Ask Slashdot: How To Get Open Source Projects To Take Our Money?

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?

Comments

$20,000 hammer

[optikos]

Couldn't you just do it the Department of Defense way and buy a $20,000 hammer from an open-source project?

Re:$20,000 hammer

[AvitarX]

Sounds like that's all they needed.

An invoice for support.

There's even a template for one in one of the FOSS spreadsheet programs.

Re:$20,000 hammer

[Anonymous Coward]

This stupid crap gets repeated everywhere, by people who don't understand the actual point of the joke.

The joke pokes fun at the accounting practices that created the illusion of a ridiculous expensive hammer when the actual purchase price of the hammer wasn't anywhere near the actual ammount invoiced.

It's just not funny anymore.

Here's some information:

http://www.govexec.com/federal-news/1998/12/the-myth-of-the-600-hammer/5271/

Re:$20,000 hammer

[girlintraining]

Couldn't you just do it the Department of Defense way and buy a $20,000 hammer from an open-source project?

That $20,000 hammer is made to very exacting specifications!

But I digress...

It really annoys me to see articles like this about money. We've been over this so often here it's Slashdot's version of "Summer is coming! What are the latest dieting fads? Find out more on our regurgitated-from-last-year news segment at nine!" 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. Redhat, the first open source project to have an IPO, still lives... it doesn't sell linux, it sells support for Linux.

It's depressing how Slashdot has rapidly descended into the Huffington Post of tech news sites... it's repost after repost, no real editorial control (or even understanding of content). Somewhere in the old offices where Malda lived is now a giant spinning turbine connected to fiber optic lines... and data spews out the top and into this mulching machine, compressing and distorting news from all other sites and then aggregating it into hipster-approved bite-sized pieces of 'content'. Earlier this year one of the maintenance engineers fell in. They didn't stop the machine... they just had to deal with a few weeks of obsessing about the latest gadgets posted to ThinkGeek... until the gunk that was that engineer worked its way out of the system... -_-

--
Go ahead now, mod me overrated... we all know there are dozens of paid shills now on Slashdot, and they hate me because I bring down their advertising revenue. Commencing -1 land in 5...4...3... (post)

Re:$20,000 hammer

[serviscope_minor]

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:$20,000 hammer

[Anonymous Coward]

That was merely a way to make payments on a contract and by that logic they underpaid for the circuit boards.

Re:$20,000 hammer

[Anonymous Coward]

No you routinely get modded because you overestimate your own understanding of things. I am one of the people who mod you down from time to time, but I have also modded you up. I do not work for Slashdot or Dice in any way.

Re:$20,000 hammer

[Anonymous Coward]

The joke pokes fun at the accounting practices that created the illusion of a ridiculous expensive hammer

Imagine if you receipt at the grocery store listed the total of all 20 things you bought, then divided them evenly between all 20 items so your milk is $2.94, your bread is $2.94, your lettuce is $2.94, your apples are $2.94, and so on, I'm sure that a lot of people wouldn't even look. A few might raise hell over the numbers.

My mother would whip out her calculator and the sales flyer, and prove that the 20 items should have run up for a total of $57.28 and start shouting that she's calling the DA.

With "accounting practices" there are no "illusions" there is only truth and fraud.

Re:$20,000 hammer

[TWiTfan]

It also sounds very suspicious and skeevy. I wouldn't have taken the money either. If someone called me up out of the blue and offered me thousands of $ on my OSS project, asking for some vague (and possibly fraudulent) invoice in return, and telling me they were on a strict deadline and needed it fast--my first inclination would be to ask them if they're a Nigerian prince. I would assume either:

a) scam/fraud
b) money-laundering scheme
c) IRS sting

And then I would have said "Thanks, but no thanks" and hung up the phone.

Re:$20,000 hammer

[The_Wilschon]

Yeah... you didn't read TFS, did you? You didn't even read TFTitle.

Re:$20,000 hammer

[jc42]

Imagine if you receipt at the grocery store listed the total of all 20 things you bought, then divided them evenly between all 20 items so your milk is $2.94, your bread is $2.94, your lettuce is $2.94, your apples are $2.94, and so on, I'm sure that a lot of people wouldn't even look. A few might raise hell over the numbers.

That's pretty close to what really happens. Some decades back, when the first stories started to appear about the $1000 hammer or $5000 power cord or whatever, there were also occasional stories from people familiar with the accounting practices who explained the bogosity of the calculations. Of course, people just ignored this, and repeated the stories as evidence of administrative (usually government) idiocy.

The basis of it all generally turned out to be the fact that many organizations (especially government) explicitly list an "administrative fee" on their invoices when purchased through the usual purchasing department. This is typically a fixed percentage of the bottom-line price. People would simply divide this charge by the number of items, to get the per-item administrative fee, and add it to an item's price to get the item's "cost".

Thus, it's common to have separate power cords, due to the different plugs needed in different parts of the world, So you might have an order for a computer (10,000), plus a cord that fits your wall outlets ($10), for a total of $10,010. If the administrative fee is 10%, the total charged your department is $11,011. You critics will then list the charge for each item as $1,001 / 2, or $500.50, so your price for the computer is $10,500.50, and the price of the cord is $510.50.

That's a pretty expensive power cord, right?

Not that we should expect any such accountant's explanation to have any effect on the situation. That would take all the fun out of reporting on bureaucratic idiocies (that our political opponents support, of course).

And there might well be $500 power cords. They might include things like a transformer that adapts to a wide variety of line voltages, generate AC output of a different frequency than the input, or have a storage battery to get through short power fluctuations, etc. But that's a different explanation, with different ways of misleading your readers or listeners.

Re:$20,000 hammer

[Bengie]

They may not need money in the normal way, but buying some Raspberry PIs to devel on or upgrading one of their servers could have been useful.

Re:$20,000 hammer

[Garridan]

If you would read just a little more carefully...

Redhat... sells support for Linux

That's an on-topic and relevant answer to TFQ. Reading comprehension in kids these days is just abysmal.

Re:$20,000 hammer

[Garridan]

But the REAL answer here is to tell the company trying to ditch $20,000 to suck it up and just pay their own damn taxes rather than illegally attempting to avoid it. (For the record, even attempting to avoid taxes is illegal...)

This makes zero sense in the context of TFS,

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.

If they wanted to make donations to "dodge" taxes (it isn't a dodge if it's written into the tax code), they'd just make a $20k donation. This is most likely a department in a large company worried that if they don't spend their entire budget, they'll have a smaller budget next year.

Re:$20,000 hammer

[lgw]

FFS, at least read TFS! This wasn't a "how do I make money doing open source" story at all. This was an "out of the blue, someone wants to give me money for my open source project, wat do?" story.

Re:$20,000 hammer

[AK Marc]

Avoiding taxes is legal, evading taxes is illegal. Attempting to do either is legal, so long as all other laws are followed (though almost anything that can be lead to evade taxes is illegal, so good luck attempting to evade without breaking the law. If you manage it successfully, it'll be avoision, not evasion, anyway.

Re:$20,000 hammer

[sjames]

Mod this up to 6! With a dozen scams appearing in people's inboxes every day, all with some sort of odd story about why things must be done in something other than the most natural way, this story about short deadlines (a classic element of a scam to keep the mark from thinking on it too long) and some bogus invoice for something (anything at all, really! Trust us it's fine!) sounds a lot like a scam.

It's sad that all the scams out there make things this way.

Re:$20,000 hammer

[Anonymous Coward]

When has Slashdot ever had quality control? I've been here for well over a decade and there has always been a distinct lack of quality control overall combined with the pettiness of various mods/admins, stupid rules, and etc. Don't get me wrong, it's still a fun place to be, but it has never been the paradise you claimed it was.

Re:$20,000 hammer

[Anonymous Coward]

This is a very fair and valid point; I won't argue with you about that. What I will say, however, is that the public sector has to follow a LOT of byzantine rules around procurement combined with vendors who know how to milk the most out of the government. What ends up happening is that the same product that the government procures costs A LOT more than what a private sector entity pays.

Re:$20,000 hammer

[Zalbik]

If you would read just a little more carefully...

Redhat... sells support for Linux

That's an on-topic and relevant answer to TFQ. Reading comprehension in kids these days is just abysmal.

WTF? TFQ from the article is:
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?

Or alternately:
How To Get Open Source Projects To Take Our Money?

In either case if you RTFA, they were trying to get open source projects to invoice them for support. Due to management, the invoice needed to be for something they had received during the year.

Redhat is not necessarily an appropriate answer to the question.

FFS...6 digit ID and you still haven't learned to RTFA.

Sheesh.

Re:$20,000 hammer

[BitZtream]

Redhat, the first open source project to have an IPO, still lives... it doesn't sell linux, it sells support for Linux.

To be clear, Redhat SURVIVES because of INVESTMENTS made of its IPO income, not because it sells support. Since its IPO, never once has its income from investments been less than 50% of its revenue stream. Without those investments, Redhat would vanish.

You guys can pretend they exist because they sell Linux support, but thats just a sad little lie.

Re:$20,000 hammer

[Anonymous Coward]

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:$20,000 hammer

[HornWumpus]

Totally off topic. If you could find a 'Black Mamba' audiophile (idiot) power cord for $500 it would be a screaming bargain.

But they would sell less of them. People that pay $2K for a power cord want to pay more, so it's better.

Re:$20,000 hammer

[budgenator]

Another point people don't realize is that it's expensive to price out each part of an end item, and most contracts have a specification that the total price of all the parts may not exceed a certain percentage of the total cost. This leads to the condition where the public outcry over a $5,000.00 hammer that will never be purchased separately is adjusted back to a more reasonable level is done, the cost of parts that will be purchased rise accordingly.

Re:$20,000 hammer

[Anonymous Coward]

I've worked in the commercial world all my adult life, and it sounds like a scam to me. Is also sounds like it's YOU that doesn't understand business. If they has invoiced that business like it wanted them to, they would themselves now be considered a commercial entity. They would lose any nonprofit status they may have or want to have in the future. Plus, they would be on the hook to pay taxes for all that money. All because the company wanted an invoice and not simply make a donation.

Re:$20,000 hammer

[budgenator]

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

[im_thatoneguy]

Actually in the case of the toilet seat and hammer examples they were both engineered one-off pieces that had to be carefully designed to meet specific weight and size requirements. Which is to say if you ever make one or two of anything the per-unit cost is astronomical.

Re:$20,000 hammer

[west]

What I will say, however, is that the public sector has to follow a LOT of byzantine rules around procurement

They do, and it's precisely *because* they have to be scrupulously fair that there are these byzantine rules. Such rules are what happen when you attempt to codify every aspect of a transaction so that there is no conceivable way that any party can be favored by the purchaser, etc. And of course, when someone *does* find a way to do something bad within the rules, the answer is more rules.

Fewer rules means trusting human judgement. Trust in human judgment means that there *will* be the occasional misuse of funds. And misuse of funds means that someone will be blamed for not having rules to prevent the problem in the first place. (The idea that the cost of preventing a crisis can easily be more than the crisis itself something few voters can understand.)

So in the end, we get exactly what the public demands - enough rules that compliance doubles the cost of everything, but a level of fraud and graft (which might have added 10% to the price) that is much lower than the private sector.

Re:$20,000 hammer

[serviscope_minor]

If you would read just a little more carefully...

Ans if you read TFS just a little more carefully, you will see that "support" was mentioned already.

That's an on-topic and relevant answer to TFQ

Well, no. Because you see, in TFS (which you should read just a little more carefully) it stated that "support" was fine by them, but that didn't cut it either, apparently.

Reading comprehension

The first word of that is "reading", which is required for the comprehension part. You may wish ti apply that, just a little more carefully, to TFS.

Re:$20,000 hammer

[RJFerret]

Pfft, contact me, I'll generate an invoice for "invoicing", toss the cash in a separate account, retain documentation of the exchange, and if nothing bad turns up in a reasonable amount of time (at least a year and half), ka-ching.

I'm never happier than when I can generate an invoice (with expectation of remittance).

Of course, like dating, 61+ days later I might be cruelly disappointed...

And they say money doesn't equal happiness.

Re:$20,000 hammer

[Obfuscant]

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.

Re:$20,000 hammer

[Anonymous Coward]

This is why you investigate, is it really that hard. Is the company or business real? Are the email addresses of said company real? Is the company involved in illegal activity?

Then you find ways to obtain the money, I am pretty sure the business didn't just say in an email "hey, here is 5k good luck", or "Congrats you won 5k". They probably worded it in a similar fashion as the poster of the query did.

Yes even if they did word the email in a constructive manner they still maybe thought it was a scam, or money-laundering, but it is very easy to investigate all of this in a short time.

Re:$20,000 hammer

[yurtinus]

So uhm... you mad, bro?

Re:$20,000 hammer

[mysidia]

Mod this up to 6! With a dozen scams appearing in people's inboxes every day, all with some sort of odd story about why things must be done in something other than the most natural way, this story about short deadlines (a classic element of a scam to keep the mark from thinking on it too long) and some bogus invoice for something (anything at all, really! Trust us it's fine!) sounds a lot like a scam.

Obviously the request for an invoice is so the donation can be characterized as an expense. A donation to something that's not a qualified non-profit is not tax-deductible, but an expense for support is deductible.

Re:$20,000 hammer

[mysidia]

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.

Ah, but if they received a benefit from the developer's work -- it's not fraudulent to label their voluntary payment for support as "support".

There is a bit of a problem though, that there might be a risk to the developers: what if someone else from the company comes back later, and claims they aren't getting the support that they paid for?

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.

If the money is not for their benefit, then they are a nominee/middleman, and there is a procedure for that. The nature of what they are required to do is not any more complicated than what what they are required to do if they receive a bunch of smaller donations.

And obviously; the receiver of the payments should not incur a financial loss to do so, if they want to make it easier on the other developers by absorbing the tax liability for them and gifting money to other developers as required ---- then the receiver should be certain to retain at least the amount of dollars required to cover the liability and their receiving expenses.

Many open source projects are sustained by non-profits or commercial enterprises; perhaps those are the best ones to "donate" to by purchasing support. This works really well with Redhat: they are happy to take a few thousand per server as a "subscription"

Re:$20,000 hammer

[raster]

Actually there is an easy way to do this. an INDIVIDUAL from the project invoices. they act as an independent contractor. They invoice for "support". You don't need a COMPANY to send an invoice and bill someone. An individual can do it. (Companies exist to take advantages of tax and ownership as well as separation of obligations vs the individual). In this case there are no obligations (or shouldn't be).

So now the individual has gained $5000. sure - they must pay tax on it. let's assumed 30% that's $1500. Put the $1500 aside, then give the $3500 to the project - if it has an existing legal non-profit entity. There is no laundering here. You do it in the open. you use fully documented bank transfers. This wouldn't trigger any money-laundering laws I know of. At the end of the tax year, declare the $5000 as "extra income", pay your $1500 in taxes and the project has $3500 now to spend (on a new server, storage, equipment, bug-bounties etc.).

Even better if the project has members who are ex-pats. I know that where I live, only money earned IN the country I am in (Korea) is taxable by Korea, *OR* if i remit money I earn outside Korea back to Korea. If I earn money somewhere else, Korea LEGALLY makes no tax claim over it. As I am not a US citizen... I'm not beholden to the US govt for taxes, regardless of my location, So actually... I can legally earn that money tax-free, so long as it never comes into Korea... so I wouldn't have to put aside $1500 (actually in Korea the tax rate for me is more like 16% - complete flat tax, not 30%). So it's possible and easily done. An invoice is easy to do. I have templates for them...

I think the issue here is that the projects contacted don't have enterprising members who have done contracting/consulting before... etc. etc.

Re:$20,000 hammer

[Anonymous Coward]

This is why you investigate, is it really that hard. Is the company or business real? Are the email addresses of said company real? Is the company involved in illegal activity?

Then you find ways to obtain the money, I am pretty sure the business didn't just say in an email "hey, here is 5k good luck", or "Congrats you won 5k". They probably worded it in a similar fashion as the poster of the query did.

Yes even if they did word the email in a constructive manner they still maybe thought it was a scam, or money-laundering, but it is very easy to investigate all of this in a short time.

It might be easy, but who cares? It's not fun or interesting.

If your company wants to give some money to a project, give them some money as a donation. Don't ask the developers to jump through hoops to get the money.

They are developers! They make software and they work, often for free, on an open source project because they think it's fun or interesting.

They are not accountants and they couldn't care less about your stupid internal corporate processes. That's not fun. It's boring!

The more people who ask open source developers to do stuff like this, the more boring it'll be to work on the projects and the developers will start to leave. Thanks for the "support", asshole!

We want the developers to make new features, fix bugs and make the software better. Don't waste their time on stuff that doesn't directly benefit the project.

Sometimes it is easier to just say no to the money than it is to spend time, however little it may be, jumping through your stupid corporate hoops.

Re:$20,000 hammer

[Garridan]

FFS...6 digit ID and you still haven't learned to RTFA.

Naw, I only RTFA I'm interested in, so yeah, tl;dr. Sometimes I browse the comments for the fun of it. I was amused by girlintraining's comment and even more amused by her detractors. And I do so enjoy not reading things and complaining about people not reading things. It's what's kept me coming back all these years.

Re:$20,000 hammer

[Anonymous Coward]

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.

My first thought on it exactly... why, I have to ask would they have to "invoice" the company for *anything* for a "donation"?!? That is not a "donation" then, that's a *scam* or *fraud*. The only "paperwork" an organization would/should be giving them back for a "donation" is a receipt so they can claim it off on taxes as a donation.

The *only* reason to have them "invoice" for some service is a lie to cover up what's really going on with the money. I wouldn't have gotten involved either.

Re:$20,000 hammer

[Anonymous Coward]

You are partially correct, but missed the point. The bid for these items was written in a manner that listed certain specs as the requirement. ie - weight and length. Exact specs were used without stating a margin of acceptable error. So, no mass produced hammer or toilet seat actually matched the requirements.

The purchasing agent ended up getting multiple bids for these (now) custom items and not knowing any better, actually awarded the bid to the lowest bidder.

It's a story detailing flawed communication between the guy that needed the hammer and the guy that bought the hammer.

Re:$20,000 hammer

[Anonymous Coward]

The trouble with audiophile (idiot) power cords and such is there are things which do work (but not power cords). I had a friend of mine say that a power conditioner was an audiophile (idiot) gadget, the gadget in question was a big box with a transformer and a bunch of inductive filters and suppression caps, which would actually be quite useful for powering a guitar or bass cabinet, so many of which have very low grade power supplies and are susceptible to all sorts of mains power noise and interference.

If I didn't already know how to build one for 1/100th the cost, it would be quite a useful accessory. It's possible there is some good vintage audio gear that doesn't have 21st century power filtering because it was built before homes were full of dirty-power modulators like computers, CFLs and flat screen televisions, perhaps you have one of those and rather than throwing it out, it appeals to you more to filter the power so it looks more like 1970s power and sounds the way it did back then.

Re:$20,000 hammer

[yacc143]

Plus, invoicing without known for what gets in really fast in in all kind of IRS (who has what income, and is it deductible business expense for the receiver, e.g. there are really few business that can claim to be buying console games for the business) DA (money laundering, fraud => the persons that tried to make you invoice almost certainly are not formally authorized to discuss business, especially if it can be seen as loss to their company), ...

So, no, "baseless" invoices are a very restricted construct, certainly not one I'd accept from somebody calling the first time.

Plus, many if not all OSS projects are not setup to do business. Plus they are quite often setup internationally, which raises even more funny tax-related questions.
(In reality, taxes are the most important part here: The $20K left over are budgeted as business cost. So you can only use them up for something that is really business related, following IRS guidelines, or the company gets issues with the IRS. If it's not used for what it was budgeted, you can still get into inner-company problems, e.g. the company deciding that you've defrauded them, ...)

Re:$20,000 hammer

[yacc143]

Hint: Being a contractor, in most places, is not a completely trivial thing to do => legal, tax, ... considerations.

E.g. most employees, in most places pay their income tax via payroll deduction. Just taking one invoice as a contractor means that you have to handle that year as a contractor, declaring and paying income tax.

Furthermore, depending on employment laws, e.g. German version comes to mind, as a full time employee you are by default forbidden to have other "work". So you might go home and work on an OSS project, which is fine, but if you make "legal" work out of it you can be fired for cause.

Re:$20,000 hammer

[TWiTfan]

If you're an individual working on an OSS project in the U.S. and you invoice someone for support, you had damned well better be ready to *at minimum* file a 1099 if it's over $600. Otherwise the IRS might want to have a word with you.

Try actually donating?

[Anonymous Coward]

Your company seems to have a problem understanding what 'donate' means.

Re:Try actually donating?

[Nutria]

Look beyond the obvious. It's hard, I know, but you'll learn how the world really works.

Re:Try actually donating?

[optikos]

No, this company probably budgeted that $20,000 for expenditure for purchasing 'X', whereas the accounting department would not permit reallocating 1) monies dedicated for purchasing 'X' into 2) an entirely different bucket of monies for donations to section-503 nonprofits. Here X is likely right-to-use software. Perhaps X might be hardware. Either way, acquisition of a durable good gets amortized over multiple years, whereas the entire donation to section-503 nonprofits hits the books immediately.

Re:Try actually donating?

[Anonymous Coward]

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.

Re:Try actually donating?

[alexander_686]

Why was it important to management that the money be earmark for a specific invoice”able” item?

If you wanted to street the project to something specific, then maybe. But retroactively ? I can’t think of any specific trigger in the tax code that would require that of a donation.

And I can’t think of any good reasons from a management viewpoint. If you want to make sure the money is spent wisely then you need to review the quality of management (or whomever decides to spend the money) not on a particular purchase. (example, the management may have done a very good job in choosing which 3D printer to purchase, but if it is a software project and does need a 3D printer it is a waste )

This just seems weird. If I were working at a charity and received this I am not sure how I would respond.

Re:Try actually donating?

[gstoddart]

Why was it important to management that the money be earmark for a specific invoiceâableâ item?

Likely because of how companies do their accounting.

You've got your capital budget, your operating budget, approved projects, and who knows what else (not an accountant).

The company trying to make the 'donation' needed to keep it within the same bucket and needed the potential recipients to give them an invoice.

In this case, it was "we'd like to 'give' you money, but it needs to look like on your side like you billed us for something". And generally when someone needs you to account for something in a special way, you might need to ask if you can (or should) actually do that without causing yourself problems.

And if I'm a charity and someone says "we'd like to donate, but can you make it look like you sold us a car instead" -- my first impulse is going to be a little wary of that deal. Because, it's no longer a donation, it's money being disguised as something else, and the recipient potentially gets themselves into legal trouble by trying to do that.

So, you try calling the Red Cross and say you'd like to donate $1 million, but they need to make it look like they sold you an island you could get the same problem. They didn't sell you an island, and as much as that $1 million might be shiny, needing to stay strictly within the rules means you might just have to say "if you want to donate $1 million, awesome, but we can't do magic accounting to make it look like something else".

Re:Try actually donating?

[RabidReindeer]

Why was it important to management that the money be earmark for a specific invoice”able” item?

If you wanted to street the project to something specific, then maybe. But retroactively ? I can’t think of any specific trigger in the tax code that would require that of a donation.

And I can’t think of any good reasons from a management viewpoint. If you want to make sure the money is spent wisely then you need to review the quality of management (or whomever decides to spend the money) not on a particular purchase. (example, the management may have done a very good job in choosing which 3D printer to purchase, but if it is a software project and does need a 3D printer it is a waste )

This just seems weird. If I were working at a charity and received this I am not sure how I would respond.

Good point.

I ran into similar problems in the corporate world where I wanted to buy products, but accounting needed an invoice and the vendor wasn't set up to deal with invoices. It was rather awkward.

More than that, however, you can you be a "non-profit organization" while invoicing? An invoice implies that you are demanding to be paid, not accepting a donation. Once you're demanding payment, you would seem to have dropped one of the primary characteristics of a charitable organization.

And then, of course, there's the final catch. Not all open-source projects are operating as legal corporations. They may not have a corporate bank account to deposit the check into. They often won't have a treasurer, much less one who can deal with large amounts of money - where not only do you have to deal with tax implications, but other things like money-laundering laws. And international finance, since open-source is often not geographically localized.

In short, there's no easy answer. It depends on who you want to give it to and how well they're set up to receive it.

Re:Try actually donating?

[alexander_686]

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:Try actually donating?

[wiredlogic]

Basically they don't want their departmental budget slashed by $20K next year so they have to spend all of this years money.

Management 101: You look bad if you spend less than you planned.

Re: Try actually donating?

[IrquiM]

It is still cooking the books.

Re:Try actually donating?

[AK Marc]

Donate means to give away receiving nothing in return. Many (most?) companies have written policies banning that practice (it's done *only* by the board, and they support the pet projects of each other's wives). But a poor purchase up to a manager's signatory level is easy, and rarely, if ever, audited. $20k for a hammer is fine. It's an invoice. $20k donation? Nope, that triggers all sorts of tax law and accounting issues.

Your inability to understand business accounting doesn't make the problem trivial.

Re:Try actually donating?

[AK Marc]

Most non-profits are run as for-profits, but without paying dividends (or any of the other equity extracting practices that would violate non-profit-ness). A non-profit may make a profit, but can't pay it to owners.

Re:Try actually donating?

[richlv]

not really. companies can be strange, and the summary already stated this :

A management catch was that it could not appear to be a donation

so yeah, it can be nearly impossible for company to donate 5 USD, but they could spend 5000 USD on a support contract they would never intend to use fully.

disclaimer : i'm working on zabbix for a few years now

as an example, true opensource monitoring solution zabbix actually has a company working on it, thus things like support contracts, consultancy or custom development can be arranged and proper invoices can be generated to keep your accountants happy.

if you ever end up in a situation like that, come talk to us ;)

Re:Try actually donating?

[ericloewe]

A non-profit is generally run like any other business - the difference being that the ultimate goal is not to make money for the shareholders.

Re:Try actually donating?

[HornWumpus]

They typically pay it to the owners in the form of salary or bonus.

Re:Try actually donating?

[The_Wilschon]

But open-source projects routinely provide service for a fee. And even if the projects in question didn't provide any direct service to the donating company, just having *written* the software in the first place could easily be considered to be a provision of service.

Re:Try actually donating?

[Anonymous Coward]

Don't forget that blood banks are often non profits, but they invoice hospitals and the like for blood products. Non-profits can sell items they just can't be doing it to turn a profit, if they do have a profit they have to do things to get rid of it but I'm not an accountant so I have no idea how they do it...
Also I think there is a difference legally between a non-profit and a not-for-profit...

Re:Try actually donating?

[grahamsz]

I don't think you are right, open source projects virtually never provide services for any kind of fee.

What you often find are that companies who develop open source projects provide services for a fee. However if they were trying to give money to one of those companies then surely they'd just sign up for enterprise support and never use it.

The real issue is that most open source projects aren't under the property of any corporation or foundation. The majority of projects are a solo or small group of developers that work together. Asking a random group of developers "Hey, can you guys form a corporation and invoice us for some service and we'll give you $5k" just isn't appealing. In parts of europe it'd cost more than that just to establish the corporation and set up a bank account that can take a US Dollar remittance.

The other issue is that the project has to find something to do with the money otherwise it's taxable for them. Most open source projects have few real expenses, source code hosting is effectively free, most hardware was probably not bought specifically for the project, and most of the development tools are free as well. If they are just going to pay it out to developers then they need to find some equitable way to split that up, and few projects are started with that in mind.

The easier approach would be to write to key developers on the projects, request a trivial feature and offer to pay them as consultants to develop and open source the feature for you. More developers are familiar with that model and it removes the problem of having to deal with the "project" as a whole and the fact that it's likely not any kind of tax entity.

Re:Try actually donating?

[tendrousbeastie]

As has been explained several times, if I invoice you for a service, and you pay my invoice (thus, implicitly accepting the agreement), then I have a risk - that you will want me to provide services to the value of the invoice.

The only way out is to have a contract behind the invoice stating the (lack of) activity required to validate the invoice.

But then clearly the author of story is trying to hide the money from management (or more likely, their accountants).

In summary, he is asking an OSS company (or perhaps group of individuals) to take on a load of legal risk.

Also, there is the ethical issue that it isn't his mone to spend. If thheir department has come in under budget, then it isn't his job to decide what to do with the surplus. He is being presumptious in assuming that he should make that decision.

Seems legit

[stewsters]

Deer project owner,

Our corporation has too much money. Please send details of how give you $500 Dollars US$ without donating.

-Prince of Nigeria

Spam bin...

[Arkh89]

Win a chance to win 20,000$ Send us 500$ by Western Union now!

Try a pitch that looks less like a 419 scam.

[Narcocide]

Seriously though, the requirement that it can't look like a donation is pretty limiting. Most open source projects are ONLY prepared to accept donations under the exact same US tax laws your company is trying to dodge, and the ones left over (especially the ones that haven't yet attained actual status as a scientific non-profit) are almost certain to look at your proposal for exactly as long as it takes to drag&drop it into the spam/phishing/blacklisted folder.

Re:Try a pitch that looks less like a 419 scam.

[Anonymous Coward]

Associate Member Benefits for Free Software Foundation:
https://my.fsf.org/associate/support_freedom/join_fsf
This depends upon how much you want it to look like a donation.
http://www.fsf.org/associate/benefits

EFF has similar things:
https://supporters.eff.org/shop/eff-gift-membership-certificate
Several of the larger open source organizations also have shops with hats and T-shirts and the like.

Re:Try a pitch that looks less like a 419 scam.

[Z00L00K]

I agree - selling a certificate is probably a good way to solve funding.

And sites like Zazzle offers items that you can put your design on as well. It's worth to note that Zazzle is available in many countries, so it may be worth checking your options there so your design may be available worldwide.

Re:Try a pitch that looks less like a 419 scam.

[mattack2]

They're not trying to DODGE anything.

If it were a donation, they *would* be able to take it as a deduction. They were trying NOT to make it look like a donation.

So they end up paying MORE taxes than you are suggesting.

Re:Try a pitch that looks less like a 419 scam.

[Anonymous Coward]

They were trying to dodge their internal accounting department's possibly accurate assessment that their budget was $20k too high.

Re:Try a pitch that looks less like a 419 scam.

[Anonymous Coward]

Actually, an invoice from someone for a service (assuming you can prove payment) is a business expense, and thus reduces taxable income.. If the person billed you for property, it may be a depreciable asset, thus resulting in depreciation expense (deductible) over a period of time.

Charitable contributions (donations) are limited to a % of corporate income, so a big enough donation (or many donations lumped together) may yield less tax benefit than an 'invoiced' expense.

If you want to donate, just donate

[dirk]

Part of the issue was you requesting an invoice for something they never provided for you. If they issue you an invoice for $5000 for something, there are legal ramification that go along with that. You could then claim that you never received the item/services and sue. They may have to set up a separate business entity to handle this business and pay a whole different set of taxes on it because they currently are not set up as a business that provides services/items. If you want to donate, just donate. It is silly to try and get them to jump through these hoops for your "donation" so your company can claim it isn't a donation.

Re:If you want to donate, just donate

[Qwertie]

Wouldn't it be legit if you ask the open-source projects to do something for you? Select some feature(s) or bug fix(es) you'd like in a future version, and pay the lead developers to do it for you. Or, some open source projects have lousy manuals--pay them to improve their documentation.

It's not illegal to pay in advance, is it? Just write the contract in advance.

Re:If you want to donate, just donate

[notanalien_justgreen]

It would, but if the project is in an early phase they might not even be selling support plans yet. If that's the case they don't have the sales and tax handling infrastructure set up to deal with it.

Re:If you want to donate, just donate

[alexander_686]

Generally yes - Which is what makes the retroactive thing from management so weird.

As the specific issue you bring up there are certain exceptions. If the company gets something specific back from the “donation” that part does not count. i.e. If you donated $5,000 and they gave you a tote bag (retail value $5) or custom reports for your firm (retail value $5,000) you would need to reduce the amount tax purposes. (And yes, lots of subjective loophole stuff here.)

Re:If you want to donate, just donate

[bloodhawk]

The problem then becomes you are entering into a legal contract with all the ramifications therein. A project setup to receive donations shouldn't be invoicing ANYONE for their work as it has all sorts of nasty tax and legal implications for them. Basically this sudo donation was little more than a time bomb waiting to explode, I don't blame any such project for ignoring or refusing the request.

Re:If you want to donate, just donate

[im_thatoneguy]

Select some feature(s) or bug fix(es) you'd like in a future version, and pay the lead developers to do it for you. Or, some open source projects have lousy manuals--pay them to improve their documentation.

How would the organization then differ from a normal business? This is *precisely* why the IRS has been cracking down on "open source organizations". You call yourself a non-profit organization and then just funnel what amounts to a consulting business.

There is nothing though to stop you from paying the lead developer to improve a project you use. But you would need to pay the developer.

Red Hat for instance isn't a non-profit. And I can see why the IRS would be suspicious of an organization which essentially operates a non-profit to launder a development company through. If they did have $20k to spend, they should have asked for the names of a few contributors and paid them to do something on the Open Source project. "Hey, here is a grant to fix some part of the project, whatever you want."

Re:If you want to donate, just donate

[david_thornley]

I rather doubt that, for legal purposes, there's any such thing as an open-source project in the US. Either it's just a bunch of people doing something together, which I doubt has any legal standing (however, IANAL), or it's a partnership or corporation. (I'm leaving the case of the single-person project out of here.) Partnerships and corporations have legal ramifications, and I wouldn't do one without consulting a lawyer first.

Contracting with a lead developer to do X has its own issues, but it's irrelevant, since the company was supposed to be paying $20K for services or product received by the end of that month. There was no time to do something worth $20K, so the invoice would have to be at least apparently fraudulent. At best, it's consult-a-lawyer time, with the distinct possibility that, after spending time and money for the consultation, the developer would have to refuse the offer.

So why might I, a hypothetical lead developer on a hypothetical open-source project, hypothetically not want a contract for $20K? It can poison my motivation. It can complicate my taxes. It can establish artificial inequalities in the team. It gives me a legal obligation, and therefore opens up legal risks. It can disrupt a workplace agreement (maybe my day job employer is fine with me doing open source development on my own, but not in receiving extra money for it - not all places have laws that would require the employer to allow it). It's a large amount of potential hassles.

You asked for something sketchy, and nobody bit?

[jandrese]

So you wanted to give money away, fine. But you then asked the project to lie about it and potentially put themselves at risk for fraud by asking them to make up some sort of invoice for a service that they weren't prepared to provide, like "support".

Also, the fact that many open source projects are basically volunteer efforts means that they aren't really setup to pay people for their work. They would have to work out the taxes and it could end up being a relatively huge amount of effort for a fairly small payoff ($5,000 covers a developer for maybe a month).

That said, there are some big projects that should have been able to figure out something. Apache for instance has their own foundation. So does X (although they apparently aren't very good at doing taxes), Mozilla, and some others. However, none of them are likely to want to talk to you once you start prattling on about fake invoices. If you want to donate, just donate. That way you can write it off of your taxes as well. If management doesn't like that, then that's their problem. You shouldn't have to do something shady and possibly illegal to support open source.

The invoice must be for something.

[Anonymous Coward]

The problem you are having is that open source projects are run by ethical people. It would not be ethical to invoice for $5k for services rendered when no services were actually rendered. (This might also cause folks to wonder, as you suggested, if your offer was actually a scam.) Your heart is definitely in the right place; perhaps with a little advanced planning, you might be able to keep a list of feature requests you have for open source projects. An offer to pay $5k in return for actual work might receive more response.

Non Profits

[Anonymous Coward]

You can give a non-profit a donation but I don't think you can pay them for services, because then they aren't a non-profit. If there is an umbrella org, ie Apache, become a corporate member instead.

Re:Non Profits

[Anonymous Coward]

Non-profit doesn't mean what you think it means.

Re:Non Profits

[omnichad]

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:Non Profits

[bws111]

You are the one who doesn't know what it means. From the IRS website:

"The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency."

Do you see anything in there about doing paid work for someone?

Re:Non Profits

[Anonymous Coward]

Non-profit doesnt mean "free" - it means the profits are put back into the org.

Re:Non Profits

[larry bagina]

You just described every for-profit company that doesn't pay out dividends.

Re:Non Profits

[HornWumpus]

Are you a child? It means the profits are put into officers salaries and bonus'.

Re:Non Profits

[sourcerror]

I would argue that OSS software falls under the "advancement of science" clause.

Re:Non Profits

[chrismcb]

Of course you can pay a non profit for their services. http://www.inc.com/articles/1999/10/14703.html They can even pay their employees, and their CEO. Someone posted something from the IRS website and asked if there is anything about doing paid work, but there isn't anything about NOT doing paid work. For many non profits a lot of their moneys they use for charitable services come from their profits, not from donations.

Re:Non Profits

[AK Marc]

I've incorporated a few non-profits (all 501(c)(3)). They all accepted fees for services rendered. All could issue an invoice. I've also worked with non-listed ones. They were generally smaller and less capable of flexibility.

How do you provide services if you have no income? Many non-profits have plenty of income from getting paid. Like the Girl Scouts selling cookies.

Re:Non Profits

[AK Marc]

Yes. Many for-profits should have been non-profit, as they are essentially operating as such.

Re:Non Profits

[alexander_686]

Just expanding. There are 3 main types of organizations
For Profit - Engaged in business for their shareholders. Pays taxes.
Not for Profit - Engaged in business for their members / customers. Think Co-Ops, Mutual, Credit Union, etc. Does not pay taxes exactly but there are a lot of quirk bits.
Non Profit – Engaged in charity or what not. Business activity is incidental.

I will point out that a lot of Non-Profits have wholly owned For Profit sub-divisions. The commercial side acts and pays taxes like a business, but pays its dividend to the non-profit side. (Example, Girl Scouts selling cookies is incidental to being a Girl Scout. It’s basically a fundraiser. If they every opened up a retail store that store would have to be a For Profit business.)

Re:Non Profits

[Rich0]

You can give a non-profit a donation but I don't think you can pay them for services, because then they aren't a non-profit. If there is an umbrella org, ie Apache, become a corporate member instead.

Sure they can bill you for services (though they might have to pay taxes on any revenue derived from this).

However, in this case they wouldn't be billing you for services. They'd be falsifying a bill for services that were really a donation. I can only imagine what their legal counsel would have to say about this. Who was the donor, Enron?

Yes to Money, but not as donation.

[epSos-de]

You could give 3k to me and I will publish a batch of the best 100 images under the creative commons license on Flickr. The images would be free to use for everybody. I can guarantee an audience in the millions. I can guarantee perfection and quality which you can see in advance. The problem is that you can not get your money to be marked as donation, because I am not an registered non-profit organization as same a many of the open source developers and contributors. Donating money is easy, getting it recognized as donation is harder. Contact epSos.de on Flickr with your money granting proposals and have fun !

Wrong way of doing it

[guruevi]

Open Source projects are often leader-less, don't have a corporation attached or anyone really working for them and (also) often not-for-profits.

Especially in the US you can't just accept $5k from someone without major tax hurdles. There has to be a service delivered (which is apparently what your company wants) and you can't just give money from your company without getting something of equal value in return (that would be too easy a way to syphon out money) and at the end of the year you have to indicate this on your taxes as well (which costs easy another $300 at the tax-preparer especially if it is out-of-state -- I used to do independent contract work in three states, at the end of the year I spent $1000 at HR-Block to figure out all the paperwork for local/state/federal taxes and the permutations of deductions between the 7 governments)

Now, you could've gone to one of your favorite open source projects and said: I want feature x - here is $5k for whatever freelance developer wants to take it on, that would've worked. I am always available to work on certain projects...

Re:Wrong way of doing it

[Kjella]

Now, you could've gone to one of your favorite open source projects and said: I want feature x - here is $5k for whatever freelance developer wants to take it on, that would've worked. I am always available to work on certain projects...

Well yes but it'd be silly to make it just random windfall for one developer (unless there is only one main developer, but I'm assuming it's a bit bigger than that), but if they have some sort of organization set up and it can't be a donation (corporate policy, whatever) then I'd suggest that with a twist, basically pick a small feature or one that was going to be in the next release anyway, work is "donated" to the organization and the organization bills them $5000 for custom development. As long as it is declared somewhere and the IRS gets their cut, it's probably fine.

Re:Wrong way of doing it

[bill_mcgonigle]

Agreed. I just spent the morning finishing up (I hope...) working out a contract between a user (corporation) and an open source project's authors to get some fixes/enhancements done that they need, but are going to go out publicly (no core competency concerns there).

So, um, yeah, gimme call next time - maybe you just need somebody who will manage the process. It's probably taken me 12 hours so far to get this setup, so it's not simply a matter of shooting off an e-mail and a check. There are concerns about disclosure, access, ownership, service levels, length of term, etc.

Re:Wrong way of doing it

[BitZtream]

Failed open source projects are leaderless. There are no successful 'leaderless' projects, contrary to whatever utopian fantasy some people have about anarchy.

Re:You asked for something sketchy, and nobody bit

[Anonymous Coward]

It doesn't have to be a lie. They could write an invoice for 1 year of priority support for the next year. Problem solved.

IRS

[Anonymous Coward]

"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.

Re:IRS

[St.Creed]

That is, if you have an OS project that is located in the US, mostly.

Otherwise you potentially have to deal with several foreign tax services. Oh joy. I'm pretty sure that $5000 is not enough to cover the hassle and aggravation you would get from trying to divide it over several contributors in several different countries with different tax laws.

Tax avoidance

[webtron]

If the only reason you are doing this is tax avoidance people are probably not responding to you for that reason alone. It would make them complicit in your trying to avoid paying taxes. The clauses you are trying to work around (ie, had to be done in the past) is there explicitly for these purposes.

Pay your taxes man.

Re:Tax avoidance

[Anonymous Coward]

Idiot.
It's obviously not tax avoidance -- if it were, donating to a nonprofit would be the obvious way to go.
It's a matter of "use all your budget this year, or we'll cut your budget next year because you don't 'need' it"

Re:Tax avoidance

[Anonymous Coward]

"I don't say evasion, I say avoision."

Re:Tax avoidance

[Anonymous Coward]

If they're desperately trying to make up stuff to spend money on, obviously they don't need as much as they were given.

Re:Tax avoidance

[mattack2]

IT IS NOT A DONATION.

What avoidance are you claiming?

Re:Tax avoidance

[Anonymous Coward]

They didn't need it this year but maybe next year a bunch of computers go down unexpectedly and there isn't room in the budget to replace them because they lost a good chunk of it.

three easy steps

[Anonymous Coward]

get non profit tax status
lose non profit tax status
profit!

tax fraud

[duckintheface]

These projects were most likely tax exempt 501(c)3 entities. They are set up to receive donations and not to provide for-profit services. In asking them to invoice you for serivces that were not rendered, you were asking them to commit tax fraud. Your management knows this but they wanted to write off the donation as a business expense. Just make the donation and stop trying to game the system. This is how tax exempt organizations lose their tax exempt status. This is also how people go to jail.

Re:Tax Fraud

[Anonymous Coward]

Probably so his department could claim to have spent all the funds and receive the same or more ammount of funding for the next year instead of having funds cut?

Also, care to point out how expenses that are actually paid out are illegitimate?

Think before you type.

Re:Tax Fraud

[osu-neko]

Probably so his department could claim to have spent all the funds and receive the same or more ammount of funding for the next year instead of having funds cut?

So they were trying to lie to another department within their own company, instead of trying to lie to the taxman. Possibly still a crime, although you're right, it's not the crime OP implied.

Also, care to point out how expenses that are actually paid out are illegitimate?

When it's not actually an expense, perhaps? If you have to falsify paperwork to justify the "expense" for a service that you already received for free... well... see your next comment...

Think before you type.

Assuming you actually tried that, you might want to look up what "expense" means, since you either didn't think, or don't understand the term. Money paid out is not necessarily an "expense". It's a bit more complicated than that, but a donation is never an expense.

Re:Tax Fraud

[osu-neko]

... It's a bit more complicated than that, but a donation is never an expense.

...and of course, the moment I hit save, I start thinking of exceptions. "Never" was too strong a word there. There are times donations and even gifts can be legitimately counted as expenses. This, however, is not one of them...

Re:Tax Fraud

[bws111]

Companies can write of legitimate expenses related to R&D, etc. Donating money is not a legitimate expense. Claiming it is a legitimate expense is fraud, plain and simple. If you want to donate money, go ahead. That is also deductible and can be written off. Or maybe you can explain how you submit a fake invoice to your company (no matter what your motivations are) and NOT have that show up as a (fraudulent) expense on their tax forms.

Re:tax fraud

[PatHMV]

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:tax fraud

[Anonymous Coward]

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.

True, but that is not at all what the poster seems to be saying - he seems to be saying he wants them to invoice them for services *not* rendered, no work being performed in return for money being given. Either you donate, or you ask for particular work to be done, and pay for that work - but paying for work that never gets done, and you don't expect to be done, is fraudulent.

Re:tax fraud

[Anonymous Coward]

We understand just fine. This is an invitation to bill for services NOT rendered. That is fraud. The assertion that this arrangement is sleazy has nothing to do with accepting money as such. It has everything to do with the false representations required to accept that money. Do you realize that companies are not monolithic entities with uniform attitudes and persppectives within? These managers are misrepresenting the nature of their budget expenditures. These managers are obviously not in a position to defend the recipient of their false billing when another member of the company questions the billing. Sensible people will stay far away from this proposal.

Hire a developer.

[Anonymous Coward]

Spend the 20k to hire a developer which you pay to contribute code to these projects.

Re:Hire a developer.

[Anonymous Coward]

Amen. Code is a real contribution. Money is just an insult. I turn down donations to my open source project because I don't want the implied obligations. I don't have time or interest in managing other developers. If you want to help, then just help. No one contributed to my project when it would have been helpful--before it was big and successful. Now, attempted donations just remind me what really makes a project successful ...and it's not money.

Re:Hire a developer.

[BitZtream]

$20k doesn't get you much development with one person, half of the money would be spent on overhead alone, then that leaves you what, maybe a single man-month worth of dev time if the dev is cheap? Yes you can get cheaper devs but the instant you factor in quality and fixing their fuckups, you're at a loss.

It'd be stupid to hire any one person.

Acknowledgement

[Anonymous Coward]

Projects might create a closed-system advertising/acknowledgement program using Piwik or similar. When a supported wishes they simply purchase an advertisement, and receive a small banner or text ad somewhere in the project website, perhaps in the footer of all pages, in rotation with all other purchased support acknowledgements. Weight banner/text-ad insertions somehow, eg one view per dollar, to create fairness among supporters.

Try this:

[king neckbeard]

Before trying to throw $5000 at someone, you should perhaps try to give them more than a month's advance notice. Then they can or can be prepared to give you some actual service.

If that still doesn't work for you, then try something like a bounty. Offer them $5000 for a bugfix or a new feature. If it would have to be claimed by the end of June, make it about fixing some typos or some other easy to accomplish task.

Varnish Moral Licence

[beebware]

Did you consider buying a Varnish Moral Licence ?

Re:Varnish Moral Licence

[TheNinjaroach]

The first useful and informative comment in the thread gets no attention. This makes me think that OP's situation is not as unique or as stupid as most Slashdotters are making it out to be.

Re:Varnish Moral Licence

[Anonymous Coward]

From the FAQ:
Hey we should post this to digg, reddit, and 742 other sites, you have never heard about, so everybody in the world hears about this!

Please don’t.

Such exposure to people who don’t know what Varnish is will not help me in any way, quite the contrary, it will probably just end up wasting my time.

But feel free to forward this to other Varnish users you know: That is the proper audience.

nt

[shentino]

Not surprised.

If you have to do something underhanded like "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" then you're going to run into trouble.

My guess? Your company wanted some good publicity but couldn't figure out a way to satisfy its own beancounters.

The fault lies with your company, not the open source projects who refuse to fudge things to make the numbers easier for your beancounters to digest.

Re:nt

[Anonymous Coward]

My guess? Your company wanted some good publicity but couldn't figure out a way to satisfy its own beancounters.

More likely that business unit management wanted to avoid admitting to top management that they went under budget in case next year's budget gets set based on their actual spend rather than their higher estimate (they want to keep a little slack). However management at the business unit are not actually authorised to make these donations, hence the shady 'make up a fake invoice for services' nonsense.

And don't blame the beancounters either. The idea that the accountants in this company can't understand the concept of a simple one-off cash donation is absurd - it's more likely that the real problem is that the accountants would know that donations like this are not permitted by company policy. This is a management problem.

Re:nt

[shentino]

Good clarification.

Either way though, TFA's implication that this is somehow the open source project's fault is insulting and absurd.

Re:nt

[BitZtream]

If you can't figure out a way to accept money, it is your problem. Seriously, for $5k they could have hired H&R Block for $1k to deal with the legality and still had 4k left over.

This is not difficult, regardless of how lazy you are in trying to find a solution.

Re:nt

[richlv]

oh damn. stop jumping on the guy (assuming no women on teh internets etc).

there was no mention of publicity, just the limitations of the accounting practices. why make it hard for good people in large companies to help, why make them less likely to help by comments like this ?

surely it is in the best interest of the receiving project to make life easier for the beancounters who are pushing the funds in the direction of the said project.

Re:nt

[chrismcb]

If you have to do something underhanded like "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" then you're going to run into trouble.

How is that underhanded? How is paying for something in the year you received underhanded?

Re:nt

[shentino]

The underhandedness is in fudging the paperwork to satisfy management's conditions on the donation.

And a donation is by definition something you get for free, without anything being received.

My question is...what was received?

Re:nt

[shentino]

Not necessarily.

Could the receiving project actually accept it if it wasn't a donation?

Don't forget that the project probably has its own paperwork to worry about.

Finally, the money belongs to the same organization that established the "accounting practices" in the first place. It can account how it pleases, and if that makes donations more difficult, so be it.

Re:nt

[richlv]

but you have to keep in mind that in large organisations things are not that simple. "so be it" attitude makes it impossible for some people inside the organisation to help - organisational rules might be very limiting, but you are dissing the efforts of some individuals who can not easily influence policies on a larger scale

Re:nt

[shentino]

Perhaps there is no solution.

If the only way to do X is to also do Y, and you can't do Y, it doesn't make you lazy if you can't do X.

And also, hiring someone else to do your legal stuff for you doesn't let you off the hook. All it does is let you burn them if someone burns you. It's still your ass on the line, and there's speculation else where that accepting this in such a way could have been construed as tax fraud by the project in question.

So, are you SURE they could have hired H&R block for this?

Re:nt

[shentino]

That's not the project's problem.

And it's the organization's inherent prerogative to make its money as hard to give away as it wants to.

The "so be it" is an acknowledgement of the organization's ownership of the money in question, not an insult against people who would like to help open source projects.

Re:nt

[richlv]

only if the project really is not interested in receiving funds at all. if so, yeah, it's not project's problem. but why do they have those 'donate' buttons then ? :)

Tax Fraud

[Anonymous Coward]

The submitter just admitted his company was conspiring to commit tax fraud by claiming expenses that were illegitimate. Why else would they need an invoice???

Another approach

[Anonymous Coward]

Hire some of their devs with the money to work on some bug reports they already have. Consider paying for a link on their site for a year.

There are other ways to help out a project without an official donation.

Most can't do it

[asmkm22]

Most open source projects aren't setup as an actual licensed company, and many aren't legally able to do business as a result. Which is fine because setting up a donation button works well enough for their needs.

There is also the problem with most of the people running the open source projects being techs, and not business people. For them, the creating and sending out an invoice for "support" and writing up the contract for a "client" to sign (to protect themselves in this situation) is pretty arcane.

And that's assuming those email accounts you used are even checked regularly. Some of those things get setup at day one, and everyone forgets about it unless forwarding is configured.

Charge for Physical Delivery

[Jah-Wren Ryel]

Tell them you are willing to pay $5K for a fully-licensed copy shipped to your business address. Somebody at the project burns you a DVD or loads a $5 usb flash drive with the latest release and ships it. That way you get something tangible and they get the money with a postal receipt in case the project needs to prove they held up their end.

I am not a corporate auditor but I don't think that would scenario would create any problems.

Re:Charge for Physical Delivery

[Krishnoid]

Plus, there's precedent for this. Oddly, I couldn't find links to buy software on CD or DVD, though.

Re:Charge for Physical Delivery

[lgw]

So now they owe sales tax, and business income tax. Are they set up to pay both already?

The tax situation is straightforward for gifts (which are not donations and thus not tax deductible for the giver). If you aren't set up as a company or a non-profit, that's really the only practical choice.

Hmmmm ...

[gstoddart]

All somebody needed to do was invoice us for something (perhaps 'support' or whatever) and they'd have received $5000

You mean, commit fraud?

Part of the problem sounds like your company needed it to look a certain way for accounting, and if the projects you contacted found themselves "how do we do that and keep it above board", maybe that was your problem.

But if someone giving out free software invoiced you for $5k for something they didn't ever actually sell you, that might put them into a questionable situation.

On the surface, it sounds like your "management catch" might have been worded in such a way as it would require very creative accounting on their end to satisfy your requirements for your gift. And that might have scared them off -- because when someone says "hey, we want to make a donation, but all you need to do it make it look like we bought something" can definitely make people worry if they're not going to get screwed in this deal.

Re:Hmmmm ...

[chill]

That isn't how I read it. I read it like management said "to make it legit, you have to pick one of the FOSS projects that we are using software from this year. How about, say...CloneZilla?" If they downloaded a new revision or patch release (2.1.2 from 2.0, say), then it most certainly could be legitimately labeled "support".

I see the problems on both ends. It isn't simple to fix.

Re:Hmmmm ...

[gstoddart]

That isn't how I read it. I read it like management said "to make it legit, you have to pick one of the FOSS projects that we are using software from this year. How about, say...CloneZilla?"

It's possible, but their wording made it sounds a little dubious:

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. ... All somebody needed to do was invoice us for something (perhaps 'support' or whatever) and they'd have received $5000.

So, clearly they were making a pretty specific demand on the potential recipients of this thing which is like a donation but not a donation. And 'notionally' screams "it just has to look OK on paper if you don't dig too deep".

At which point you're trying to make a donation, but make it look like it isn't a donation, and have the recipient write up some bogus paperwork to put the money into another category besides donations. As I said, that's bordering on fraud.

So, "my cousin Vito is going to make a charitable donation to you, but he just needs you to sign this paper giving him a controlling interest of your house and we'll get you the check, it's routine don't worry" makes it sound like a full-on scam, or definitely something shady you want to stay the hell away from.

That the company needed this be accounted for as anything but donation says part of the problem was the accounting shell game happening within the company, and then asking someone to play along and fabricate stuff to support that. And it sounds like the potential recipients would have more to lose than the donors in this.

You can either make a donation or not. But if you can't do it as a 'donation', expecting these groups to help put together a false paper trail to support it, and then bitching when they don't ... well, someone means well but hasn't got a clue about how accounting works.

Re:Hmmmm ...

[Anonymous Coward]

It's called money laundering. In the end you would also go to jail for misappropriating company funds.

Mmmm Kkaayyy!

[tiberus]

Problem #1: Placebo Corp has funds that you would like to nominally give away but, for some strange reason (e.g. FSO is addicted to counting the wrong kind of beans, CEO thinks donating is a bad word. etc, etc, etc.) you are not able to actually give money away.

Problem #2: Open Source projects accept actual donations. Sending you an invoice would very likely change their financial and/or legal status, especially, when said invoice is for services they didn't provide or for a product they don't sell.

While I can't comprehend why Placebo Corp wants to but can't give away money, I do have a vague grasp of why an Open Source project won't invoice you. The Project is unlikely to have anyone who can easily deal with invoicing etc. especially in the time frame you are taking about. The simplest solution would be to solve the problem on your end and figure out a way for you company to actually make a donation.

Corporate giving, it's been know to happen!

Re:Mmmm Kkaayyy!

[bws111]

I can offer a guess as to #1. Most likely Placebo Corp has a corporate donations policy, and corporate decides when and who to give donations to. However, there is some project manager who begged and pleaded for a budget of $X and didn't spend it all. Now, he wants to get rid of the 'excess' money because he is afraid next years budget will be lowered because he didn't spend all of this years. So, this manager, and apparently his flunkies, are trying to commit fraud against their company by claiming they spent the money on a legitimate expense while really they just gave it away. The problem is, the company will take those 'expenses' and claim them as tax deductions, when in fact there was no expense. The company has now just committed tax fraud thanks to these bozos.

IMHO, whoever hatched this scheme or agreed to go along with it needs to be fired ASAP.

Re:Mmmm Kkaayyy!

[BitZtream]

For $5k, you can easily hire a temporary accountant who can deal with the issue and still leave you $4500 to spend. This is a solved problem ... a hundred years ago.

Re:Mmmm Kkaayyy!

[Anonymous Coward]

Still sucking cocks, buddy? I bet you like those cocks deep in your throat. Big bucks in sucking cocks I hear. A good business for a fucktard cunt like yourself. You probably take on 3 or 4 dicks at a time.

Re:Mmmm Kkaayyy!

[Anonymous Coward]

Talking as someone involved in an opensource project, whose developers are scattered over 3 continents and are doing this strictly on their own time - with not a single one of them doing contracting work for a living. I would have to spend those 500 quid for an accountant (and probably another 500 for a lawyer) up front, without even being sure that I'd actually get rewarded the 5000 quid afterwards...

Not even talking about then distributing the donation to the other project members - and getting them into similar trouble.

Many opensource projects are a loose group of people doing coding for fun, with little or no legal entity involved. The typical donations received are in the pocket money range - and are usually spent in an uncontroversial way for hosting, hardware, simple stuff that's far below the thresholds for getting into trouble with legalese or advanced taxation.

gnu

[Anonymous Coward]

Many years ago I actually proposed to GNU that they set something up to make it easier to donate to OSS developers (and developers to sign up to receive donations).

notionally?

[Anonymous Coward]

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.

"notionally" ?

Huh?

If your company is using these products then I think there's plenty of reason to donate money. But "existing in the mind only" is one definition of "notionally"; therefore, ANY FOSS project qualifies.

Budgets, not tax. Jeez.

[damacus]

"Dodging" tax laws has a negative connotation. Tax laws related to donations *benefit* companies generally as write-offs. I think your post was unfair and presumptuous as to the original poster's intentions.

I don't think the original poster's intentions / considerations had anything to do with tax laws and instead are directly relevant to financial budgets, hinted at by the "underspend" part. Budgets are different from a wallet or general corporate account. You don't want to get into dealings with the administration on misappropriation of budgeted funds.

As far as misappropriations are concerned: if your underspend is on a 'services' or 'software' category, and you use a lot of open source software, it isn't necessarily a misappropriation of funds (and the spirit of the account) to help ensure the projects on which your company depends stay in good health. The groups could've sold a $5,000 consultation or Support Meeting and just talked about how the org. used the software in question and had a chance to present ideas to them. And then at the end of the call or meeting, the project is $5K richer.

TL;DR large organizations that may have money to spend sometimes need some flexibility.

Re:Budgets, not tax. Jeez.

[Cycloid Torus]

Agree with you completely. Good points.

Re:Budgets, not tax. Jeez.

[Anonymous Coward]

Selling services has different tax rules than accepting donations. Most projects are not set up for this and don't want to deal with this.

Re:Budgets, not tax. Jeez.

[Anonymous Coward]

If you have an organisation that even had 'underspend' in their vocabulary there is something wrong.
In fact budgeting itself is wrong from the business point of view.

As an organisation you should spent exactly the amount of money you should. Do you need certain things for your work, you should be able to prove to the higher ups (all the way to the top) that you will make on it.

Maybe it is because I work at a proprietary (trading with their own money) trading firm. We don't have budgets, you are supposed to work for the betterment of the company and spend resources responsibly. In the end more profit (by both reducing cost and increasing earnings) will give us more bonuses.

Donating to open source projects can still be responsible spending, your company may use an open source project in house and wants to keep getting new features. But also talk to your PR and Recruiting department, because they may also want to donate to forester good will and find candidates for jobs.

Re:Budgets, not tax. Jeez.

[chrismcb]

As far as misappropriations are concerned: if your underspend is on a 'services' or 'software' category, and you use a lot of open source software, it isn't necessarily a misappropriation of funds (and the spirit of the account) to help ensure the projects on which your company depends stay in good health.

This sounds exactly why it was " it had to be for something we had notionally received in the current financial year." So, they are trying to pay some money for something they received THAT year. Don't quite see why someone thinks this is a tax dodge, or a misappropriation.

Re:Budgets, not tax. Jeez.

[AK Marc]

Maybe it is because I work at a proprietary (trading with their own money) trading firm. We don't have budgets, you are supposed to work for the betterment of the company and spend resources responsibly. In the end more profit (by both reducing cost and increasing earnings) will give us more bonuses.

So what happens if you find a good trade and go to make it and find there is no cash in the account. Someone else made a good trade not quite as good as yours, so the company will have lost profit from the lost opportunity. To ensure proper cashflow, budgets are almost always used. No public company can be listed without one. Only tiny companies ever work without them, and most of them go out of business.

Re:Budgets, not tax. Jeez.

[damacus]

Yeah, I agree, but not everyone works in an organization with that accounting structure. :-)

"Fund accounting is an accounting system emphasizing accountability rather than profitability, used by non-profit organizations and governments. In this system, a fund is a self-balancing set of accounts, segregated for specific purposes in accordance with laws and regulations or special restrictions and limitations."

http://en.wikipedia.org/wiki/Fund_accounting

Re:Budgets, not tax. Jeez.

[Livius]

"Dodging" tax laws has a negative connotation.

It's also exactly what they were trying to do.

Re:Budgets, not tax. Jeez.

[Anonymous Coward]

The inquiry made to the open source projects was in fact an invitation to commit tax fraud. It could also be a problem if some other member of the corporation decided to perform an internal audit and then decided to grill the recipient over the strange payment with implications of fraud charges. Hearing the come on at this stage on Slashdot, it still doesn't smell clean at all. In other words I question the company's motives even now.

Sue them ...

[Anonymous Coward]

... for being bearded hippies, and then settle out of court

Gittip.

[Rinisari]

You can fund developers individually via Gittip.

WHAT IS GITTIP?

Gittip is a way to give small weekly cash gifts to people you love and are inspired by.
Gifts are weekly. The intention is for people to depend on money received through Gittip in order to pay their bills, and bills are recurring.
Gifts come with no strings attached. You don't know exactly where your gifts come from, and the maximum gift from one person to another is $100 per week.
Gifts are public. The total amount you give and the total amount you receive is public. Participants on both sides of the equation are rewarded publicly for their participation. (You can opt out of publicly displaying your total giving.)
Give by answering Who inspires you? on our homepage, and following the steps.

Re:Gittip.

[Jonah Hex]

Close to what I'm looking for, but then again KickStarter/etc doesn't fit the bill either. Maybe you can suggest something...

I'm willing to put up some bucks in order to sponsor a FOSS I Can Haz Chat to IRC Bridge using their new Web API. I'm looking for a 3rd party site where people can pledge an amount and that will split it between 1st place, 2nd place, and a tip for ICHC for providing the site itself. That takes it from the realm of "these folks said they'd pay" to an actual escrow type service. Any suggestions are welcome! - HEX

I have an idea!

[teaserX]

You may pay me to find the open source project that you are looking for. I will invoice you for your books and donate the proceeds to http://www.gofundme.com/help-sherry That should clear up the accounting. Thank you.

Re:I have an idea!

[teaserX]

wow...at least one of you is a real asshat. I'm sure you know who you are.

I was in a similar situation once

[aflyingcat]

A few years back, I was in a similar situation; our group wanted to give some money to a couple open source projects that we used and wanted to thank. Donation was the first thing that came to my mind, too. Unfortunately, that could not be justified at the company level. The financial types who ran the company at that point would not accept the company doing a donation for no direct return. They also insisted it be buying "something". That part wouldn't have been too bad, I could come up with something that was pretty close (but not exactly) what the open source projects already had (something like a 'golden master' CDROM including the source control archives) that they could charge us for; it seemed like a good solution; they'd get some money, we'd (hopefully) encourage them to keep improving the project. The sticking point turned out to be that our company management (either legal, finance, or both, I don't remember at this point) insisted on doing up a full contract. Based on our standard contract. That eventually killed the deal. The open source project didn't have a staff lawyer to review and revise the contract, our company lawyers really didn't want to spend the time modifying the contract into something that made sense for this situation; so they made a couple half-assed attempts on modifying the contract, but never got something that anyone on the open source projects would (or should) sign. So the donation really went nowhere. (I did what I could on the department level to thank the open source projects; but it was a lot less than it would have been if the company had gotten behind the effort)

Re:I was in a similar situation once

[Anonymous Coward]

"We want to donate money to you, but it can't say "donate"...and we're not trying to launder money, even though it appears that way."

There are lots of ways to donate money to Open Source projects. One might be to pay to host a server somewhere. And you could always host a user group, and give dinner or goodies to attendees. You could offer to give some part time contract work to some needy members of the project to do work on that project. The original poster didn't say why the donations couldn't be listed as donations, so we are only guessing their intentions were good.

Foundation membership

[Anonymous Coward]

If your company would consider foundation membership as a receivable, do that. It gives you tangible benefits such as influence over the project's direction.

The one that comes to mind is OpenStack because we work with them. Their Gold Membership requires $50k, but I'm sure some smaller projects would let you in for $20k.

You would then get the ability to shape the project over the next year and could use that as a business advantage (ethically, of course).

501(c)(3)'s CAN CHARGE FOR SERVICES!!!!!

[Anonymous Coward]

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:501(c)(3)'s CAN CHARGE FOR SERVICES!!!!!

[Todd Knarr]

Yes, but what do they bill for? The project didn't do any work or provide any services, so what do you create an invoice for that isn't completely fictitious? Bear in mind that fabricating an invoice can result in falsified financial records, which can cost you your 501(c)(3) status and get you in trouble with the IRS. That, I think, is the main problem: the business wants a fake invoice that they can "pay" to cover up the fact that they're donating, and the project isn't set up to do that.

Re:501(c)(3)'s CAN CHARGE FOR SERVICES!!!!!

[Anonymous Coward]

Yes, but what do they bill for?

Priority support by email for the next year.

Re:501(c)(3)'s CAN CHARGE FOR SERVICES!!!!!

[damacus]

Ever been to Kickstarter?

You can sell a poster for $500.

Sell a meeting with lead developers (to discuss project direction, feature requests.. whatever) for $2,500.

Get creative.

Re:501(c)(3)'s CAN CHARGE FOR SERVICES!!!!!

[damacus]

Absolutely. Quoting Wikipedia, "While not-for-profit organizations are permitted to generate surplus revenues, they must be retained by the organization for its self-preservation, expansion, or plans." ... "The extent to which an NPO can generate surplus revenues may be constrained or use of surplus revenues may be restricted."

Re:You asked for something sketchy, and nobody bit

[mwvdlee]

Why couldn't they just give the projects the money in exchange for actual future services?
It's not uncommon for open source projects to recieve money in order to be able to implement a particular feature, write documentation, provide support, etc.

Perhaps this company could have done a small "{your-company-name-here} Summer Of Code", where summer interns would built code for the open source projects you wanted to support. $20k ought to pay for quite some code. The Open Source project would probably be happier than accepting the money as is (money isn't always the best thing to happen to a group of volunteers).

Corporate Sponsorship?

[corychristison]

As others have mentioned there are a lot of legal and tax reasons they could not accept the "donation".

However for future reference you could always go down the Corporate Sponsorship route. Many projects accept these and are also a write-off on your companies taxes (eg. advertising).

Coporate Bureaucracy.

[Anonymous Coward]

Everything you said is spot on for a typical American corporation stuck in their bureaucracy.

There are ways around it.

Find the person who can change policy.

The problem here is that the OP thinks he's stuck with what some other underling told him.

It's time to leave footprints on the accounting department's foreheads - IF and ONLY IF it is politically feasible (meaning, it won't get the kid fired or worse, a bad review and shitty raise.)

Frame it as PR - Marketing - anything.

GPL-compatible of course

[Beryllium Sphere(tm)]

Maybe the project could treat it for tax purposes as one of those things where donors get something of value in return, which I believe is legal for 501(c)3s (DO NOT TAKE MY WORD FOR IT).

Re:GPL-compatible of course

[systemeng]

There a re a lot of 501c3 organizations including universities that do a lot of work for profit.

Sounds Like Money Laundering

[Anonymous Coward]

What a bunch of nerds we are, we're looking up "money laundering" in a dictionary.

Kickstarter

[umafuckit]

OS projects are volunteer efforts that man hours more than cash. Cash might help buy man hours but it might not. Choosing 4 Kickstarter projects, on the other hand, is a better bet. Kickstarter projects deliver a product and need cash for development. It's not a donation.

Re:Kickstarter

[Anonymous Coward]

Projects do not give support, companies do.

They do need to look for actual open source companies, not projects.

RedHat, puppetlabs would be examples.
i.e. entities set up to do support and licensing.

Projects exist for the software itself, and are not set up to invoice for services.

buy art.

[Anonymous Coward]

Seriously, just go to your local gallery. Buy originals, not some dogs playing poker.

Ideame your money!!

[Anonymous Coward]

Some friends and i are working on a free-software cooperative and have a project that needs some money, we would gladly accept it.

Also, we sell this really expensive limited edition papercrafts...

http://idea.me/proyectos/9198/gaspacho-smart-router

-aza

Buy a MariaDB support contract

[Animats]

Buy a MariaDB support contract. If your business uses databases, this gets you access to the MariaDB developers. It might help you get rid of some expensive Oracle databases.

I'll take it...

[ZonkerWilliam]

Seriously though, a open source is a loose collection of people who have come together to work on a project/software, no real formal structure.

an actual suggestion

[Anonymous Coward]

If you really do want to spend money, but don't know how much or when, you could set up a service or R&D contract consisting of a bunch of options. You'll have to be able to describe what it is you want for your money. You're not going to get that done in a month, and some non profits may not want to do business that way at all. Many academics are ok with that, though. You'll want to have that contract in place early in the fiscal year, and then exercise options as you want to spend the money.

In the case that you end up without that extra budget, you don't exercise any options. You'll have wasted time and money getting the contract set up, but at least everyone's lawyers will be comfortable with the situation.

Re:You asked for something sketchy, and nobody bit

[dj245]

So you wanted to give money away, fine. But you then asked the project to lie about it and potentially put themselves at risk for fraud by asking them to make up some sort of invoice for a service that they weren't prepared to provide, like "support". Also, the fact that many open source projects are basically volunteer efforts means that they aren't really setup to pay people for their work. They would have to work out the taxes and it could end up being a relatively huge amount of effort for a fairly small payoff ($5,000 covers a developer for maybe a month). That said, there are some big projects that should have been able to figure out something. Apache for instance has their own foundation. So does X (although they apparently aren't very good at doing taxes), Mozilla, and some others. However, none of them are likely to want to talk to you once you start prattling on about fake invoices. If you want to donate, just donate. That way you can write it off of your taxes as well. If management doesn't like that, then that's their problem. You shouldn't have to do something shady and possibly illegal to support open source.

Perhaps the company phrased things the wrong way, or didn't think of the project's situation. If they had Function X on their wishlist for Software Y, why can't they write a check for $5000 for a developer of the project to work on that issue? Perhaps the project could estimate that creating such a function and testing it would take approximately 120 man-hours (for example), and invoice accordingly. Isn't that a completely legitimate use of a 1099 contractor? I am not entirely familiar with 1099 employees, but I am under the impression that all tax liabilities are the responsibility of the contractor, and that the paperwork for both parties is relatively straightforward and commonly done.

Re:You asked for something sketchy, and nobody bit

[Anonymous Coward]

> Why couldn't they just give the projects the money in exchange for actual future services?

Whatever the purpose, they need the invoce to be backdated (June 30th), which no project will accept as this cannot be done in a legal way.

uncle sam's cut?

[peter303]

The receiving entity would have to be set up as a non-profit to avoid taxes, which not be feasible or worth the trouble. A small project and donation could be set up as a personal 1099 business. The business could write off a lot of expenses before the rest of the donation became income to the recipient.

Consultants and small partnerships do this all the time. And there is lots of web and book literature on how to do this.

Slashdot submitters are this ignorant?

[Anonymous Coward]

The only reason "underspent" exists as a thing is because corporations needed a way to say "tax evasion" without using the words "tax evasion." I honestly can't believe the submitter and his/her company is surprised that people would not want to participate in illegal activities which, while seemingly beneficial to the recipient, could have potentially disastrous legal and financial repercussions later down the line.

Here's an idea: Just pay your fucking taxes!

Re:Slashdot submitters are this ignorant?

[Anonymous Coward]

That is the most retarded thing posted on this thread. Hint: this has nothing to do with taxes and everything to do with trying to avoid getting your budget cut.

Good job on your HairyFeet award.

News Flash: Scam

[wisnoskij]

Open Source projects are not looking to scam the government, and lose their non-profit status or whatever credibility they previously had. They are not willing to draw up fake bills of sale, just to save your company a little money.

Why would you ever admit publicly your underhanded dealings, and tax scams?

Re:News Flash: Scam

[Anonymous Coward]

And then have the gall to blame it on those projects. Donations are only donations if they come without any attachments - otherwise they are Pay for Work/service or just bribes. The problem is the sickeness in the corporate culture - you have only yourself (the company you work for) to blame for nobody wanting to "take your money" because you added a whole lot of requirements to that "free" money.

Need a middleman for FOSS donations

[mounthood]

FOSS should have an org. that acts as a middleman for donations, tax issues, and foundation compliance. Make a donation to the org (hereafter MITM) on behalf of the software project, similar to Kickstarter but without the projects needing to join or setup a page. MITM can let accounts build-up until it's worth dealing with, find and verify the contributors, then help them with taxes or setting-up a foundation. MITM could also have donation clauses that let them change donations from dead projects to other similar ones, or maybe donations could be restricted by license, or by estimated number of users, etc...

I'd suggest GNU to take this on, but I don't think they'd be pragmatic enough.

Re:Need a middleman for FOSS donations

[Tiki-Geoff]

FOSS should have an org. that acts as a middleman for donations, tax issues, and foundation compliance. Make a donation to the org (hereafter MITM) on behalf of the software project, similar to Kickstarter but without the projects needing to join or setup a page. MITM can let accounts build-up until it's worth dealing with, find and verify the contributors, then help them with taxes or setting-up a foundation. MITM could also have donation clauses that let them change donations from dead projects to other similar ones, or maybe donations could be restricted by license, or by estimated number of users, etc...

I'd suggest GNU to take this on, but I don't think they'd be pragmatic enough.

A FOSS middleman would be great. Personally I heavily depend on at least 3 dozen free apps and websites throughout the year these days. I don't want them to go away so I'd like an easy way to support them all. We can't really expect everyone to donate $10 to each one. But if there was a fast and easy way to donate $1 to $3 to each one then many more users would donate and more people would share in supporting open source developers. And if such service only charged a very small fee to recipient regardless of the amount donated that would be even better.

I strongly believe that FOSS should be supported through small donations by the people that use it. I created a mobile and online donations startup called TikiPal.com that is founded on this principle. It's in early development now and we could use wkaan's 20K to spend on improving our site and app and adding important functionality (And modernize the look! Currently it's a working demo in progress and not ready for public consumption). Think of it as 20K being spent to eventually support thousands of worthy FOSS projects, rather than just four.

Tiki-Geoff

Re:Need a middleman for FOSS donations

[Rich0]

I'd suggest GNU to take this on, but I don't think they'd be pragmatic enough.

What do you think GNU already is? Or the SFC?

There are lots of such organizations.

Now, none of them are going to falsify invoices for donations, because they're mostly composed of lawyers and accountants who understand the legal implications of doing this. Perhaps you were thinking of an organization more like the Mafia?

Gittips FAQ say "talk to lawyer" about taxes

[peter303]

Its only a matter of time before the IRS starts nosing around about crowdsourcing money. After about a decade it was decided that aution sites like Ebay and Amazon has to issue 1099-Ks for more than 200 transactions or 20K cash flow during the year. Then it is up to the recipeint to minimize the net income this represents on a tax return. I predict they'll do this for crowdsourcing too.

Better Gittip should have said "talk to tax accountant".

Re:Gittips FAQ say "talk to lawyer" about taxes

[lgw]

Gift tax is pretty straightforward in its rules, though I'd still check how it would apply to open-source software. Gift taxes are owed by the giver, and you can give quite a bit before you owe taxes, but you'd want to be certain it counts as a gift and not a payment for services.

Walk down a "respectable" street...

[boristdog]

Walk down a respectable street and stop respectable looking people and try to make them take a $20 bill from you. Most will run the other way.

Now, if ou did that in a poor neighborhood or a college campus area...results might be different.

FSF Membership

[Anonymous Coward]

https://my.fsf.org/associate/support_freedom/join_fsf

Set amount that you want.

also

[shentino]

The complications are from your own company.

Don't blame the open source project for your own beancounters and managers making things difficult to donate.

You are the one making them jump through hoops, not the other way around.

Sell me a plaque

[Anonymous Coward]

Most fundraisers are about selling items for more than they are worth, or rather, more than you paid for them. So, I give you $5000, you give me a $15 plaque from your local trophy place that says thanks for supporting project X. No legal, ethical, or accounting issues. If the accountants really get fussy, say its to decorate for when a customer comes to visit.

Re:You asked for something sketchy, and nobody bit

[hawguy]

Also, the fact that many open source projects are basically volunteer efforts means that they aren't really setup to pay people for their work. They would have to work out the taxes and it could end up being a relatively huge amount of effort for a fairly small payoff ($5,000 covers a developer for maybe a month).

This is probably the biggest problem... taxes and logistics of distributing the money. Someone has to be approved by all of the co-developers to accept the money on their behalf, pay taxes and distribute the proceeds equitably (how? 1099? That's even more paperwork). If there are 10 regular developers, that's $500 each, minus taxes, so around $300. Probably not worth the effort or political problems "Hey, Developer X contributed twice as many lines of code as Developer Y. So X should get more money than Y. But Developer Z created the entire code base the project was based on 2 years ago, so he should get the most money."

Maybe they could have become a member of EFF, the Open Source Initiative, The Linux Foundation or some larger organization like that without it appearing as a donation. These places must have run into this situation before and have a way to deal with it appropriately.

Something for nothing and the sex is free

[Trax3001BBS]

I figure most are hardened to the Internet now, get rich quick schemes, and if if it seems too good....
all get a quick glance then removed.

But haven't seen what was sent to the developers, that would of been an important item to of linked to.

Me me me

[MrEricSir]

The open source company I work for has a nice donation page. Problem is, for obvious reasons (obvious for informed Americans, anyway) donations made to us are not tax deductible because we cannot become a 501c3.

sounds like you were the problem

[Joining Yet Again]

So, some stranger calls you up and tells you that they're happy to give you money, but you must accept it in a very peculiar way. Specifically, you must accept it in a somewhat dishonest way, contrived merely so the money can be passed to you.

Scam scam scam scam scam. Worse, it sounds like you're being asked to involve yourself in fraud or theft.

Frankly, I'm not even convinced that you're telling the truth right now.

If you have stupid processes, fix your damn processes. If you think should pay open source projects, then put things in place so you can cut them a cheque and be done with it. Otherwise, the money doesn't just get burnt - it goes back into the company to be spent on other things. Your choice.

Maybe the answer?

[Anonymous Coward]

"The X.Org Foundation, which drives the X.Org Server projects, Mesa, and Wayland open-source programs, had its tax-exempt status revoked by the IRS. It turns out the X.Org Foundation had put in quite a lot of work to become a non-profit organization, with guidance from the Software Freedom Law Center. They got in trouble after failing to routinely file their taxes on time. There's also been a host of other X.Org accounting errors in recent years. There was also the recent news of the IRS going after open-source projects, too."

Depends on what projects and if it's a non-profit status or not. Those that are would have to be careful as services like that could/would be seen as for-profit.

Simple Solution

[Anonymous Coward]

Start an open source company whose product is billing invoices. "We will provide you an invoice for $5000 for the low cost of $5000."

For a small handling fee...

[JerryLove]

I will invoce your company for "transaction services" and then donate the bulk of the funds to the open-source projects of your choice. Feel free to contact me to do so :)

Re:For a small handling fee...

[Anonymous Coward]

You do realize that if you invoice $20.000, you have to pay taxes because you generated income/profit?
Donating it does not exempt you from paying.

"Underspend?"

[Anonymous Coward]

Is that like when you go to JP Penny and buy a dozen pairs of boxer shorts?

Income Tax

[Roger W Moore]

Look beyond the obvious. It's hard, I know, but you'll learn how the world really works.

Sound advice because in the real world there is something called "income tax" and if you submit an invoice saying that you provided support and in return someone gives you money for that "support" something called the government may want to have some cut of it. Of course there are ways around this, for example you might set yourself up as a non-profit organization...err or perhaps not. One thing is for certain though that invoice is likely to cause a huge pile of paperwork and require the project to spend time reading and understanding obfuscated tax laws at which point they will probably question whether they would rather skip the money and spend the time reading and understanding obfuscated code instead.

Re:Income Tax

[mattack2]

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.

Re:Income Tax

[Obfuscant]

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 ...

Re:Income Tax

[Chelloveck]

I posed this question to my wife, who actually worked as the bookkeeper for a non-profit for a number of years. Her answer was, "There are laws against that." So yeah, I don't blame the OSS projects for not taking the money. Besides, it just sounds dodgy. Even if I was convinced it's not a scam, at best it's dishonest. At worst it's criminal fraud that will end up costing a lot more than $20k in lawyer fees.

Re:Income Tax

[Anonymous Coward]

This a thousand times. Tax law is hard; really hard. If you were offering $5 000 000 then you'd get a much better response but, for just $5000, it's not worth the effort and/or risk to attempt to accept the money legally.

I'd personally only engage in tax evasion with people I sufficiently trust, only through relatively secure communication channels (not plain-text e-mail), and would insist on using Bitcoin.

If I've misunderstood and you're proposing a fully above-board transaction then you should give an explanation as to why you can't donate.

Re:Income Tax

[Anonymous Coward]

I posed this question to my wife, who actually worked as the bookkeeper for a non-profit for a number of years. Her answer was, "There are laws against that." So yeah, I don't blame the OSS projects for not taking the money. Besides, it just sounds dodgy. Even if I was convinced it's not a scam, at best it's dishonest. At worst it's criminal fraud that will end up costing a lot more than $20k in lawyer fees.

I too was treasurer for a 501(c)(3) non-profit for the better part of a decade, and quite honestly I would have avoided an "offer" like this like the plague. It doesn't just "sound dodgy", it *is*... and we had enough problems with money, the thought of getting say $5K (almost 1/2 our yearly budget) as a donation would have been awesome, but the potential for spending $20K in lawyers fees (which would have bankrupted us) would have made me refuse it quite easily.

Re:You asked for something sketchy, and nobody bit

[jc42]

They could write an invoice for 1 year of priority support for the next year.

I've seen a number of free/open software projects that ask for funding along this line, often to fix bugs or implement new features. It seems to work pretty well.

You can also find something similar among the flock of (sometimes very good) online cartoonists. You can "contribute" by paying them for a specific date's cartoon, for example. Sometimes they'll "pay" you by sending an "original" printout of the cartoon, which of course really only exists in their computer's file system, but they do have a (color) printer, and there's a long pre-Internet tradition behind the sale of such artwork.

There should be lots of ways to donate money to "support" what they are doing, especially if you're using their software. And paying for new features is a friendly way to do it. Everyone knows how expensive corporate software development can be, so you should be able to pay what would be a significant N-month "contracting" salary without any auditors batting an eye. They know how expensive in-house software can be to develop.

What would we do with $5000?

[Anonymous Coward]

I run a small open source project. We have had people ask us over the years if they can give us money. We have always refused. What are we going to do with money? All our regular contributors have full time jobs already. Our code is hosted for free on Github. Our website and amazon storage costs us less than $10 a month. We don't have any significant operating expenses.

Furthermore, since we have dozens of contributors, we don't feel it's right for any subset of contributors to receive donated money directly into their pockets. We all contribute because we want to help the project, as volunteers. What kind of incentive does that put on a one-off contributor to add value to a project that earns the regulars big bucks from donations? What kind of process would one have to go through to get "promoted" and get a cut? These are all administrative questions that I'd prefer not to have to answer at all.

The bottom line is nobody on our project needs the money to keep it going.

We did eventually start accepting donations strictly on an "ask to donate" basis. We don't advertise that we accept donations anywhere on our website but if you ask us personally, we'll accept it on the policy that the money will only go towards common resources for the project such as servers and hosting costs, never directly to any single developer. So far I think we've only used the donation pool once to cover an unusually high amazon service cost. Overflow money is to be re-donated to other projects and open source foundations (such as the Python Software Foundation).

Too much effort

[Anonymous Coward]

Honestly, many developers are not exactly starving.
So a lot of them can't be even bothered to set things up to accept donations - and that is fairly simple.
Now if you actually want a proper invoice etc. that involves a lot of effort, and internationally in most cases it's just impossible to do without a lawyer.
They'll be lucky if of your $20000 even $10000 would "survive" that. If I could keep all the $10000 for myself I might start to consider it (though probably not), but even then I'd not manage to do it in one month.
Or to put it differently: Your money isn't worth the amount of work you are asking for. Your best chance is to look for a project that happens to offer exactly what you want - a license, DVD, some other promotional items for sale, possibly while offering an "unusually high price". Then it might work.

Hire a programming intern to help supply code.

[geoskd]

Your best bet for how to support a FOSS project like that is to hire an intern for 6 months to write code / debug / whatever for the project. Take your favorite OSS project, and think of what features would be useful for it to have, and take on an intern to implement it for you. The resulting patches could then be submitted for mainline inclusion, and thereby benefit everyone. Everyone wins. You get even better software tools, the project gets badly needed programmer resources, and you have managed to spend your budget in a way that doesn't set off every alarm bell from your CFO to the IRS. Plus you have helped to employ one more American in need of work.

Re:Hire a programming intern to help supply code.

[Anonymous Coward]

This. Thank you for suggesting this.

Re:Hire a programming intern to help supply code.

[Anonymous Coward]

It's a good idea.

The problem on the donator's end is that they needed a way to disburse leftover funds from a fiscal year. You don't know those funds will be leftover until... the end of the year. And then you have to move quick to spend the money before the FY finalizes.

Your solution is a structured one that essentially involves budgeting to that staff intern. That's the traditional and squeaky-clean way of doing it.

What's unsaid here is that it's also traditional to have unspent money left in budgets at the end of the FY. And it's commonplace for managers to want to spend it so as not to lose that money in the next FY. It's a real problem and organizational politics is the underlying reason for all of it.

Therefore simply advising the donating company to "fix your problem" is rarely feasible. It's like suggesting to a child, "stop crying and lift that car!" It's beyond their capability.

AdBlock?

[Anonymous Coward]

AdBlock has a nice little page where you can pay for using their service.

So happy with it I'm downloading again and sending them one.

It's all about the charters conflicting

[Anonymous Coward]

The charter of a company is to make profits, create value for its investors, and protect itself from competition.

The charter of a F/OSS project is to proliferate a technology, learn, create value for everyone, and get credit where credits due.

The charters do not align.

The reason why this company and many other fortune 500 companies do payout in this manner is to get cheap, but innovative resources to build stuff, it's like paying for an alliance (i.e. a stake or some level of control) The real problem is IP, if it's not a donation, then guess who owns the IP?

Some F/OSS projects like it (cause they want to sell out or IPO eventually). and some don't (keep their stuff in the free domain likely for research and academia).

Trivial

[Anonymous Coward]

Simply sponsor a change request and charge it on an invoice as an outsourced modification. The problem for the project owners receiving money is that unless they're already an organization, they'll have to deal with the tax consequences.

Appearances...

[Anonymous Coward]

Whether or not you are trying to dodge anything is not important. In this day and age of IRS rooting around your backside with microscopes it's the APPEARANCE of wrongdoing that will get you nailed to the wall. No one wants that kind of attention right now and it's very, very, very expensive to prove that you weren't trying to do something wrong.

this is a problem with the law; and a solution

[Anonymous Coward]

I am assuming the reason your employer wanted to structure it as an expense was that it would lose the donation money as a tax deduction.

A solution would be to calculate the amount of tax that would be paid on $20k, subtract it, and donate that smaller amount.

I am assuming that the reason this could not happen was because of budgeting bureaucracy, either where the chain of communicationis weak (ie, the accountant would never know) or the chain of command would disapprove. Such is life.

An overall solution would be to enter into an agreement for future services (ie, we will pay the project $5k for a special support line that is to be answered with x days of receiving a request or something. You would choose projects that produced something relevant to the type of work your company does. An implicit understanding would be that the support line would not be used. Nevertheless, the terms of the contact control and the line would legally have to remain open. There could be any number of reasons your company scrapped the project necessitating its use.

Of course, if uncovered this would be evidence of tax fraud for both entities, which brings us to the main reason no one wanted your money which is that, at minimum, it would risk the entity's non-profit status. In all honesty, your email probably sounded more like a trap from an undercover tax agent than it did an honest attempt philothranpy. Whoever was on the receiving end was smart to ignore you or disengage.

If you were to go through with some strategem to defraud like an implicit understanding that the support line was fictitious, you'd want to make sure that there is not a trace of it in your email, slashdot postings *ahem*, texts, or any other written record. Afterall, the IRS can read your email without a warrant. See e.g. http://www.democracynow.org/2013/5/10/are_the_fbi_and_irs_secretly. You'd ideally want to have this meeting in a private third party location, chosen a short time before the meeting. No phones or electronic devices. It's probably safe to assume you are not under individual surveillance, though if there's a drone overhead it may be recording everything. See e.g. http://www.youtube.com/watch?v=QGxNyaXfJsA. So maybe you want to arrive by some covert means lest they uncover the fraud and look back in time to find more evidence.

At its heart, this is a problem of our tax code, where it is cheaper to spend money than it is to give it away, the penalty for evading the senseless law is criminal charges, and the ability of the government to uncover evidence against you is unlimted.

And liability and IP issues

[Anonymous Coward]

More than just income tax, if I accept money for an open source project what do I give up in return? Will they come back and say "we paid you X dollars now you're our bich for life, or now we own the entire project?" OK in some countries it's good enough to email a couple of paragraphs explaining the limitations, but in others nothing short of contract written by a lawyer is good enough, and that lawyer may cost more than what's being paid.

You're in luck!

[mariox19]

I would be happy to accept your $20,000 on behalf of The Human Fund. We are an open source organization providing human contact—via email, telephone, in-person, or through web forums—to individuals like you and companies like yours. If you've read this post, you have already benefited from our service! Your donation will enable us (me, mainly) to spend more time online, providing human contact to others. I eagerly await receipt of your check. Have a blessed day!

consulting, hardware, membership

[ssam]

There are a few opensource companies (collabora, fluendo, yorba) that offer things like consulting, or commissioned work. you might have to pay them to do an actual task though.

would a hardware or hosting donation work? could you buy a server and ship it to opensource project. could you set up a mirror server for one (or more) linux distros on you network.

corporate membership. this has been mentioned already by a few folk.

licensing. got any centos servers, you could swap them to RHEL. maybe put RHEL onto some of your workstations.

Contact Bram Moolenaar the author of Vim

[stasike]

I remember reading somewhere that Bram Moolenaar is willing to sell you a special licence for his program if you insist that you want to buy it.
Vim is absolutely magnificent Free Software project - a very powerfull reincarnation of the vi editor. And the left-over money will be used for kids in Uganda.

See this page: http://www.vim.org/sponsor/index.php
Registered Vim user You can become a registered Vim user by sending at least 10 euro. This works similar to sponsoring Vim (see above). Registration was made possible for the situation where your boss or bookkeeper may be willing to register software, but does not like the terms "sponsoring" and "donation".

Uh

[jon3k]

You're asking them to commit accounting fraud with you. Why would you think this is OK?

X.org

[unixisc]

I'd suggest donating it all to X.org - since they've lost their tax exempt status, people wanting to be able to deduct their taxes would be less likely to donate there. So approach X.org, and ask the person there who forgot to file how to donate while getting invoiced for something really intangible. That sounds like the way to do it.

Contractor?

[zztong]

Could you hire one of the developers on the open source project as a contractor to implement a feature? It could be a modest feature at a generous hourly rate. It could be a feature the developer already had planned and perhaps could consider the feature to have been sponsored by your company, generating good will and a positive public image, in addition to enjoying a needed feature.

I'm starting a project called "Hello World"

[Anonymous Coward]

No donations whatsoever will be refused.

Sounds to me like fraud

[Archfeld]

Not that I am accusing you of anything, but a tax protected organization isasuing an invoice for services NOT rendered, and then receiving money that is NOT a donation sounds very much like a tax dodge and/or fraud. Maybe in the future you should just offer to hire one as a consultant for a week and pay $5000.00, or purchase some equipment that a project needs, that way there is value for value.

Where is the official money sink?

[Anonymous Coward]

These projects were most likely tax exempt 501(c)3 entities.

These projects were most likely no tax-visible entity at all. I'm working on a donation basis on LilyPond (the GNU music typesetter). I can write out bills (for which I'll have to pay income tax), and I actually accepted a donation of that size (which was from a private person actually without the need for a bill, but I also write bills) recently. But the bills I write are for the purpose of working on LilyPond, but they are not bills by the project.

The point is: I can accept substantial amounts of money and write bills for it (and be accountable for it), but the project as a whole can't do that. There just is no dedicated, controlled, and tax-visible money sink somewhere. And if somebody wanted to donate such an amount of money to the project rather than a single person, this would be rather hard to pull off.

hollywood

[Anonymous Coward]

The situation you describe is common, even in supposedly for-profit business. Try to buy a movie file from Hollywood some time. For them, I think it's a combination of "too rich" combined with commie/hippie values and fraudulent accounting. They want P&Ls to show a loss, and revenue seriously undermines that.

Tax evasion much?

[Anonymous Coward]

Your company is trying to "spend" the money, not donate it. If the groups you contacted were not IRS registered tax exempt organizations, they would have to pay taxes on the income from the invoices they sent you. Not to mention, that it sounds totally fishy to transact business as you described. It sounds like someone is stealing money somewhere. Did your CFO sign off on this little "donation" project?

Not if they USE the FOSS software. It's OK to pay

[Anonymous Coward]

It's okay to pay for things they use. That's not fraud. Just because they weren't FORCED to pay a certain amount doesn't make it fraud to pay for valuable work product.

For tax donation would be BETTER. Paying for SW OK

[raymorris]

On taxes, it would be BETTER for them to treat it as a donation. So no, this doesn't sound like a tax dodge. it sounds like they have some spare money in a budget for software / a certain project, they use FOSS software, and they want to pay for the software they use. Yay for them.

However, giving money away frequently requires a approval process by the board of directors, which meets for times per year, so if it takes two board meetings that's six months. (This so that mid-managers don't give company money to their brothers.)

Bureaucratic idiocies are real.

[GPS Pilot]

Last financial year, we had an underspend at work, and it was suggested...

Let me guess: this person works for the federal government.

Bureaucratic idiocies are real. When I worked for the federal government, our unit's financial controller sent out an annual email soliciting ideas for how to spend the underspend.

"Sent it back to Washington, so the Treasury can borrow marginally less money from China et.al." was never an option, because doing so would cause the unit's budget in the next fiscal year to be cut.

A better strategy, that might actually result in sub-trillion-dollar deficits, would be to reward government entities that don't spend their entire budget. Tell the financial controllers to send 99% of the "underspend" back to Washington, and personally pocket the other 1%. Suddenly you will see massive underspends appearing all over the place!

Re:Bureaucratic idiocies are real.

[Anonymous Coward]

If the government directed to spend $10,000 on new rifles, they expect you to buy $10,000 worth of new rifles, not one rifle with 99% sent back to Washington.

Re:Bureaucratic idiocies are real.

[Princeofcups]

A better strategy, that might actually result in sub-trillion-dollar deficits, would be to reward government entities that don't spend their entire budget. Tell the financial controllers to send 99% of the "underspend" back to Washington, and personally pocket the other 1%. Suddenly you will see massive underspends appearing all over the place!

No. You'd see people gaming the system to get the maximum budget (over what they need) so they could have the most unspent. These sorts of "obvious" solutions are almost always ridiculous if you put in a little thought.

Re:Bureaucratic idiocies are real.

[Anonymous Coward]

This has been done in France, with 50% of the savings granted to the employees of the savy department. And suddenly nothing happened.

Re:Bureaucratic idiocies are real.

[tendrousbeastie]

It would be an incredibly stupid instruction to tell someone to spend $x on rifles, without any conditions on how many or what quality they should be. There is no incentive to get a good deal.

The proper instruction should be to procure x rifles of y quality, with a mximum budget of z. Give the procurement officer an incentive to come in lower than z and also measure and enforce y, and you have a decent incentive structure that is more likely to get results.

Re:Bureaucratic idiocies are real.

[GPS Pilot]

Our unit had already spent all the money it needed to, for those fiscal years, to accomplish its mission. Only then did our financial controller send emails asking for suggestions on how to spend the "underspend."

Cutting corners on accomplishing the mission is certainly not something that should be rewarded, and that's obviously not what I was talking about, unless you assume malicious intent on my part.

By the way, we ended up with "underspends" despite the fact that we weren't trying particularly hard to economize. We should have been. That wasn't our money we were spending; it was money withheld from the paychecks of people who earned it.

Re:Bureaucratic idiocies are real.

[lilrobbie]

Your point is correct, as is the one you replied to. The parent was basically saying that *if the department knew in advance* that underspend would result in a reward (as you suggested), it is highly likely to eventually degrade into creative accounting that reports an underspend (to secure the bonus), at the expense of delivering functionality.

Your situation works because no-one benefited directly from the savings, and no-one was focused on those savings. As you stated, you focused on delivery. This seems like an unusual situation to me though, as many places I've worked at are loaded with people who are strongly motivated by fiscal means rather than customer/company loyalty.

If the focus somehow remains on services, there is no problem with rewarding savings. If *just* savings are rewarded, the system would fall into a heap quickly though due to human greed.

Re:Bureaucratic idiocies are real.

[GPS Pilot]

You still don't seem to see my point, which is, it shouldn't be too difficult to set up a regulatory environment that rewards departments that don't spend their entire budget, and at the same time, punishes departments that use fraudulent means to try to obtain that reward. ("Fraudulent means" would include curtailing spending that is necessary to accomplish the mission.)

Why should my situation be considered an "unusual"? It happened four out of four years that I was employed there. When departments know that next year's budget will be cut if they don't go out of their way to spend 100% of this year's budget, wasteful spending is the usual and predictable result.

Re:Bureaucratic idiocies are real.

[lilrobbie]

I do follow your point, I just don't agree with the assertion it is easy ;-). The ways to game a system like this are blindingly obvious.

I am honestly thrilled it works at your company :) (how big is your company out of interest?). I haven't disputed that it can work under certain conditions. But, it does require either a very carefully engineered reward system (i.e., accurate metrics that can be tracked to ensure there isn't deliberate under-spending being performed), or a group of honest people who genuinely care about the company's health and the customers they serve. Metrics work well for sales companies, but are difficult to enforce for a lot of tech-heavy or research heavy jobs. In the latter two, the metrics are not obvious for tracking expenditure.

I'm interested as to how your department is able to underspend four years in a row. Did they get any change to their budget after underspending the first year (i.e., up, down, stagnant)?

If you're interested in the results of driving towards savings, it's worth looking at a book called "The Wallmart Effect". The plot spoiler is that continually trying to save more money will inevitably lead to long-term sacrifices to allow short-term savings. If you make someone's salary dependent on how little they spend, they find intelligent ways to hide the accumulating debt from you (this isn't a hypothetical situation... this actually is happening with numerous large supermarket chains).

Re:Bureaucratic idiocies are real.

[Anonymous Coward]

Most large corporations work the same way.

Re:Bureaucratic idiocies are real.

[GPS Pilot]

I am honestly thrilled it works at your company :)

Go back to my original post: I was working for the federal government, and they were sending out annual emails asking for suggestions on how to spend the "underspend." Things weren't working there. That's dysfunctional.

I'm interested as to how your department is able to underspend four years in a row. Did they get any change to their budget after underspending the first year

My unit got annual increases, because by the end of the year, they managed to spend what had been shaping up to be an underspend. All the underspends were, frankly, wasted on crap we didn't need. That too is dysfunctional.

Speaking of Walmart, I can use it to make an example of what I'm talking about. The person controlling a store's finances should be rewarded when expenses are reduced. One way to do that is to find brands of janitorial supplies that work nearly as well as top-of-the-line brands, at half the cost. (Walmart's own "Great Value" store brand might fit the bill.) But if costs are cut to an unreasonable degree, the floors will be filthy. So the store should be judged on cleanliness, as well as expense levels. If done right, this will drive store management to find the sweet spot in the trade-off between low expenses and spotless floors.

Re:You asked for something sketchy, and nobody bit

[richlv]

why would that be lying ?
they wanted to support some opensource projects but had accounting limitations (see how large companies work. it's not always fully logical on all levels...)
so providing invoice for support would be perfectly fine. have questions about this product ? go ahead, for 5k we'll answer them during the next year.

Next time you have too much money...

[einar.petersen]

I'd be happy to help anyone with excessive cash flow problems and can point to a project with an actual product you could get for the money, a product that would be delivered and invoiced within the fiscal year and an opportunity for your company at the same time to boost their corporate CSR and promise it would be a worthy FOSS project you'd support and one that needs your support. Any amount received would go to pay for programmers to work on applications and or hardware according to project needs. But if you are representing a serious entity, feel free to contact me through my personal website - Scammers please stay away, I have had enough fun with fighting against cyber criminals trying to twarth the efforts by destroying sites involved and thus using up precious time that should have been used for development instead funneled into cleanup operations etc. Though I would like a multitude of posters be quite suspicious to anyone just offering money as this has happened more than just once.

Pay some maintainers / major contributors (me?)

[raymorris]

I would pay some of the major contributors or maintainers who developed, tested, or documented the code you use. If they are self-employed like many developers,
they can handle it just like any other invoice. No need to label it "support" if you don't want support, you can pay for FOSS software if you want to! I contribute a lot to Moodle, a little to Apache. If you use either of those, I'll gladly accept some accept some payment.

I tried something like that a while back.

[Anonymous Coward]

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.

Lots of projects are work spinoffs

[Just Some Guy]

Several of the projects I've released were written in-house for my employer to accomplish a certain task. Because I've made it a habit to work for enlightened employers, most of them have been receptive to me releasing my non-company-mission directed software under various open source licenses.

So say I'm working at Foo Corp and wrote Bar Widget to help them get something done. Bar Widget isn't something we make money directly from. It's just a piece of infrastructure that we needed, and my boss is cool and lets me put it on GitHub. You come along and say, "hey, JSG, we'll give you money for Bar Widget as long as you send us an invoice for it." Great. Thanks! But how do I do that? My boss is a good guy, but asking him to let me send companies invoices to use the software he paid my salary to write is a bridge too far. So maybe I ask Foo Corp to bill you instead; then what? I'm only going to see a portion of that money, probably routed in as a (taxable!) bonus on my next paycheck, minus however much he thinks it cost him to process the invoice, accounts receivable, etc.

In that situation, I'd have given you a heartfelt "thanks for thinking of me!" and started ignoring your calls and emails, too. It's not that I don't like free money, but that I don't actually have a way to accept it that won't either 1) get me fired or 2) have such a high overhead that it's not worth the effort to collect.

Were any of these 501c(3) nonprofit organizations?

[MyFirstNameIsPaul]

I recently read a book about forming nonprofits. It creates a lot of trouble for a nonprofit to accept money for services instead of as a donation. It may be that it wasn't worth the trouble to accept your donation or even they didn't know how. A better method may have been to find developers who voluntarily and substantially contribute to the projects and have them invoice your company as they would not be subject the regulations, so long as they are not on the board of the nonprofit.

Open Source Accounting Agency

[timdaly]

I have tried for years to find a funding source for Axiom, an open source computer algebra project. I checked with the NSF, DARPA, and several companies.

If I were at a University there would be no problem. I could submit a grant proposal, they send the money to the Provost, he sends it to me, and HE ACCOUNTS FOR IT. The snag in trying to fund open source appears, in every case, that there needs to be trusted accounting. So, the problem is simple. We need a firm whose job it is to receive, disburse, and ACCOUNT FOR, grants and donations.

That seems simple enough. Set up a small shop (1 person?) who is paid to manage funds, handle taxes, handle banking, handle receipts and invoices. How hard can this be, right?

IBM contributes to open source through a Linux foundation. I contacted the Linux foundation about setting up an accountant or two to handle the accounting. They never replied. I contacted several people I know at IBM to "donate accounting services" or fund an open source accounting person. They said it was not possible.

The money would be useful to pay for things like servers (currently costing me about $3000 per year out of my pocket), or fund a conference, or fund developers to attend the usual conferences. It would not be to pay developers.

Anyway, I have tried to fund this project for nearly 12 years and have yet to be successful. If you can figure out a way to handle the accounting, I'm all ears. Send your ideas to daly at axiom-developer.org

Tim Daly

Re:Open Source Accounting Agency

[Anonymous Coward]

you may want to try something like

kickstarter
gittip

see a more extensive list here: http://thechangelog.com/how-to-fund-your-open-source-projects/
or if this is no good try this

http://bit.ly/1dMZZ9n

Re:Open Source Accounting Agency

[Anonymous Coward]

Good Project.. Somebody please create crowd sourcing for software developer.. kickstarter seem

Re:Open Source Accounting Agency

[blackorzar]

Have you considered to be part of one of the open source foundations?
http://www.spi-inc.org/ Software in the Public Interest ( http://www.spi-inc.org/projects/associated-project-howto/ )
http://sfconservancy.org/ Software Freedom Conservancy
http://www.ffis.de/ (Germany)
And the most known Eclipse, Apache and Outercurve Foundations

The process for handling the money is very similar as you have described. The foundation is the entity that receives the funds (money or equipment) and tag them for the project that they were donated. So the foundation keep the donations for each project independent. If you need money for a conference or to pay the hostings and your project have the resources then they can send the project leader a wire or a check or in some cases make the payments directly in behalf of the project. The expenses have to match the legal policies for a non profit organization (all the previous samples are fine).
Each foundation has its own rules and processes to be accepted, there was a really interesting thread some months ago in the vertx mailing list where some of the foundation leaders exposed their own strengths: https://groups.google.com/forum/#!topic/vertx/WIuY5M6RluM%5B1-25-false%5D look at the posts from:
Jim Jagielski (Apache), Bradley M. Kuhn (SFConservacy), Kohsuke Kawaguchi (Jenkins, this project is on SPI), Mike Milinkovich (Eclipse), Paula Hunter and Stephen Walli (Outercurve)

gittip

[__aatbmk7644]

GitTip.com seems like a great way to support the developers who are making software you care about.

Simple solution

[Spudley]

I don't get why this is so difficult.

There are a number of well known open source organisations that fit your bill with no problems at all.

Think Canonical or Red Hat.

They're well established, and well known for selling support contracts for their otherwise free software.

What's the problem here?

Re:You asked for something sketchy, and nobody bit

[AK Marc]

. You shouldn't have to do something shady and possibly illegal to support open source.

It is not illegal to overpay for an item to support some organization. If that were the case, the Girl Scouts is the largest criminal organization on the planet. Many companies have relatively set budgets. It's hard to get a capex dollar moved to a donation dollar. It's easier for the company to "buy" a pencil for $5000. There's nothing illegal about that, and it's only "shady" if someone misrepresents the transaction. The issue is on the non-profit's side where they don't sell anything with variable value. I know more than one musician that sells CDs with a "set your price" (with a minimum to cover shipping). If the non-profit sold a hat with a "set your price" they could have paid $5000 for a hat, and everyone would have been happy.

Cat in Can?

[Squiggle]

Might not work in this siutation, but perhaps posting a reward for a feature you wanted would be close enough to purchasing services?

https://www.catincan.com/

Certainy this seems like a good, and likely typical problem for someone to solve so that the interface between free software and large organization accounting mesh better.

Hackerspace

[Anti-Social Network]

Step 1) Buy *real* equipment a hackerspace will find useful, e.g. power tools, soldering iron, 3d printer, etc. (hint: ask them what they need) Step 2) Give actual equipment to hackerspace (or maybe a school), where FLOSS evangelists are trying to actually put "the rubber to the road" as it were, spreading the good news to the masses, using FLOSS and may then have more funds to give to actual coding projects Step 3) Profit! (in a moral, rather than financial sense)

Re:You asked for something sketchy, and nobody bit

[Anonymous Coward]

Not a lawyer so I can't say whether or not the proposal that was given is truly illegal, but what's different here is that the person with the money not only made the demand to the vendor to take his money, but to take it for services not normally rendered by that company at an arbitrary price that the payer set. This would set off all sorts of red flags for money laundering even if no actual crime is being committed here.

Now if this was the *regular* way for a company to sell goods/services, I don't think it would set off the red flags, but if someone out of the blue calls up another company and demands that they take 20 grand off of them for what on the surface might look like frivolous or poorly-structured goods/services, yeah, it's gonna raise flags with the IRS and law enforcement.

give it to the Synergy folks

[Anonymous Coward]

they deserve it, they need it. at least some.
http://synergy-foss.org/
Thanks.
(I am not related to the project in anyway, but have used it and payed for it. It's just great)

Re:You asked for something sketchy, and nobody bit

[AK Marc]

What flags would it set off with the IRS or LEOs? Money doesn't get laundered by giving it away. If someone tries to give you $20,000, it may set off "too good to be true" flags, but there's nothing illegal about it. The red flags are about the expectation it isn't true. If it is true, then there's nothing suspicious about it.

FSF/OSI/etc. corporate membership program

[Anonymous Coward]

Your company might want to join some open source organization's "corporate membership" program. As they are used to dealing with big companies, they should be able to give your company an invoice for "joining their corporate membership program" (effectively a donation but probably not mentioned as such). Some of them are:

- http://www.fsf.org/patrons (Free Software Foundation)
- http://opensource.org/affiliates (Open Source Initiative)

Re:You asked for something sketchy, and nobody bit

[Anonymous Coward]

No, he was not asking for fraud, but for a way to for them to be able to pay for things they use -- presumably they were and are using products of OSS projects. This would be done to support projects. There is nothing particularly fishy here; especially considering that one could buy, say, support from the project. This is not a bad way to build a relationship with OSS projects.

Unlike almost everyone around here, it seems, I actually HAVE done this, both as purchaser and seller. An open-source project I lead does actually offer commercial licensing, and one of main reasons is that occasionally (not often, but every now and then) companies do approach us, asking whether they could buy a license. We let them know that they really do not have to -- Apache License 2.0 is a fine way to go -- but sometimes they indicate that they'd still rather buy a non-OSS license and be done with it. Sums involved are not high since we don't feel it would be appropriate to get greedy; but they are not completely negligible (like 200$ or 500$, depending a bit on who approaches us :) ).

Shut up and take my money!

[coffecup]

Insert picture of fry from futurama with a wad of cash in his hand

Hire a core dev to do a presentation

[Fencepost]

As others have noted, there needs to be a service provided to cover everyone's legalities. If a charitable donation isn't viable, don't try to do one while trying to hide what you're doing - bear in mind that frequently for all involved the coverup is worse than the crime*.

That said, if there's an open source project that you've gotten significant use and value out of and you'd like to support it as a business expense, there's a trivially easy way to do it that beancounters won't blink at:
Contract one or more core developers to come and do a day or two of training/consulting at a cost of $4000 plus expenses. Four grand for an in-office trainer for X of your staff? Completely unremarkable expense, and you really do get something more out of it while supporting that project.

* Clinton impeachment? Lying under oath. Martha Stewart? Lying to investigators.

You worked at Enron or something?

[WebCowboy]

...because I cannot figure any other reason you would thing such a practice is "ttotally normal". It does happen, it is on the fuzzy legal line where it probably wouldn't result in legal trouble yes. However, this is FAR from "totally normal".

The spending pattern you talk about *IS* a common situation, though in my experience it is mostly what happens in public institutions or perhaps a few of the largest of corporations in departments that are "revenue sinks" rather than "revenue generators". That is because of the budget cultire. Managers are compensated and their departments staffed based on a budget handed down in a political process. Such operations are not profit driven--the goal is to reach a "zero balance". Chronic deficit spending can be politically harmful, but chronic UNDERspending makes you a target for budget cutbacks--it is perverse but that is what happens--there is no incentive for efficiency in such an operation (and is why socialised industries without private competition are notoriously bureaucratic and inefficient).

In Canada political pundits call this "March Madness" because that is the fiscal year end, when federal government offices that are in surplus spend like drunken sailors, whilst at the same time politicians grandstand and court lobbyists and so forth at the same time. Until the Great Recession started it really was madness, becasue the whole government had been operating in surplus for many years and every department tried to maximise their spending to motivate expansion of their budgets. Now with a few years of deficits they've sobered up a bit, but the motivation to spend all allocations is still there to try and defend against cutbacks.

What is NOT commonplace at all these days is a trumped up "purchase" of imaginary products or services because if the Auditor General finds such items it could (and has) become a political mess--this is exactly what happened in the "sponsorship scandal" in Canada, where the federal government earmarked many millions of dollars to campaigning against a vote in Quebec to secede from Canada. a very large portion of that money was not spent on "real" materials and services, so government officials "bought" fake marketing services--worst of all the "supppliers" of those fake services were mostly supporters of the ruling Liberal party of the day who in turn made nice donations to the party ini the following elections (essentially funneling taxpayer revenue into the political party).

Since that scandal the government has been under a microscope over questionable purchases--no matter what the scale. Presently there is a bit of a scandal over expenses filed by Senate members--and though it is literally about %1 the size of the sponsorship scandal it has been very damaging politically. Now, say that a gov't department approached you unsolicited and said "here is $5000--you don't need to do anything but send us an invoice" would it not cause you to pause? Even if they wanted nothing else what would happn if it surfaced? Would you want to be associated with an unethical scheme of this nature? What if you had donated to the ruling party in the past personally? Optics of that are terrible.

I'd have to say that I woud not take this kind of "money for nothing" for just such a reason, whether it was from a gov't department or a corporate windfall. It may not be obviously illegal but it is ethically dubious and bad optics--enough to raise red flags in an audit. I would want no part of that.

There is another problem with this as well not even related to the above. If these project maintainers get money in exchange for an invoice for any reason it cannot be a "donation" or "gift" on the books--and that has significant tax implications especially if the FOSS project is a registered foundation or simply a personal project. In such cases unless proper services can be delivered and the amount is large enough it may be less trouble financially or legally to accept a "donation" in the form of a fake invoice. And in this c

Smells in here

[WebCowboy]

--too much BS.

transparency != complexity. Having relatives who worked in the DND I know that it is mostly about bureaucratic inertia at best and NOT being fair at worst.

Having to follow public tender rules designed to manage huge projects for purchasing hand tools, power cords, and other sundry items is not reasonable nor is it expected. It is done because of the culture of the organisation, and sometimes to REDUCE transparency. The rules do NOT say such illogical accounting procedures that average out costs like that are mandatory. in fact the strategy in that environment is chosen to REDUCE transparency. You sign a big huge contract then single source all under that one party and do the LEAST amount of breakdown as required by law. Sometimes it is done to hide shenanigans, other times it is because of "national security" (legitimately). Then some wag asks "wow your tools budget is huge--what does a hammer cost" but there is no accounting for individual tools, so some bean counter is assigned to pull a number out of his butt (hmmm..inventory control shows 'x' hammers added, sum('quantity')='y' and total dollars spent was 'z' so hammercost=z*x/y ... hmmm that is $20k...oh well it's a number and they wanted a number so there it is). But it isn't really--they just fill out a req form for some hammers then send it to purchasing then hammers arrive...and no money or invoices or anything passes hands until the end of a fiscal period, so that is all they have to go on.

Again, it is quite the opposite of "transparent" and "fair"--it is all about "minimum compliance"...follow the law to the letter and do no more, because the more detail is available the more questions get asked. The only thing that makes it "fair" is that the rules are the same for all (the fact the rules are stupid and unworkable for many matters not).

Well you still have to pay attention

[WebCowboy]

The question does not have enough detail to make ultimate judgments on the approach they attempted, but what is there suggests what mistakes they made.

Firstly you don't have to yel at the m SUPPORT! Well duh, that is the first thing anyone would think (including these people as well). Purchase a support contract is obvious.

Which brings me to the other point you seemed to miss completely--that this budget surplus of $20,000 had to be "spent" AND PRODUCTS/SERVICES RENDERED within the fiscal year, which was only 4 weeks or less by the time the offers went out! I think is is quite possible that making out four $5000 invoices for just a couple WEEKS of a support contract and making it look legitimate could be a challenge without some legitimate record of services or products delivered over that short period (where are the transmittals? Reports? Bills of Lading? Meeting minutes? Receipts for expenses?). To make it unsuspicious would require some degree of fabrication (inventing face documents, back-dating, etc), and then you are in murky ethical territory.

So, making a superficial post without giving even cursory thought to what was in TFA, then b!tching about the decline in the quality of discussion of others despite the lack of effort put in by yourself, I think you've been rightfully down-modded.
 

Re:Well you still have to pay attention

[BranMan]

The only way to handle this properly would have been to negotiate a new feature in that open source project the would benefit the company. It could be anything. Then send them an invoice / quote for the $5K to add the feature. They send you a check, you send them the first 'cut' of the new feature - does not have to work yet, this is just to get a delivery of it into the company's hands within their time frame - and finish it as soon as you can.

There you go - legitimate work for a fee, custom feature added to the project - everyone happy. C'mon - this isn't rocket surgery!

Spent it...

[Anonymous Coward]

on Whores and Wine.

Bureaucracy not the Tax itself

[Roger W Moore]

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.

It is not just tax that is the issue it is the overhead to do the government's job of figuring out for them how much you owe. If you already had a company infrastructure set up I would completely agree with you but this is a group of open source developers we are talking about here. They probably don't even exist as any sort of legal entity. The cost and effort required to set themselves up as a legal entity and then figure out whether tax is due and if so how much and what sort (should they be charging VAT/sales tax for example?) is unlikely to be adequately compensated by $5k.

Really it boils down to a simple cost/benefit analysis. If earning you a one-off $5k payment costs look like they will be $5k or more in admin overhead and taxes, not to mention an additional cost in time, why bother?

Re:You asked for something sketchy, and nobody bit

[Anonymous Coward]

They are potentially commiting fraud. They are creating invoices for services they have no intention of delivering, masking donations as legitimate services is cooking the books. This whole thing raises alarm bells end to end. Either Donate the money or don't, asking the OSS project to make up phony invoices and potentially take on legal and tax burdens is dodgy in the extreme and yes this is the sort of thing that sets of Alarm bells.

Fed Fiscal year is October

[Anonymous Coward]

Used to be mid calendar year, but Nixon slipped it three months to fix a deficit.

Federal fiscal year is Oct 1 (nominally.. it's actually the Monday or Sunday near that date, so the year has 52 or 53 weeks)

But it's not unusual to have use it or lose it kinds of budgets.

Re:You asked for something sketchy, and nobody bit

[AK Marc]

They are potentially commiting fraud. They are creating invoices for services they have no intention of delivering, masking donations as legitimate services is cooking the books.

If overcharging for items and masking donations was a crime, then every Girls Scout would be in jail. Since reality proves you wrong, I'll side with reality over some AC.

Either Donate the money or don't, asking the OSS project to make up phony invoices and potentially take on legal and tax burdens is dodgy in the extreme and yes this is the sort of thing that sets of Alarm bells.

There is never a case where the tax burden is more than the money donated, so it's always in the best interests of the non-profit (OSS or otherwise) to accept the money. There is no tax benefit in selling something over accepting it as a donation, so it'll set off fewer flags than a straight donation.

Solution

[Mantrid42]

Contract them to deliver a custom build of their software. The minimum you can spend on their custom work is $5000. Have them deliver a build with a "Hello, Company X" startup message, and no other changes.

Money Laundering - Red Flag Alert

[D,Petkow]

This would definitely cause a red flag in a world where anything that seems "too good to be true must" be a scam (e.g. nigerian prince, rich descendant from the middle east, make thousands of $$$ by clicking on ads, MLM pyramids, etc). BTW any good accountant could had it done for you for a small fee, without the "active participation" of the targeted sponsored projects. Then after all was done in paper - just send them over the money "post factum": eg. you are welcome to claim your $5000 at western union/ money bookers/ etc. Also another user suggested creating a branded version of the open source - e.g. with your company's logo on it - no other changes for 5K. Sounds legit

Huh

[Anonymous Coward]

if your company has got that kinda cash to blow couldnt you do a small register fly party? pay for a few hookers and lines of coke at a sleezy bar somewhere?

Don't donate money

[Anonymous Coward]

Most Open Source projects will need hardware, web hosting, etcetera. Offer to donate that instead. You'll get the invoice from the actual commercial supplier, with your name on it. The OSS project benefits from lower cash expenditures, which makes their accounting easier instead of harder. You justify it internally by stating that "the one year of web hosting provided to project X will guarantee our continued access to a software used in our business process".

errr... receipt?

[Anonymous Coward]

I'm a small business owner in the UK. AFAICS, the donating company gives the developer the money and requests a receipt. The receipt counts as a sundry expense to the donator. To the developer, it's just straight income, regardless of the reason - but because it's not cash the developer will have to declare it in their self-assessment (if they're not a company). Why is that dodgy? Maybe it's just another example of how tax-haven-friendly the UK is!!

The need for invoices is for double-entry accounting, but surely it's just an internal document that's needed? That's what expenses forms (maybe a capex but there are other rules about that) are about.

Simple soution

[Anonymous Coward]

There are a lot of suggestions and concerns here that amount to this: here's a scheme to get around the rules, and schemes are bad.

The solution is to ask for something special, that they could easily offer but haven't chosen to and offer to pay in order to get it done rapidly.

Want to support my favorite pet projects? Here's how:

• 
   
• Pay for a new feature they're close to finishing. Or even a couple. Particularly if you can align it with your business interests. That way you'll be a very appreciated customer immediately, they'll benefit and your company will benefit. I'd like to see ExQuilla get paid to do the SMIME integration. It's already being worked on, they have it on the map, but if you provided sufficient incentive, they might be able to get it out sooner.
• Pay for a custom configuration. I'd like to see the Adblock people making money, so maybe pay them to build you a custom filter list. It wouldn't take too much effort, as in they could probably do it in an hour, but it is something they could bill you for and something your company could actually use.
   
• I really liked Annvix and the developer was a good guy who could have used a cash influx. He could have built a very good Xen Dom0 system and I wanted him to, but incentives/bills/ready cash didn't come together. If I'd had several thousand dollars to make up for his derailed time, he could have whipped me up a prototype in a day or two that I certainly could have appreciated and might have been beneficial to the project.

So essentially, I'm saying, pay the project to do something they are inclined to do anyway that would benefit your company at the same time. Everybody wins and there is no need for a scam or any worries about a scam.

It is the taxes stupid!!!!

[Anonymous Coward]

I run a Linux User Group.
We are NOT setup as a non-profit.
We have ZERO overhead and spend $ZERO. Everything we have / do is 100% donated goods and services - NO money.

Money causes us tax issues that we just don't want to deal with. We have meetings and training because it is fun, it is NOT work. As soon as money gets involved, the government wants their take and that means tracking all sorts of crap.

That is NOT fun.

A local company wanted to donate some money to our group a few months ago. Just $1000, but that was more than we could easily accept with a check. I suggested that they buy a pre-paid VISA card and hand that over to me. Never heard from the company again. At the time, it looked like the LUG was going to loose our meeting location due to University politics, so accepting **any** money would not have been a good idea in my mind.

I'm trying to avoid any tax considerations - and definitely do not want to become personally liable for this "income" as far as the IRS is concerned.

Does this make sense?

I've been the treasurer for a 503(c) organization previously. That organization had an annual budget just under $20K. Tax filings sucked. I'd rather NOT have the money then have to go through that again.

F/LOSS projects are supposed to be fun. Having too much money makes them "not fun."

The best way that I know to "fund" most F/LOSS projects is to pay for hotels, airfare and food expenses to the key members to attend conferences.

Illegal...

[YoungManKlaus]

i am pretty sure billing for stuff you dont do is illegal and we currently have some pretty high-profile cases going on in this regard in my country at the moment (payments in the order of millions for "adviser activities" which never happened and so on) ... the thing gets esp. juicy if you involve not-for-profit organisations and political parties (or companies with close ties to them).

Also what's wrong with donating? At least in my country you can even get your tax reduced for stuff like that.

FSF has a shop for these sorts of things...

[Anonymous Coward]

The FSF has a shop for these sorts of donations...

http://shop.fsf.org/

I remember about 20 years ago RMS asking if we wanted to buy any of the FSF's GNU software on tape, predominantly to support the FSF financially. Today you can buy autographed books, shirts, reference cards, stuffed GNUs and everything else under the sun. This is not a hard problem..

SQLite sells optional licenses for $1000

[tech-law-ny]

http://www.hwaci.com/cgi-bin/license-step1

why not spend the $20k in t-shirts?

[Anonymous Coward]

support openbsd or another open source project by getting their nerdy t-shirts for everyone in your company! and their families!

http://www.openbsd.org/tshirts.html

Re:Not if they USE the FOSS software. It's OK to p

[Archfeld]

I did not catch the part in the article which mentioned they were using the software. I was under the impression they just found several FOSS projects they 'liked' and wanted to donate some funds. In either case there ought to be a simple way to do so, sad to see a good cause go unrewarded in the presence of 'free' money.

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Purely out of interes

[Anonymous Coward]

People on open-source are working purely out of interest. It is based on concept of sharing knowledge freely to produce something innovative or to solve each other’s tech issues. Money is neither the motivation nor the incentive. Developers on these projects can be working from different parts of the world. People who start the project just leave the idea on internet/server and rest just flows on its own and in almost costless way.

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