4 ms·

Are non-profits in the US allowed to hoard cash long-term? In the UK, spending on furthering their charitable purpose is expected to roughly match income over

Are non-profits in the US allowed to hoard cash long-term? In the UK, spending on furthering their charitable purpose is expected to roughly match income over the medium term. There are carve-outs for specific types of "permanent endowment" (and even there, spending is meant to match the investment income) but it wouldn't cover anything like Mozilla's commercial agreement with Google.

yencabulator 1y ago
Mozilla has already hoarded well over a billion. A billion would pay a sizable development team of experts for quite a while. https://assets.mozilla.net/annualreport/2024/mozilla-fdn-2023-fs-final-short-1209.pdf https://assets.mozilla.net/annualreport/2024/mozilla-fdn-202...
- roryirvine 1y ago
  But the Mozilla Foundation's purpose is "protect and improve the Internet as a public resource, open and accessible to all". It's not clear to me why that requires a sizeable team of developers - surely they'd be better off working for MoCo (the commercial subsidiary who make the browser and who provide a large portion of the MoFo's income)? MoFo's activities are centred on philanthropy and advocacy. You'd expect most of their staff to be experts in things like community engagement, policy research and development, grant-making, campaign strategy, volunteer welfare, reporting & transparency, and management of investments. Sure, there'll be some engineering needed to support that, but it shouldn't be their core focus.
  - yencabulator 1y ago
    You're arguing the stated purpose of the current system, I'm arguing we'd actually benefit more from refocusing it into software (like it used to be). And that's the stated purpose. The observed current purpose of the system is to make a small handful of people more rich.
    - roryirvine 1y ago
      The MoCo/MoFo split happened for a reason: a non-profit couldn't do the big commercial deals that became available to MoCo. If you went back to the pre-2005 situation, in which MoFo was all there was, it would have at most low single-digit millions in the bank rather than a billion. The AOL dowry was only intended to last a couple of years, and there's simply no way it could have sustained development of the browser beyond that. The Phoenix would have been consumed by the flames, and we'd be left with a stagnant IE/Chrome duopoly.
      - yencabulator 1y ago
        Let's try this: 1. most of the money comes from Google Search placement in the browser 2. most of the money is NOT used on the browser
        glenstein 1y ago
        On the linked report above I'm seeing software development as about 52% of their expenses. And many of the other expenses, eg "General and administrative", I understand to be support infrastructure for software development. This would seem to fit the meaning of "most" on my read.
        yencabulator 1y ago
        It's really telling that Mozilla does not want to itemize those costs to say how little the actually use on Firefox.
        glenstein 1y ago
        Saying "Mozilla doesn’t itemize expenses" is like saying a university's annual financial report is hiding cafeteria costs because it doesn’t list fruit cups separately. Large nonprofits publish consolidated, high-level statements that group expenses by broad function, not by department or line item because that's the correct level of financial reporting for external audiences. If they misrepresented their spending that would be flagged by the independent auditor. It's deeply responsible to accuse them of hiding something when you have no baseline concept of standard disclosures.
  - ptx 1y ago
    Why is it that the Mozilla Foundation was set up in such a way that it cannot fund the core browser development activity? Other foundations do fund software development for their respective projects, e.g. the FreeBSD Foundation [1] and the Python Software Foundation [2]. [1] https://freebsdfoundation.org/about-us/about-the-foundation/ https://freebsdfoundation.org/about-us/about-the-foundation/ [2] https://www.python.org/psf/developersinresidence/ https://www.python.org/psf/developersinresidence/
- glenstein 1y ago
  Having worked for a non-profit many years ago as an office monkey who, among other things, took notes on finance committee meetings, it's typical to have some operating reserves that you can measure in terms of how many months or years of your operating expenses they could cover. This is a common financial stress test used to assess the financial health of organizations. Given Mozilla's singular dependence on Google search and pressure to diversify income streams, it's their firewall in case of emergency. And frankly the simple return on investment from their endowment year to year is one of the strongest non-Google revenue streams at their disposal right now. If armageddon came and they no longer had their search revenue, they could cover 2 years of their operational costs. Many organizations have endowments that cover them for anywhere from 5 to 20 years. What I understand off the top of my head is that their major spending categories are software development, "operations" which is largely infrastructure to support that development, legal, and marketing. I could see the case for not spending so much on marketing, but it would be organizational suicide to deficit spend away their endowment, their one firewall against existential threats, on "engineering" without a credible road map to long-term sustainable income that's better than what they're already doing. In fact if you catch the HN comment section on the right say, such behavior would probably be pointed to as yet another example of wasting money on unfocused side bets, because at the end of the day the mob truly can't decide what it wants. And who knows maybe this "spend it all down on engineering + ??? + profit" plan could work, but that would be extremely risky and would hinge on the details of a plan. But I don't feel like I'm hearing a plan so much as vibes. I would actually turn the tables on this whole entire interpretation and say what they spend relative to their market share, they're actually punching above their weight compared to Google, and that this criticism of "hoarding" is not grounded in financial literacy.
  - yencabulator 1y ago
    The whole argument is that Mozilla is using their money incredibly inefficiently, and a good chunk of that is putting money into the pockets of the people managing it. They claim to be putting $220 M/year into software development, but can't sponsor Servo even at $1 M/year? I call bullshit.
    - 1y ago
nicoburns 1y ago
Worth noting that Mozilla Corporation (which I believe is the entity that has the contract with Google) is a for-profit organisation wholely owned by Mozilla Foundation which is the non-profit. In theory, it feels like that ought not to change anything regarding the legal situation, but I bet it does.

yencabulator 1y ago

Mozilla has already hoarded well over a billion. A billion would pay a sizable development team of experts for quite a while. https://assets.mozilla.net/annualreport/2024/mozilla-fdn-2023-fs-final-short-1209.pdf https://assets.mozilla.net/annualreport/2024/mozilla-fdn-202...

roryirvine 1y ago
But the Mozilla Foundation's purpose is "protect and improve the Internet as a public resource, open and accessible to all". It's not clear to me why that requires a sizeable team of developers - surely they'd be better off working for MoCo (the commercial subsidiary who make the browser and who provide a large portion of the MoFo's income)? MoFo's activities are centred on philanthropy and advocacy. You'd expect most of their staff to be experts in things like community engagement, policy research and development, grant-making, campaign strategy, volunteer welfare, reporting & transparency, and management of investments. Sure, there'll be some engineering needed to support that, but it shouldn't be their core focus.
- yencabulator 1y ago
  You're arguing the stated purpose of the current system, I'm arguing we'd actually benefit more from refocusing it into software (like it used to be). And that's the stated purpose. The observed current purpose of the system is to make a small handful of people more rich.
  - roryirvine 1y ago
    The MoCo/MoFo split happened for a reason: a non-profit couldn't do the big commercial deals that became available to MoCo. If you went back to the pre-2005 situation, in which MoFo was all there was, it would have at most low single-digit millions in the bank rather than a billion. The AOL dowry was only intended to last a couple of years, and there's simply no way it could have sustained development of the browser beyond that. The Phoenix would have been consumed by the flames, and we'd be left with a stagnant IE/Chrome duopoly.
    - yencabulator 1y ago
      Let's try this: 1. most of the money comes from Google Search placement in the browser 2. most of the money is NOT used on the browser
      - glenstein 1y ago
        On the linked report above I'm seeing software development as about 52% of their expenses. And many of the other expenses, eg "General and administrative", I understand to be support infrastructure for software development. This would seem to fit the meaning of "most" on my read.
        yencabulator 1y ago
        It's really telling that Mozilla does not want to itemize those costs to say how little the actually use on Firefox.
        glenstein 1y ago
        Saying "Mozilla doesn’t itemize expenses" is like saying a university's annual financial report is hiding cafeteria costs because it doesn’t list fruit cups separately. Large nonprofits publish consolidated, high-level statements that group expenses by broad function, not by department or line item because that's the correct level of financial reporting for external audiences. If they misrepresented their spending that would be flagged by the independent auditor. It's deeply responsible to accuse them of hiding something when you have no baseline concept of standard disclosures.
- ptx 1y ago
  Why is it that the Mozilla Foundation was set up in such a way that it cannot fund the core browser development activity? Other foundations do fund software development for their respective projects, e.g. the FreeBSD Foundation [1] and the Python Software Foundation [2]. [1] https://freebsdfoundation.org/about-us/about-the-foundation/ https://freebsdfoundation.org/about-us/about-the-foundation/ [2] https://www.python.org/psf/developersinresidence/ https://www.python.org/psf/developersinresidence/
glenstein 1y ago
Having worked for a non-profit many years ago as an office monkey who, among other things, took notes on finance committee meetings, it's typical to have some operating reserves that you can measure in terms of how many months or years of your operating expenses they could cover. This is a common financial stress test used to assess the financial health of organizations. Given Mozilla's singular dependence on Google search and pressure to diversify income streams, it's their firewall in case of emergency. And frankly the simple return on investment from their endowment year to year is one of the strongest non-Google revenue streams at their disposal right now. If armageddon came and they no longer had their search revenue, they could cover 2 years of their operational costs. Many organizations have endowments that cover them for anywhere from 5 to 20 years. What I understand off the top of my head is that their major spending categories are software development, "operations" which is largely infrastructure to support that development, legal, and marketing. I could see the case for not spending so much on marketing, but it would be organizational suicide to deficit spend away their endowment, their one firewall against existential threats, on "engineering" without a credible road map to long-term sustainable income that's better than what they're already doing. In fact if you catch the HN comment section on the right say, such behavior would probably be pointed to as yet another example of wasting money on unfocused side bets, because at the end of the day the mob truly can't decide what it wants. And who knows maybe this "spend it all down on engineering + ??? + profit" plan could work, but that would be extremely risky and would hinge on the details of a plan. But I don't feel like I'm hearing a plan so much as vibes. I would actually turn the tables on this whole entire interpretation and say what they spend relative to their market share, they're actually punching above their weight compared to Google, and that this criticism of "hoarding" is not grounded in financial literacy.
- yencabulator 1y ago
  The whole argument is that Mozilla is using their money incredibly inefficiently, and a good chunk of that is putting money into the pockets of the people managing it. They claim to be putting $220 M/year into software development, but can't sponsor Servo even at $1 M/year? I call bullshit.
  - 1y ago

nicoburns 1y ago

Worth noting that Mozilla Corporation (which I believe is the entity that has the contract with Google) is a for-profit organisation wholely owned by Mozilla Foundation which is the non-profit. In theory, it feels like that ought not to change anything regarding the legal situation, but I bet it does.