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TL/DR just because you release OSS does not mean you get to be a charity:) From the previous discussion this link is probably the best advice someone can get:

TL/DR just because you release OSS does not mean you get to be a charity:) From the previous discussion this link is probably the best advice someone can get: https://news.ycombinator.com/item?id=7969202 https://news.ycombinator.com/item?id=7969202 > Generally speaking, they may not like that a for-profit business can use your organization's by-product to make lots of money for themselves. > Nevertheless, just releasing OSS is NOT an exempt purpose. If you read the IRS regulations, they are very specific as to what a core exempt purpose is. You'll need to pick one that fits best. Generally speaking, it's 1) Church stuff 2) Scientific advancement and research 3) Furthering of the arts 4) Education 5) "Charity," meaning helping people who are disadvantaged in some way 6) Some others that I'm not remembering. > Most OSS 501(c)3 don't get exemption by just releasing open source software-- they get exemption by being an educational institution.

duaneb 12y ago
Wouldn't this fall under "scientific advancement"? That's a dangerous term to say the least, but it's technology that benefits everyone.
- stephencanon 12y ago
  Writing software, in and of itself, does no more to advance science than building houses does to advance structural engineering. If they are specifically writing software to be used for scientific research, or are carrying out significant research into computing and releasing papers/patents freely, then they might qualify.
  - Karunamon 12y ago
    So let's look at some of the existing ones like Wikimedia or Apache. What are they doing to claim that particular exemption?
    - stephencanon 12y ago
      I expect that they aren't claiming a scientific purpose. More likely they claim to be educational, or that they provide a public work.
    - lacksconfidence 12y ago
      at least in the case of wikimedia, software is merely a byproduct of their goal. To quote their main page: Wikimedia is a global movement whose mission is to bring free educational content to the world.
    - DougBTX 12y ago
      Here's Wikimedia's confirmation of exemption letter. https://upload.wikimedia.org/wikipedia/foundation/9/90/501%28c%293_Letter.png https://upload.wikimedia.org/wikipedia/foundation/9/90/501%2... To go further, I'd look up exactly what "Public Charity Status 170(b)(1)(A)(vi)" is, and then compare that to how they describe themselves here: https://wikimediafoundation.org/wiki/FAQ/en https://wikimediafoundation.org/wiki/FAQ/en
    - kijin 12y ago
      In a different thread a couple of days ago, someone mentioned that Apache got a scientific exemption. Which is not surprising at all, since the Apache HTTP Server had its roots in the National Center for Supercomputing Applications (NCSA), a scientific institution. Python Software Foundation also got a scientific and educational exemption.
pdabbadabba 12y ago
This is exactly on-point, and bears repeating: simply not seeking to make a profit does not make an organization eligible for 501(c)(3) status. The organization must have an exempt purpose, one that is "charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals." Charitable, in turn, has its own specific meaning: it includes "relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency." See http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Exempt-Purposes-Internal-Revenue-Code-Section-501(c)(3) http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organi... In light of these requirements, and poking around the Yorba website, I'm not shocked that Yorba was denied. Though it may claim to be a "charitable, scientific, and educational" organization, it certainly looks to me like its purpose is to make free software. It does not exist to educate people, it does not exist to further a field of scientific study, and it does not appear intended to do any of the things covered by "charitable purposes." It may do some of these things incidentally (education, in particular) but that won't cut it. Ars's argument that open-source software has educational value misses the point: education has to be the purpose of the organization, not simply a benefit that flows from the organization's work. And the IRS's concern is not just that corporations might indirectly benefit from the work of non-profits (though that seems to . The IRS is also concerned about corporations intentionally spinning off projects for the purpose of sheltering some of their activities from taxation.
- cscurmudgeon 12y ago
  > maintaining public buildings, monuments, or works I'd say Yorba falls under that if you take "works" to include digital artifacts.
  - pdabbadabba 12y ago
    Sure, if "maintaining a work" counted, the standard would be pretty easy to meet! But it's not just "works" but "public works." As in, "a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community." http://en.wikipedia.org/wiki/Public_works http://en.wikipedia.org/wiki/Public_works (Yes, it's Wikipedia, but this definition is about right.)

duaneb 12y ago

Wouldn't this fall under "scientific advancement"? That's a dangerous term to say the least, but it's technology that benefits everyone.

stephencanon 12y ago
Writing software, in and of itself, does no more to advance science than building houses does to advance structural engineering. If they are specifically writing software to be used for scientific research, or are carrying out significant research into computing and releasing papers/patents freely, then they might qualify.
- Karunamon 12y ago
  So let's look at some of the existing ones like Wikimedia or Apache. What are they doing to claim that particular exemption?
  - stephencanon 12y ago
    I expect that they aren't claiming a scientific purpose. More likely they claim to be educational, or that they provide a public work.
  - lacksconfidence 12y ago
    at least in the case of wikimedia, software is merely a byproduct of their goal. To quote their main page: Wikimedia is a global movement whose mission is to bring free educational content to the world.
  - DougBTX 12y ago
    Here's Wikimedia's confirmation of exemption letter. https://upload.wikimedia.org/wikipedia/foundation/9/90/501%28c%293_Letter.png https://upload.wikimedia.org/wikipedia/foundation/9/90/501%2... To go further, I'd look up exactly what "Public Charity Status 170(b)(1)(A)(vi)" is, and then compare that to how they describe themselves here: https://wikimediafoundation.org/wiki/FAQ/en https://wikimediafoundation.org/wiki/FAQ/en
  - kijin 12y ago
    In a different thread a couple of days ago, someone mentioned that Apache got a scientific exemption. Which is not surprising at all, since the Apache HTTP Server had its roots in the National Center for Supercomputing Applications (NCSA), a scientific institution. Python Software Foundation also got a scientific and educational exemption.

pdabbadabba 12y ago

This is exactly on-point, and bears repeating: simply not seeking to make a profit does not make an organization eligible for 501(c)(3) status. The organization must have an exempt purpose, one that is "charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals." Charitable, in turn, has its own specific meaning: it includes "relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency." See http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Exempt-Purposes-Internal-Revenue-Code-Section-501(c)(3) http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organi... In light of these requirements, and poking around the Yorba website, I'm not shocked that Yorba was denied. Though it may claim to be a "charitable, scientific, and educational" organization, it certainly looks to me like its purpose is to make free software. It does not exist to educate people, it does not exist to further a field of scientific study, and it does not appear intended to do any of the things covered by "charitable purposes." It may do some of these things incidentally (education, in particular) but that won't cut it. Ars's argument that open-source software has educational value misses the point: education has to be the purpose of the organization, not simply a benefit that flows from the organization's work. And the IRS's concern is not just that corporations might indirectly benefit from the work of non-profits (though that seems to . The IRS is also concerned about corporations intentionally spinning off projects for the purpose of sheltering some of their activities from taxation.

cscurmudgeon 12y ago
> maintaining public buildings, monuments, or works I'd say Yorba falls under that if you take "works" to include digital artifacts.
- pdabbadabba 12y ago
  Sure, if "maintaining a work" counted, the standard would be pretty easy to meet! But it's not just "works" but "public works." As in, "a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community." http://en.wikipedia.org/wiki/Public_works http://en.wikipedia.org/wiki/Public_works (Yes, it's Wikipedia, but this definition is about right.)