Description

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Bradley and Karen discuss the key differences between 501(c)(3) and
501(c)(6) organizations in the USA, and discuss recent refusals by the IRS
to grant such statuses to Open Source and Free Software orgs.

Show Notes:

Segment 0 (00:34)

• Bradley mentioned the 501(c)(3) vs. 501(c)(6) difference came up on href="http://faif.us/cast/2013/aug/14/0x41/">FaiF 0x41. (03:35)
• Bradley mentioned that in href="http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Exemption-Requirements-Section-501%28c%29%283%29-Organizations">501(c)(3)
  status from the IRS is based on receiving some status governed by href="http://www.law.cornell.edu/uscode/text/26/170">§170(b)(1)(A)
  of the tax code. (Most Free Software charities, such as Conservancy,
  are classifed as non-profit charities under §170(b)(1)(A)(vi).)
  (05:10)
• Bradley mentioned this issue had been discussed on href="http://flossfoundations.org/">FLOSS Foundations' mailing list
  (05:50)
• Bradley discussed that at the href="http://www.oscon.com/oscon2013/public/schedule/detail/29249">OSCON
  2013 tutorial, Community Foundations 101, most of the
  501(c)(6) representatives who spoke argued incorrectly that the
  differences between 501(c)(3)'s and 501(c)(6)'s were not
  substantive. (10:50)
• Karen referenced how href="http://www.npr.org/2014/04/17/304150243/silicon-valley-asks-is-your-startup-really-making-the-world-better">the
  TV show Silicon Valley parodies the irony of for-profit
  software companies claiming they make the world a better place.
  (11:58)
• Bradley mentioned he was inspired by href="http://www.michaelmoore.com/">Michael Moore in his work on Free
  Software. (15:02)
• Bradley mentioned href="http://2014.texaslinuxfest.org/content/keynote-karen-sandler-identity-crisis-are-we-who-we-say-we-are">Karen's
  talk called Identity Crisis (15:21)
• Karen mentioned that href="http://www.nytimes.com/2013/06/25/us/politics/documents-show-liberals-in-irs-dragnet.html?_r=0">open
  source was on the list of items the IRS gave additional scrutiny. (16:51)
• Bradley mentioned a href="http://blogs.gnome.org/jnelson/2014/06/30/the-new-501c3-and-the-future-of-free-software-in-the-united-states/">blog
  post by Jim Nelson where Yorba's rejection was discussed; Yorba's
  501(c)(3) application was href="http://faif.us/cast/2011/nov/11/0x1C/">previously discussed on was
  discussed on 0x1C, and href="http://associationsnow.com/2014/07/open-source-projects-failing-pass-irs-nonprofit-muster/">covered
  in many other places. (17:46)
• href="http://sfconservancy.org/blog/2014/jul/02/FLOSS-501c3-status/">Karen
  wrote a blog post about why she isn't worried for Conservancy's 501(c)(3)
  status at this time. (18:30)
• Bradley mentioned that IRS decisions don't make precedent, and if
  there's a dispute, it would go to href="https://www.ustaxcourt.gov/">USA Tax Court (19:00)
• Mozilla Foundation's odd hybrid for-profit/non-profit model was href="http://www.cnet.com/news/mozilla-gets-lucky-settles-irs-audit-for-1-5m/">audited
  by the IRS, and Mozilla Foundation settled with the IRS. (20:22)
• Open Stack Foundation was initially href="http://blogs.gnome.org/markmc/2014/05/17/may-11-openstack-foundation-board-meeting/">denied
  501(c)(6) status, as reported on Mark McLoughlin's blog. (25:10)
• Bradley promised links to both href="http://yorba.org/docs/IRS-determination-letter-final.pdf">Yorba's
  501(c)(3) denial letter from the IRS and href="http://lists.openstack.org/pipermail/tax-affairs/attachments/20140716/477faee1/attachment-0001.pdf">Open
  Stack Foundation's 501(c)(6) denial letter from the IRS. (The href="http://lists.openstack.org/pipermail/tax-affairs/attachments/20140716/477faee1/attachment-0003.pdf">response
  to the IRS from OpenStack, written by DLA Piper, OpenStack
  Foundation's law firm, is also available, too. (27:15)
• Bradley and Karen discussed Board of Directors meetings in href="http://faif.us/cast/2014/may/27/0x45/">FaiF 0x45: I'm Board
  (31:40)
• Bradley mentioned the How
  fresh stays fresh campaign, which includes the href="http://www.youtube.com/watch?v=WMhRA8Mk6xE">Nature's Pause Button
  television commercials by the American
  Frozen Food Institute, which is a 501(c)(6) organization. It's href="http://990s.foundationcenter.org/990_pdf_archive/530/530114635/530114635_201212_990O.pdf">FY
  2012 Form 990 is the most recent on available.
• Bradley also mentioned the href="http://www.youtube.com/watch?v=tviyAIS9c_U">Beef: It's What's For
  Dinner advertisting campaign that has existed for decades in the USA,
  which is sponsored by the National Cattlemen's
  Beef Association, Inc. which is a 501(c)(6) as well. It's href="http://990s.foundationcenter.org/990_pdf_archive/840/840738973/840738973_201209_990O.pdf">FY
  2012 Form 990 is the most recent on available.
(35:40)
• Bradley further mentioned the href="http://www.youtube.com/watch?v=tviyAIS9c_U">Pork: the other white
  meat advertising campaign, which has also existed for decades but is
  now called the href="http://www.porkbeinspired.com/index.aspx">Pork:
  Be Inspired campaign, seems a bit more dubious in its non-profit
  existence. It appears to be funded by the National Pork Board Foundation,
  which is ostensibly a 501(c)(3) but has href="http://990s.foundationcenter.org/990_pdf_archive/262/262299789/262299789_201312_990EZ.pdf">no
  assets, revnue nor expenses, and appears to be a front for an
  org called the America's Pork
  Producers / Pork Checkoff, which appears to be some href="http://en.wikipedia.org/wiki/National_Pork_Board">quasi-govermental
  agency related to pork (in other words, it's pork for pork). More research would probably be needed to
  figure out better what's going on here with regard to non-profit status,
  but it seems that unlike the Beef ads, which are clearly funded by a
  501(c)(6), this campaign is funded by a separate legislation, presumably
  unrelated to §501(c). There is, BTW, also, a 501(c)(5) called the
  National Pork Producers Council, which
  appears to be href="http://990s.foundationcenter.org/990_pdf_archive/420/420796455/420796455_201212_990O.pdf">where
  the big money is (— not surprisingly — 501(c)(4)'s and 501(c)(5)'s often
  make 501(c)(6)'s and 501(c)(3)'s look tiny by comparison). (36:13)

Segment 1 (39:43)

href="http://sfconservancy.org/news/2014/aug/12/tax-exempt-working-group/">Conservancy
and OSI jointly announced a working group on IRS applications and
denials. (40:49)

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