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More Legal Protection for FOSS Developers - Software Freedom Conservancy Launches
Monday, April 03 2006 @ 09:11 AM EDT

Here's yet another creative idea to protect FOSS developers. The Software Freedom Law Center has launched the Software Freedom Conservancy, which is designed to permit certain projects accepted as members, such as Wine, uClibc and BusyBox currently, to apply for and then benefit from nonprofit tax-exempt status. The Conservancy does all the onerous paperwork needed to set it up and run that way.

It does the paperwork and it provides the umbrella. It will file one tax return covering all members' projects, and it will handle the other corporate and tax issues that are associated with becoming a nonprofit and then operating as one, as well as holding project assets and managing them as the project directs. That leaves projects members free to code. It's a free service, if your project is accepted as a member.

There are a number of benefits to being a nonprofit. First, folks are more likely to donate money, because they can get a deduction at tax time. Also, there is protection from personal liability for the project. That basically means that if somebody sues you, they can't take your house if you lose. Of course, it's ultimately up to the IRS to decide who qualifies for nonprofit status, but all the necessary paperwork to apply will be provided.

This is an amazing arrangement. If you apply for nonprofit status, it's vital to keep everything just so, and it's a major time commitment with nonstop paperwork, so what the Conservancy is offering is, for those accepted as members, to take that administrative load off of you developers, because they know how to do this, and you probably don't. Here's the press release, with information on how to apply.

***************************

SOFTWARE FREEDOM LAW CENTER LAUNCHES CONSERVANCY

Software Freedom Conservancy offers nonprofit umbrella to free and open source projects

NEW YORK, April 3, 2006 – The Software Freedom Law Center (SFLC), provider of pro-bono legal services to protect and advance Free and Open Source Software (FOSS), today announced it has established the Software Freedom Conservancy to provide free financial and administrative services for a collection of FOSS projects through a single entity.

“The mission of the Conservancy is to provide free and open source software developers with all of the benefits of being a tax-exempt corporate entity without having to do any of the work of setting up and maintaining such an entity,” said Dan Ravicher, legal director for the Software Freedom Law Center and one of the initial directors of the Conservancy. “Letting projects pass off the mundane administrative burdens placed on those wishing to benefit from nonprofit status is a significant way to keep developers focused on what they do best – writing software.”

The Software Freedom Conservancy (conservancy.softwarefreedom.org) will be a fiscal sponsor for FOSS projects by providing free financial and administrative services to its members. It will provide individual developers protection from personal liability for their projects and will seek to provide participating projects with tax-exempt status, allowing them to receive tax deductible donations. The Conservancy will file a single tax return that covers each of the member’s projects and will handle other corporate and tax related issues on behalf of its members. In addition, the Conservancy can hold project assets and manage them at the discretion of the project, which removes another fiscal burden from developers who are focused on software innovation.

“We understand the importance of having our legal, financial and administration houses in order, but our focus and energy needs to be on our code,” said Alexandre Julliard, The Wine Project, one of the Conservancy's initial members. “The Software Freedom Conservancy gives us the opportunity to join with fellow community projects to gain needed legal and fiscal protections in a market where disruptive technologies such as open source software sometimes generate aggressive actions from other market participants.”

Other initial members of the Conservancy include SurveyOS, BusyBox and uClibc. For more information about the Conservancy and how to become a member, please visit conservancy.softwarefreedom.org.

About The Software Freedom Law Center

The Software Freedom Law Center – directed by Eben Moglen, one of the world’s leading experts on copyright law as applied to software – provides legal representation and other law-related services to protect and advance Free and Open Source Software. The Law Center is dedicated to assisting nonprofit open source developers and projects. The Conservancy is an example of how the Center is working to address the needs of FOSS projects that are playing significant roles in the software market. For criteria on eligibility and to apply for assistance from SFLC, please visit the website at www.softwarefreedom.org.


  


More Legal Protection for FOSS Developers - Software Freedom Conservancy Launches | 112 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
More Legal Protection for FOSS Developers - Software Freedom Conservancy Launches
Authored by: Anonymous on Monday, April 03 2006 @ 09:33 AM EDT
Looks like a good idea.

[ Reply to This | # ]

Off topic thread
Authored by: MathFox on Monday, April 03 2006 @ 09:35 AM EDT
For other Open Source legal issues.

If you have something to link to, you can follow the instructions in red and
post in HTML mode.

---
When people start to comment on the form of a message, it is a sign that they
have problems to accept the truth of the message.

[ Reply to This | # ]

Corrections
Authored by: MathFox on Monday, April 03 2006 @ 09:40 AM EDT
I didn't see any mistakes...

---
When people start to comment on the form of a message, it is a sign that they
have problems to accept the truth of the message.

[ Reply to This | # ]

I wish Carlo Piana good luck
Authored by: Anonymous on Monday, April 03 2006 @ 09:58 AM EDT
Apply for non-profit status and next complain, uh ... claim how the GPL is the
"only real competition" to Microsoft.
It all makes sense.

[ Reply to This | # ]

A "non-profit principle", then who is copyright holder? Laws of Agency? Unrelated Bus Income?
Authored by: Anonymous on Monday, April 03 2006 @ 10:04 AM EDT
Is this non-profit then a "master principle" as a far as copyright
issues are concerned? This is an interest participating entity... no matter how
you examine it, since there is now some agency relationships that are
happening?

So, then who is copyright holder? Is the non-profit, to have any interst at all,
or are they just a funding vehicle. IN order to remove liability (like
corporate veil), then the projects are no longer independent? How do the Laws
of Agency play here regarding, agents of various colors?

Is there a need to educate everyone about the pitfalls of Unrelated Bus Income
activities (IRS rules are important to follow and have income limits...
requiring knowledge of form 990 and 990T), that can affect a non-profit status
if not adhered to properly. There is some education that is needed here! There
are rules that need to be followed for this to work properly.

nonprofit tax-exempt status - has IRS rules (much more complex these days since
non-profit health interests have awakened concerns by the IRS (resulting in a
tightening of the rules in order to prevent misuse of tax status by parties that
are really for-profit, but trying to hide as non-profit.

Could someone please write up a little summary of some issues that geeks need to
know about to participate in non-profits with a little better understanding of
the rules?

[ Reply to This | # ]

More Legal Protection for FOSS Developers - Software Freedom Conservancy Launches
Authored by: kozuch82 on Monday, April 03 2006 @ 10:11 AM EDT
Well,

generelly, i like the idea very much. FOSS sufferes from close to none legal
support (except the licence i meah) and i understand this as very important next
piece in the legel adoption of open sources... while, actually it is a legal
out-sourcing service to help all FOSS better live.

[ Reply to This | # ]

"if somebody sues you, they can't take your house if you lose"
Authored by: Anonymous on Monday, April 03 2006 @ 10:17 AM EDT
If they sue you, then they're suing you, obviously, not the project, so this
should probably be rephrased.

[ Reply to This | # ]

Deep Pockets
Authored by: Anonymous on Monday, April 03 2006 @ 10:18 AM EDT
A danger of this scheme, even though it purports to
protect its member from lawsuits, is that it creates a
group with deep pockets: a magnet for lawsuits.

[ Reply to This | # ]

  • Deep Pockets - Authored by: PJ on Monday, April 03 2006 @ 11:07 AM EDT
Expanding on the concept
Authored by: anomalyst on Monday, April 03 2006 @ 10:38 AM EDT
I wonder if, at some point in the future, they might publish a How-To/Checklist
for those who might not fit the criteria for direct support. I'm not sure how
many projects might fall in this grey area to make such a supplemental reference
worthwhile. Although, it might be a good idea to document their process for the
qualifying members as well, many eyes make for shallow legal blunders, not that
Mr Moglen makes that many, but stuff happens. Knowing the details might inspire
the definition of additional or exceptional needs for version 1.1 of the
process.

---
Mama told me there'd be .sigs like this.

[ Reply to This | # ]

Whats the catch?
Authored by: Anonymous on Monday, April 03 2006 @ 10:42 AM EDT
Can someone please explain how this work is paid for? Do the member projects
have to pay some sort of fee? Are other non-members the ones who would pay?

I'm just trying to understand how this is can support itself or if it is
dependant on third-party donations.

[ Reply to This | # ]

Tax Deductions?
Authored by: snorpus on Monday, April 03 2006 @ 12:53 PM EDT
There are a number of benefits to being a nonprofit. First, folks are more likely to donate money, because they can get a deduction at tax time.

IANAA, but being a non-profit is not the same as being a charitable non-profit, is it? I thought only contributions to charitable organizations is deductible, it's not enough to be "just" a non-profit.

---
73/88 de KQ3T ---
Montani Semper Liberi
Comments Licensed: http://creativecommons.org/licenses/by-nc/2.0/

[ Reply to This | # ]

A question about "nonprofit"
Authored by: Alan(UK) on Monday, April 03 2006 @ 05:21 PM EDT
If a "nonprofit" organisation produces a piece of software, surely
that software, if it owns the copyright, represents an increase in its assets.
Is this not a profit for tax purposes? Even licencing it under the GPL does not
seem to avoid this as the copyright holder still has the right to licence it in
other ways as well.

[ Reply to This | # ]

More Legal Protection for FOSS Developers - Software Freedom Conservancy Launches
Authored by: Anonymous on Monday, April 03 2006 @ 06:15 PM EDT
Nonprofit does not mean that contributions are deductible - in the case of this
organization, they definitely would not.

Can't help but wonder about the rest of the info, considering this glaring
error.

IANAL, but I am the president of a nonprofit organization.

[ Reply to This | # ]

  • In what country? - Authored by: Anonymous on Monday, April 03 2006 @ 10:03 PM EDT
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