses include servers, and also the programmers, and other staff.

      You can find out where some of the money is going by requesting a copy of their informational tax return.

      If you request it, they must provide you with a copy. No, really, it's true -- they have to do it.

      So, if you have questions, write to the Mozilla Foundation and ask for their tax return info.

      GF.

      --
      Lots of petrified grits
  7. corporate donations - bigger deal by Potlucker · · Score: 5, Informative

    this allows corporations as well to donate and take the write-off.

    this is big since it makes the foundation significantly more likely to recieve large donations.

    IRS Tax Information for Charitable Organizations

  8. That Is Nice But by ArchAngel21x · · Score: 5, Insightful
    I am thinking of donating a small portion to Mozilla since Firefox is my main browser now. However, my motive is not fueled by a tax break. I want to support an organization that makes good software.

    I encourage everyone who uses a Mozilla browser to donate at least $5. Come on, that is only the price of a value meal at a fast food joint. Just think what the organization could do if we all donated.

    1. Re:That Is Nice But by swillden · · Score: 2, Insightful

      Why not give the tax break to the charity if the donor does not want it.

      That's really no different from the US approach, it just shifts the paperwork from the donor to the charity and reduces the government's contribution with respect to a particular tax rate.

      Assume I'm donating $5 and I paid $1 in taxes on that money.

      Under the Gift Aid approach, if I give $5, the charity gets $5 and then can file to get the other $1, for a total of $6. Net, the charity is up $6, $5 from me and $1 from the government. The charity has to do the paperwork on the donation, I don't.

      Under the US approach, I give $6. Net, the charity is up $6, $5 from me and $1 from the government. Except that's not actually right. If I paid $1 in taxes on $5 of income, I paid $1.20 on $6. So under the US scheme, $4.80 of the $6 comes from me and $1.20 comes from the government, rather than the $1 under the UK method.

      I wonder if that side effect was planned when the UK approach was set up?

      I have no idea if the US scheme actually does encourage larger donations. I know I don't actually think "I can afford to donate $100, but I'll get a $20 tax break for that, so I'll donate $120 (or, ideally, the limit of the converging series 100[.2^n], which converges to $100/.8, or $125)", but I certainly do think "$100 is kind of a lot, but it's really only $80; I can afford that", so the tax effects do cause me to make larger donations than I would otherwise, but I can't really generalize that beyond my own giving habits.

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  9. Doh! What about last year's return? by buzban · · Score: 5, Funny

    um...

    meaning you can now deduct donations made directly to Mozilla.org from your income tax returns

    what if I've been deducting donations for a year or so now? :P

  10. Great. by Scrab · · Score: 2, Funny

    I can claim it on my tax returns. All I need now is to actually have any money......

    *sigh*

    --
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  11. Re:Open Source kills jobs! by T-Keith · · Score: 2, Funny

    First the Government recommends it, now they are financially supporting it. What's next, they prosecute Microsoft?

  12. plugging my interests too by kippy · · Score: 2, Informative

    The Mars Society
    Project Gutenberg and the Distributed Proofreaders
    Wikipedia (sorta, soon it'll be 501(c)(3) )

    --
    Blaze a trail to the New World
  13. Re:Obviously... by thumperward · · Score: 5, Funny

    Isn't it

    1. Get 501(c)(3) approved
    2. Post on Slashdot for millions to see
    3. ???
    4. don't profit, because you're 501(c)(3) approved!

    - Chris

  14. yep, it's not good by zogger · · Score: 3, Informative

    there are a lot of hidden gotchas once you have that status, many of them political. For instance, say you had candidate A who really supported open source, and a candidate B who wanted to restrict heck out of it. Moz . org could no longer issue press releases or endorse candidate A officially about it. It's hit a lot of not for profits lately. A lot of churches now for instance are abandoning their 501 c 3 status because of those restrictions. The government can legally outlaw some things a preacher might preach about if they are incorporated under 501 c 3. It applies to any org like that, not just churches. I'd have to google to go find all the exact particulars, but I know there's a lot.

    A good rule of thumb (well, IMO anyway) is, DON'T sign a contract with the government or any of it's agencies or bureaus if you absolutely do not have to. Every time you "voluntarily" sign something with them, it's always in their favor in the fine print.

  15. UK donations? by 16K+Ram+Pack · · Score: 2, Interesting
    Any way we can donate and get some extra money for Mozilla?


    I don't know if an open source software project would be able to get charity status in the UK.

  16. Only if you itemize (Schedule A) by jabberw0k · · Score: 5, Informative

    You can only deduct charitable contributions if you itemize your deductions on Schedule A.

    See the IRS page, "Should I Itemize?"
    http://www.irs.gov/taxtopics/tc501.html

    For those of us without mortgages or major charitable contributions, the Standard Deduction is far greater than what can be achieved with Itemization...

    Permitting charitable contributions even for apartment renters would surely have a huge positive impact socially and economically... but as things stand, I and many others are foreclosed from realizing any *financial* advantage (as opposed to a warm fuzzy feeling) from charitable donations.

  17. Re:retro-active? by sunilonline · · Score: 3, Informative

    I am on the board of a 501(c)(3) and when we got the designation from the IRS they said it was retroactive to the date that the organization started.. I don't know if this applies to all organizations or not.

  18. Re:Before you donate... by michaelggreer · · Score: 4, Insightful

    Not so scandalous, in my opinion. Someone took their trademarked logos to use in a KDE theme. Now, they may have been wrong not to allow that, but I can understand why they did. They don't want people tagging all sorts of things with their logos: their logo refers to them. It's a brand. If they don't defend it now, then later they can't do so. This is not fair use either: its not a commentary on the logo, but an appropriation of it. There might be ways around this, but it is a far cry from a "scandal."

    Be reasonable, folks. I agree with the free software movement, but that doesn't mean I think everything anyone ever does should be available for anyone to use under any conditions.

  19. Re:Before you donate... by linuxci · · Score: 2, Insightful

    Why can't the mozilla foundation protect its trademarks?

  20. This means that . . . by Prince+Vegeta+SSJ4 · · Score: 4, Funny
    because they are not able to return the money to investors that they investors would be looking for.

    I can deduct most of my investments from the late 90's, since 90% of the companies from the dot.bomb era must have been nonprofits! w00h00

  21. 501(c)(3) != deductability! by weav · · Score: 4, Informative

    IIRC, 501(c)(3) status just means the entity doesn't have to pay income tax on its revenues. Being certified as a public charity to whom contributions are deductible is a DIFFERENT THING.

    Don't try to write off Mozilla contributions until you hear they're classified as a public charity...

    Danger, Will Robinson!

  22. Re:Before you donate... by Gerv · · Score: 3, Informative

    Hardly a scandal. The Mozilla Foundation has trademarks on the Firefox and Thunderbird logos, and we want to make sure they are only used to label our stuff. Trademark law says we have to ask people misusing them to stop, or we lose the trademark.

    When I get a second, after tonight's staff meeting where I will be bringing the issue up, I plan to get back in touch with the people concerned and see if we can't find a way to make these legal.

    However, the way to get legal icons is not to distribute illegal, infringing ones and hope no-one notices or fails to take you down. The Free Software movement is (or should be) built on respect for the law. After all, if people ignore copyright law, they can rip off our software. And we would rightly complain about that.

    Gerv