Re: [tdf-discuss] Foundation Fundraising

On 9 February 2011 18:44, toki <toki.kantoor@gmail.com> wrote:

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> On 02/08/2011 04:36 PM, BRM wrote:
>
> > Why resort to deception and Microsoft-esque tactics to promote LO?
>
> FWIW, it isn't uncommon for 501(c)3 organizations to have a for-profit
> organization operating "at an arm's length". Microsoft-esque only if you
> think that a 501(c)(3) organization should pay corporate income tax on
> all the revenue it generates.

And this is very different in the UK. The only companies that are able to
allow donations against tax are registered charities so a foundation set up
as a company limited by guarantee or a CIC will not get tax relief on
donations. They will be able to allow operating expenses against tax which
is why there is no tax to pay if they don't make a profit. It's not
different from any other commercial venture, usually they just don't pay
dividends to shareholders they put that money back into the service the
company was set up to support. If a lot of income is likely to come from
donations, in the longer term an organisation that can claim back the tax
paid is essential but it might be necessary to do something less optimal as
a stepping stone to get there.

Depending upon how much revenue is generated from sources other than
> grants and donations, for the US at least, serious consideration needs
> to be given to establishing a for-profit that operates at an arm's length.

The thing is that company law is different in different countries so in a
multinational project some account has to be taken of that. It seems, for
example, much more expensive to set up a not for profit company in DE
compared to UK and tax exemptions seem easier to get for donations in a
501(c)3 in the USA.  TDF owe it to its community to get the best working
deal that is legal and ethical and that requires understanding of several
options without getting sidetracked into spurious arguments based on half
understandings and irrational fears about competitors' ethics.

jonathon
> - --
> If Bing copied Google, there wouldn't be anything new worth requesting.
>
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>
>                                           DaveJakeman 20110207 Groklaw.
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