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

[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

[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

[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

[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

[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.

Try actually donating?

[Anonymous Coward]

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

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?

[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".

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

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.

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.

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.

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...

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

[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.

Hire a developer.

[Anonymous Coward]

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

Varnish Moral Licence

[beebware]

Did you consider buying a Varnish Moral Licence ?

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.

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.

Sue them ...

[Anonymous Coward]

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

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)

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.

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.

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.

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!