8 ms·

Open Source Madness

191 points by aroman 12y ago

dkural 12y ago
While the software itself may be free and open, often the authors of the software provide consulting & professional services around the implementation of the software. If the software in question has a primarily commercial purpose, I can see this conflict of interest confusing authorities. Open Source is a widely used marketing and product strategy used to gain traction &market share and make substantial capital gains by the owners Github, MongoDB and many other start-ups. It's not clear to me any of this is "non-profit" by default.
- deleted 12y ago
  [deleted]
- malandrew 12y ago
  If some of society has benefitted and the organization has not made a profit from those benefits, then I'd say that the non-profit claim is valid and we are all better off for it. There are tons of people who use MongoDB without paying MongoDB(Tengen) a penny. Even though I totally understand the IRS concerns, eliminating this benefit creates a disincentive for the commons, and we are all poorer because of it. I think one of the metrics that could be used here to determine full or partial non-profit status is the community around a piece of software. The active community is a representative, albeit biased/skewed, sample of the entire community using the open source software in question. Polling these unrelated parties (i.e. there is no contractual obligation between them and the software producing entity beyond a commonly accepted open source license) should be sufficient to figure out if an organization should qualify for non-profit status.
jedberg 12y ago
The problem here is that it could create a huge loophole. I'd love to be able to write off my donations to open source groups, but so would big companies. Imagine a situation where a company that develops their software as open source, like reddit for example, setting up a 503(c) and putting all the developers and all the reddit gold revenue into the 503(c), thereby getting a massive write-off for the "donations" and not having to show profit on reddit gold. Or worse, someone like IBM putting all their consultants into a 503(c) and taking all their consulting revenue as donations.
- sheetjs 12y ago
  relevant: http://www.cnet.com/news/mozilla-gets-lucky-settles-irs-audit-for-1-5m/ http://www.cnet.com/news/mozilla-gets-lucky-settles-irs-audi...
- DoubleMalt 12y ago
  And you know what: That would be absolutely fine. It would create a huge incentive for companies to develop at least parts of their software as open source. Think of how much reinventions of the wheel we could avoid if run of the mill components for companies would be in the open. The IBM case is unrealistic because IBM would still need to make profits for it's shareholders. If IBM was to transform into a huge non for profit that uses consultants' fees to develop open source software (think of open source Watson), That would definitely a net plus for society that would outweigh the loss of double dutch diminished corporate taxes by several orders of magnitude.
  - deleted 12y ago
    [deleted]
  - trhway 12y ago
    >It would create a huge incentive for companies to develop at least parts of their software as open source. Think of how much reinventions of the wheel we could avoid if run of the mill components for companies would be in the open. one can also imagine that the "open-source non-profit IBM" would have much more troubles trying to enforce its patents thus resulting in even more open innovation and bigger benefit for the society.
    - zanny 12y ago
      How would it be open source with patent restrictions? I guess they could write their own false foss license that gives them an excemption on it, but it would not be gpl compatible.
      - olefoo 12y ago
        You are assuming that the patent-holding organization is the same as the open-sourcing organization; they could be legally separate and controlled by the parent corporation. In this case; you would be worried about software that was widely used and had both infringing and non-infringing uses. Especially if the patent-holding org waited for several years before they started enforcing. The software license and patent grants are orthogonal; and while it's not a good look for an organization to give with one hand and take with the other it's certainly a legally plausible strategy.
laurent123456 12y ago
Though I don't know all the details I can see how the IRS could arrive to this conclusion. Otherwise any company could open source their in-house software (no matter in which state it is), then claim tax exemption.
- guard-of-terra 12y ago
  And we'll have a lot of open source software covering huge range of potential corporate needs, possibly saving a lot of money for everyone. Win? Win! Of course one could specifically craft their software to be unusable by everyone but them, but it sounds like additional work for them with no clear benefit.
  - moron4hire 12y ago
    "Additional work with no clear benefit" never stopped a project manager before.
- mindcrime 12y ago
  I, for one, would find that scenario totally acceptable.
trhway 12y ago
i wish they apply the same principles to the tax exempt status of churches - as, for example, distribution of entertainment media products for money done by a church has no substantial difference from that done by a [commercial] Hollywood studio.
- malandrew 12y ago
  If you want to read something interesting involving religious groups and avoiding taxes and taking advantage of welfare programs, read up on the Kiryas Joel community.
thrush 12y ago
First company I thought of when reading this was Famo.us. They are creating open source Javascript frameworks, but then want to sell hosting solutions that handle their stack (something along those lines).
tslug 12y ago
It isn't just open source. The whole US non-profit application process is needlessly long and difficult for anyone seeking it, which is generally, you know, the most benevolent people living amoungst us (like, for example, open source software developers). For years, the workaround on the delay has been to partner with a pre-existing non-profit. In the meantime, if you want to start a for-profit company, why you can pick from one of a half dozen different varieties in any state in the nation by clicking on a few buttons on a website. The only possible counter-argument to making it easy is worry about fraud. For every other reason, starting a non-profit should be easy, but if fraud's the big one, then for goodness sake, spend some money watching the non-profits. The government should be, anyway, because most non-profits are doing works for the public good, you know- that stuff that the government used to fund? Maybe it could learn a thing or two? Maybe the government could pro-actively send them funding, instead of them having to wait and wonder whether a grant application will go through?
- tptacek 12y ago
  How does the US process of obtaining tax-exempt non-profit status compare to that of countries in Europe?
  - yxhuvud 12y ago
    Well, for starters the countries of EU have not harmonized any such procedure yet, so there is all kinds of different variants. http://www.eatlp.org/uploads/public/Reports%20Rotterdam/Thematic%20report%20Amatucci%20%28section%202a%29.pdf http://www.eatlp.org/uploads/public/Reports%20Rotterdam/Them... has some information.
dasil003 12y ago
"Please explain how the activities of this organization differ from a commercial software development company beside distributing the software for free." Please explain how the activities of your soup kitchen serving meals to the homeless differ from a commercial restaurant serving meals to the rich and famous of Beverly Hills beside distributing the food for free.
- tedunangst 12y ago
  While the soup kitchen's meals are available to all, they specifically target the disadvantaged.
  - guard-of-terra 12y ago
    And this is a scary bad thing that forces disadvantaged to stay disadvantaged or be cut from support at once. You like putting a bomb under your society, you just go on.
- gph 12y ago
  Because the soup kitchen is providing a charitable service and product to a segment of the population that wouldn't otherwise be able to provide for themselves. Now imagine if there was a "charitable" catering group that accepted donations from large corporations and used it to provide free catering near corporate events. Should they be allowed non-profit status? The whole argument is that it matters who the end product is going to. There are a number of open source projects that mostly get donations from large corporations who are the main end-users of the software. Should they be non-profit? And there's a whole grey area in between. The IRS seems to be drawing a strong line where the authors of this article think there needs to be more of a grey area. Personally I don't have a problem with being more liberal with non-profit for FOSS organizations. But it's certainly not as clear cut as your analogy is making it sound.
  - __david__ 12y ago
    > Now imagine if there was a "charitable" catering group that accepted donations from large corporations and used it to provide free catering near corporate events. Should they be allowed non-profit status? Are the open to the general public? Are homeless people not turned away at the door? If yes, then yes, they should be allowed non-profit status.
xbryanx 12y ago
Does this mean that if I currently work at a non-profit developing open source software--not our primary goal, just sharing tools we make--that I'm jeopardizing our 501(c)(3) status?
- tedunangst 12y ago
  No.
noonespecial 12y ago
The hair that's split is ours (free software) so we care, but we should probably be more concerned about the 5 year wait to get a decision! That is unreasonable to the point of unworkable.
dahart 12y ago
NP != OS, until proven otherwise :P
mindcrime 12y ago
Just eliminate the IRS and income taxes, and this problem goes away. Move most government services, for which there is an actual market, to private for-profit or non-profit organizations, or voluntarily assembled communes or co-ops. Fund the rest of the government apparatus through usage fees where the government service is providing value that someone will pay for. Does this expose a "free rider" problem? Yes. Is that important? No.
- 21echoes 12y ago
  i'm sure that this will cause no amount of poor people to no longer have enough money for food, water, or shelter, much less health care, education, or other social contract goods, because enough non-profits will spring up to fill the gap and richer people will just be begging to fund them with all their freed up capital from no longer having to pay taxes. right? right? man this just sounds so pleasant a society to live in, i can't wait til we get there.
  - mindcrime 12y ago
    i'm sure that this will cause no amount of poor people to no longer have enough money for food, water, or shelter, much less health care, education, or other social contract goods, because enough non-profits will spring up to fill the gap and richer people will just be begging to fund them with all their freed up capital from no longer having to pay taxes. right? Who knows? More likely it would lead to a lot less poor people, and much lower prices for health care, education, etc., so there would be a much smaller problem of poor people lacking such essentials to begin with. Whatever you think about that, it's clear that the present system certainly hasn't done a very good job of eliminating poverty. I would think it's time to try an alternative. In either case, it would be a Good Thing to have less institutionalized use of force in our society.
    - deleted 12y ago
      [deleted]
deleted 12y ago
[deleted]

191 points by aroman 12y ago

While the software itself may be free and open, often the authors of the software provide consulting & professional services around the implementation of the software. If the software in question has a primarily commercial purpose, I can see this conflict of interest confusing authorities. Open Source is a widely used marketing and product strategy used to gain traction &market share and make substantial capital gains by the owners Github, MongoDB and many other start-ups. It's not clear to me any of this is "non-profit" by default.

deleted 12y ago
[deleted]
malandrew 12y ago
If some of society has benefitted and the organization has not made a profit from those benefits, then I'd say that the non-profit claim is valid and we are all better off for it. There are tons of people who use MongoDB without paying MongoDB(Tengen) a penny. Even though I totally understand the IRS concerns, eliminating this benefit creates a disincentive for the commons, and we are all poorer because of it. I think one of the metrics that could be used here to determine full or partial non-profit status is the community around a piece of software. The active community is a representative, albeit biased/skewed, sample of the entire community using the open source software in question. Polling these unrelated parties (i.e. there is no contractual obligation between them and the software producing entity beyond a commonly accepted open source license) should be sufficient to figure out if an organization should qualify for non-profit status.

jedberg 12y ago

The problem here is that it could create a huge loophole. I'd love to be able to write off my donations to open source groups, but so would big companies. Imagine a situation where a company that develops their software as open source, like reddit for example, setting up a 503(c) and putting all the developers and all the reddit gold revenue into the 503(c), thereby getting a massive write-off for the "donations" and not having to show profit on reddit gold. Or worse, someone like IBM putting all their consultants into a 503(c) and taking all their consulting revenue as donations.

sheetjs 12y ago
relevant: http://www.cnet.com/news/mozilla-gets-lucky-settles-irs-audit-for-1-5m/ http://www.cnet.com/news/mozilla-gets-lucky-settles-irs-audi...
DoubleMalt 12y ago
And you know what: That would be absolutely fine. It would create a huge incentive for companies to develop at least parts of their software as open source. Think of how much reinventions of the wheel we could avoid if run of the mill components for companies would be in the open. The IBM case is unrealistic because IBM would still need to make profits for it's shareholders. If IBM was to transform into a huge non for profit that uses consultants' fees to develop open source software (think of open source Watson), That would definitely a net plus for society that would outweigh the loss of double dutch diminished corporate taxes by several orders of magnitude.
- deleted 12y ago
  [deleted]
- trhway 12y ago
  >It would create a huge incentive for companies to develop at least parts of their software as open source. Think of how much reinventions of the wheel we could avoid if run of the mill components for companies would be in the open. one can also imagine that the "open-source non-profit IBM" would have much more troubles trying to enforce its patents thus resulting in even more open innovation and bigger benefit for the society.
  - zanny 12y ago
    How would it be open source with patent restrictions? I guess they could write their own false foss license that gives them an excemption on it, but it would not be gpl compatible.
    - olefoo 12y ago
      You are assuming that the patent-holding organization is the same as the open-sourcing organization; they could be legally separate and controlled by the parent corporation. In this case; you would be worried about software that was widely used and had both infringing and non-infringing uses. Especially if the patent-holding org waited for several years before they started enforcing. The software license and patent grants are orthogonal; and while it's not a good look for an organization to give with one hand and take with the other it's certainly a legally plausible strategy.

laurent123456 12y ago

Though I don't know all the details I can see how the IRS could arrive to this conclusion. Otherwise any company could open source their in-house software (no matter in which state it is), then claim tax exemption.

guard-of-terra 12y ago
And we'll have a lot of open source software covering huge range of potential corporate needs, possibly saving a lot of money for everyone. Win? Win! Of course one could specifically craft their software to be unusable by everyone but them, but it sounds like additional work for them with no clear benefit.
- moron4hire 12y ago
  "Additional work with no clear benefit" never stopped a project manager before.
mindcrime 12y ago
I, for one, would find that scenario totally acceptable.

trhway 12y ago

i wish they apply the same principles to the tax exempt status of churches - as, for example, distribution of entertainment media products for money done by a church has no substantial difference from that done by a [commercial] Hollywood studio.

malandrew 12y ago
If you want to read something interesting involving religious groups and avoiding taxes and taking advantage of welfare programs, read up on the Kiryas Joel community.

thrush 12y ago

First company I thought of when reading this was Famo.us. They are creating open source Javascript frameworks, but then want to sell hosting solutions that handle their stack (something along those lines).

tslug 12y ago

It isn't just open source. The whole US non-profit application process is needlessly long and difficult for anyone seeking it, which is generally, you know, the most benevolent people living amoungst us (like, for example, open source software developers). For years, the workaround on the delay has been to partner with a pre-existing non-profit. In the meantime, if you want to start a for-profit company, why you can pick from one of a half dozen different varieties in any state in the nation by clicking on a few buttons on a website. The only possible counter-argument to making it easy is worry about fraud. For every other reason, starting a non-profit should be easy, but if fraud's the big one, then for goodness sake, spend some money watching the non-profits. The government should be, anyway, because most non-profits are doing works for the public good, you know- that stuff that the government used to fund? Maybe it could learn a thing or two? Maybe the government could pro-actively send them funding, instead of them having to wait and wonder whether a grant application will go through?

tptacek 12y ago
How does the US process of obtaining tax-exempt non-profit status compare to that of countries in Europe?
- yxhuvud 12y ago
  Well, for starters the countries of EU have not harmonized any such procedure yet, so there is all kinds of different variants. http://www.eatlp.org/uploads/public/Reports%20Rotterdam/Thematic%20report%20Amatucci%20%28section%202a%29.pdf http://www.eatlp.org/uploads/public/Reports%20Rotterdam/Them... has some information.

dasil003 12y ago

"Please explain how the activities of this organization differ from a commercial software development company beside distributing the software for free." Please explain how the activities of your soup kitchen serving meals to the homeless differ from a commercial restaurant serving meals to the rich and famous of Beverly Hills beside distributing the food for free.

tedunangst 12y ago
While the soup kitchen's meals are available to all, they specifically target the disadvantaged.
- guard-of-terra 12y ago
  And this is a scary bad thing that forces disadvantaged to stay disadvantaged or be cut from support at once. You like putting a bomb under your society, you just go on.
gph 12y ago
Because the soup kitchen is providing a charitable service and product to a segment of the population that wouldn't otherwise be able to provide for themselves. Now imagine if there was a "charitable" catering group that accepted donations from large corporations and used it to provide free catering near corporate events. Should they be allowed non-profit status? The whole argument is that it matters who the end product is going to. There are a number of open source projects that mostly get donations from large corporations who are the main end-users of the software. Should they be non-profit? And there's a whole grey area in between. The IRS seems to be drawing a strong line where the authors of this article think there needs to be more of a grey area. Personally I don't have a problem with being more liberal with non-profit for FOSS organizations. But it's certainly not as clear cut as your analogy is making it sound.
- __david__ 12y ago
  > Now imagine if there was a "charitable" catering group that accepted donations from large corporations and used it to provide free catering near corporate events. Should they be allowed non-profit status? Are the open to the general public? Are homeless people not turned away at the door? If yes, then yes, they should be allowed non-profit status.

xbryanx 12y ago

Does this mean that if I currently work at a non-profit developing open source software--not our primary goal, just sharing tools we make--that I'm jeopardizing our 501(c)(3) status?

tedunangst 12y ago
No.

noonespecial 12y ago

The hair that's split is ours (free software) so we care, but we should probably be more concerned about the 5 year wait to get a decision! That is unreasonable to the point of unworkable.

dahart 12y ago

NP != OS, until proven otherwise :P

mindcrime 12y ago

Just eliminate the IRS and income taxes, and this problem goes away. Move most government services, for which there is an actual market, to private for-profit or non-profit organizations, or voluntarily assembled communes or co-ops. Fund the rest of the government apparatus through usage fees where the government service is providing value that someone will pay for. Does this expose a "free rider" problem? Yes. Is that important? No.

21echoes 12y ago
i'm sure that this will cause no amount of poor people to no longer have enough money for food, water, or shelter, much less health care, education, or other social contract goods, because enough non-profits will spring up to fill the gap and richer people will just be begging to fund them with all their freed up capital from no longer having to pay taxes. right? right? man this just sounds so pleasant a society to live in, i can't wait til we get there.
- mindcrime 12y ago
  i'm sure that this will cause no amount of poor people to no longer have enough money for food, water, or shelter, much less health care, education, or other social contract goods, because enough non-profits will spring up to fill the gap and richer people will just be begging to fund them with all their freed up capital from no longer having to pay taxes. right? Who knows? More likely it would lead to a lot less poor people, and much lower prices for health care, education, etc., so there would be a much smaller problem of poor people lacking such essentials to begin with. Whatever you think about that, it's clear that the present system certainly hasn't done a very good job of eliminating poverty. I would think it's time to try an alternative. In either case, it would be a Good Thing to have less institutionalized use of force in our society.
  - deleted 12y ago
    [deleted]

deleted 12y ago

[deleted]