Considerations on a non-profit home for your project

Post Syndicated from Bradley M. Kuhn original http://ebb.org/bkuhn/blog/2013/12/05/non-profit-home.html

[ This post of mine is cross-posted
from Conservancy’s
blog
.]

I came across this email
thread this week
, and it seems to me that Node.js is facing a standard
decision that comes up in the life of most Open Source and Free Software
projects. It inspired me to write some general advice to Open Source and
Free Software projects who might be at a similar crossroads0. Specifically,
at some point in the history of a project, the community is faced with the
decision of whether the project should be housed at a specific for-profit
company, or have a non-profit entity behind it instead. Further, project
leaders must consider, if they persue the latter, whether the community
should form its own non-profit or affiliate with one that already exists.

Choosing a governance structure is a tough and complex decision for a
project — and there is always some status quo that (at least) seems
easier. Thus, there will always be a certain amount of acrimony in this
debate. I have my own biases on this, since I am the Executive Director of
Conservancy, a non-profit home for Open Source and Free Software projects,
and because I have studied the issue of non-profit governance for Open Source
and Free Software for the last decade. I have a few comments based on that
experience that might be helpful to projects who face this decision.

The obvious benefit of a project housed in a for-profit company is that
they’ll usually always have more resources to put toward the project —
particularly if the project is of strategic importance to their business.
The downside is that the company almost always controls the trademark,
perhaps controls the copyright to some extent (e.g., by being the sole
beneficiary of a very broad CLA or ©AA), and likely has a stronger say
in the technical direction of the project. There will also always be
“brand conflation” when something happens in the project (Did
the project do it, or did the company?), and such is easily observable in
the many for-profit-controlled Open Source and Free Software projects.

By contrast, while a for-profit entity only needs to consider the
interests of its own shareholders, a non-profit entity is legally required to
balance the needs of many contributors and users. Thus, non-profits are a
neutral home for activities of the project, and a neutral place for the
trademark to live, perhaps a neutral place to receive CLAs (if the community
even wants a CLA, that is), and to do other activities for the
project. (Conservancy, for its part, has a list of what services it
provides
.)

There’s also difference among non-profit options. The primary two USA
options for Open Source and Free Software are 501(c)(3)’s (public charities)
and 501(c)(6)’s (trade associations). 501(c)(3) public charities must always
act in the public good, while 501(c)(6) trade associations act in interest of
its paying for-profit members. I’m a fan of the 501(c)(3)-style of
non-profit, again, because I help run one. IMO, the choice between the two
really depends on whether you want the project run and controlled by a
consortium of for-profit businesses, or if you want the project to operate as
a public charity focused on advancing the public good by producing better
Open Source and Free Software. BTW, the big benefit, IMO, to a 501(c)(3) is
that the non-profit only represents the interests of the project with
respect to the public good, so IRS prohibits the charity from conflating its
motives with any corporate interest (be they single or
aggregate).

If you decide you want a non-profit, there’s then the decision of forming
your own non-profit or affiliating with an existing non-profit. Folks who
say it’s easy to start a new non-profit are (mostly) correct; the
challenge is in keeping it running. It’s a tremendous amount of work and
effort to handle the day-to-day requirements of non-profit management, which
is why so many Open Source and Free Software projects choose to affiliate or
join with an existing non-profit rather than form their own. I’d suggest
strongly that the any community look into joining an existing home, in part
because many non-profit umbrellas permit the project to later “spin
off” to form your own non-profit. Thus, joining an existing entity is
not always a permanent decision.

Anyway, as you’ve guessed, thinking about these questions is a part of
what I do for a living. Thus, I’d love to (by , phone or IRC) with
anyone in any Open Source and Free Software community about joining
Conservancy specifically, or even just to talk through all the non-profit
options available. There are many options and existing non-profits, all with
their own tweaks, so if a given community decides it’d like a non-profit
home, there’s lots to chose from and a lot to consider.

I’d note finally that the different tweaks between non-profit options
deserve careful attention. I often see people commenting that structures
imposed by non-profits won’t help with what they need
. However, not all
non-profits have the same type of structures, and they focus on different
things. For example, Conservancy doesn’t dictate anything regarding specific
CLA rules, licensing, development models, and the like. Conservancy
generally advises about all the known options, and help the community come to
the conclusions it wants and implement them well. The only place Conservancy
has strict rules is with regard to the requirements and guidelines the IRS
puts forward on 501(c)(3) status. Meanwhile, other non-profits do
have strict rules for development models, or CLAs, and the like, which some
projects prefer for various reasons.

Update -12-07: I posted
a follow
up on Node.js mailing list
in the original discussion that inspired me
to write the above.

0BTW, I don’t
think how a community comes to that crossroads matters that
much, actually. At some point in a project’s history, this issue is raised,
and, at that moment, a decision is before the project.