Wedge

Public area => Off-topic => The Pub => Other software => Topic started by: Dismal Shadow on November 17th, 2011, 08:37 AM

Title: No 501 status on SMF yet?
Post by: Dismal Shadow on November 17th, 2011, 08:37 AM

http://www.simplemachines.org/community/index.php?topic=459389.msg3208685#msg3208685

Title: Re: No 501 status on SMF yet?
Post by: live627 on November 17th, 2011, 08:41 AM

(and Motoko's last post does make a good point - why the constant silence? It's ridiculous.)

Title: Re: No 501 status on SMF yet?
Post by: Nao on November 17th, 2011, 08:46 AM

Does it matter in any way?

Title: Re: No 501 status on SMF yet?
Post by: Arantor on November 17th, 2011, 08:49 AM

It means that they won't be paying taxes on the income generated from Charter memberships and advertising. It was at least enough to cover the hosting costs (which, remember, is on a collection of servers that they own and that reside in a datacenter, which means it ain't cheap)

Title: Re: No 501 status on SMF yet?
Post by: AngelinaBelle on November 17th, 2011, 04:01 PM

IRS form 1023 and its instructions (required to file or US 501(c)3 status) are a confusing read.

So the work is progressing very slowly, I admit.

Title: Re: No 501 status on SMF yet?
Post by: Arantor on November 17th, 2011, 04:05 PM

Thing is, there are people in the environment who have successfully applied for 501(c)3 in the past, if I recall... specifically I'm thinking of Thantos when he applied for it for Yourasoft, wouldn't he be able to help?

Title: Re: No 501 status on SMF yet?
Post by: AngelinaBelle on November 17th, 2011, 05:13 PM

I am sure he would be able to help.

There are some differences. The situation of Simple Machines is more complicated. More expenses, more domain names, more stuff, more moving parts, more history.

Title: Re: No 501 status on SMF yet?
Post by: Arantor on November 17th, 2011, 06:08 PM

Quote

I am sure he would be able to help.

I have no doubt he would, but I get the impression that no-one asked him.

Quote

The situation of Simple Machines is more complicated. More expenses, more domain names, more stuff, more moving parts, more history.

More expenses: fair enough, though at the end of the day as far as the form is concerned it should be a total at the bottom of the balance sheet, as it would be for other companies.

More domain names: should be irrelevant. As far as I know, only two domains are held by SM NPO, but that's ultimately a justified organisational expense, and so goes into the above as another line on the balance sheet.

More stuff: certainly. The problem I'm having is that the more I look at it, the more I'm thinking 'more stuff to find excuses for'. This is the part that's an issue: for an organisation that swore it would have more transparency, it isn't doing a good job of this.

More moving parts: wouldn't have thought it would have made that much difference. At the end of the day, if there is a problem with filing the document, either it should be handed over to a suitably qualified accountant to arrange, or someone should be contacting the IRS for advice. Right now I get the impression, however accurately or not, that it's being sat on because it's 'too hard'.

Title: Re: No 501 status on SMF yet?
Post by: AngelinaBelle on November 17th, 2011, 06:21 PM

Well, actually, we're not sitting on it. We're working through it. Slowly, admittedly. The Treasurer, the other members of the SM BOD, and the rest of the membership.

The work and discussions are done on boards the members of Simple Machines can see. (I try to keep public everything that can be allowed to be public).

I think I had actually forgotten that yourasoft had filed for 501(c)3 status. So thanks for reminding me.

Title: Re: No 501 status on SMF yet?
Post by: godboko71 on November 17th, 2011, 07:48 PM

Angelina, someone must live near a city/university all of which have have offices for the small business administration, they will help with the paperwork. Between the SMA, any number of online foundations and federations for helping open source projects there is no reason at all that the 501c3 was filed.

Title: Re: No 501 status on SMF yet?
Post by: AngelinaBelle on November 17th, 2011, 08:09 PM

Yes -- the Software Freedom Law Center, for example, could probably offer us some advice.
It does still take time to put together all the information, and we are working on it.

Title: Re: No 501 status on SMF yet?
Post by: godboko71 on November 17th, 2011, 08:16 PM

You are to hilarious :) I needed that laugh.

Must be a very unorganized organization if they still gathering information.

Title: Re: No 501 status on SMF yet?
Post by: AngelinaBelle on November 17th, 2011, 10:02 PM

Are you familiar with form 1023?

Title: Re: No 501 status on SMF yet?
Post by: Arantor on November 17th, 2011, 10:14 PM

See for yourself: http://www.irs.gov/pub/irs-pdf/f1023.pdf

It isn't actually that scary, it's just full of standard legalese.

Title: Re: No 501 status on SMF yet?
Post by: AngelinaBelle on November 17th, 2011, 11:16 PM

It is not scary. It is long. And it takes several re-readings to understand it all properly.
There are 12 pages to the form, then 8 associated schedules (some of which we need to fill out, but not all)
Then there will be maybe 5 pages of explanatory attachments, explaining our answers to many of the form's line items.

Starting with every single line item of a year's worth of income and expense, it is necessary to categorize appropriately in order to produce an appropriate statement of revenues and expenses.  Then, it is necessary to place a value on all the server hardware in order to finish filling in the balance sheet. And the value of intangibles like domain names and trademarks.

And make sure you are using the correct dates for your "tax year". So we'll need legal help to complete this task.

It isn't scary.  It just takes time.

Title: Re: No 501 status on SMF yet?
Post by: Arantor on November 17th, 2011, 11:29 PM

Yes, it is long. But it's not so long that it takes *months* to compile the paperwork for this. Weeks, perhaps, but not months.

And if there is a lack of time and/or skill, get an outside party to do it. There are legal firms who will offer discounted rates (or even do it pro bono) to NPOs. I appreciate that you're trying smooth relations on all sides, and that's no easy task, but 1) you're doing a better job of it than the 'marketing' people[1] and 2) it's a virtually indefensible position anyway: 14 months is too long for this to occur, plain and simple, that's not that far off from a page a month.

There's no reason why it couldn't just be handed over to an accountant, paperworks, receipts, everything and have them file it on your behalf, the form even has specific provisions for this. Even if it isn't done pro bono, it would still likely be cheaper than the tax rebate that would come back in consequence.

1.	No, seriously, you're doing a better job of raising SMF's image from malcontents like me than the designated marketing people are. This strikes me as a problem because marketing isn't just about promoting a brand, it's also dealing with problems that crop up.

Title: Re: No 501 status on SMF yet?
Post by: Nao on November 17th, 2011, 11:33 PM

I totally plus-one the footnote above.

Title: Re: No 501 status on SMF yet?
Post by: AngelinaBelle on November 18th, 2011, 07:45 PM

Thanks for the vote of confidence, guys.  But you've never seen my angry eyes!

Of course the 501c3 filing has not been underway for 14 months. There was other stuff to get done.
It was nearly a year after Simple Machines was formed before it reached an agreement with the LLC on transferring assets.
But I'm pretty new over at Simple Machines, so I was not involved in that work.

We've been working on this since about August. And some of the pages take a lot longer to fill out than others.
And we will get outside help, I promise. We'll be fine.

Thanks, everyone, for your continued interest in the well-being of Simple Machines and the SMF project.

Title: Re: No 501 status on SMF yet?
Post by: Dismal Shadow on November 18th, 2011, 07:49 PM

Look like I'm gonna fill for 501c3 status on one of the non-profit organization I founded... :@

I whether the lawyer do it.

Title: Re: No 501 status on SMF yet?
Post by: Nao on November 18th, 2011, 08:07 PM

Wedge without SMF would be like Laurel without Hardie!

Title: Re: No 501 status on SMF yet?
Post by: Dismal Shadow on November 18th, 2011, 08:12 PM

Laurel? Hardie? Doesn't ring a bell. :P

Title: Re: No 501 status on SMF yet?
Post by: AngelinaBelle on November 18th, 2011, 08:14 PM

Stan Laurel and Oliver Hardey got along famously, and entertained people together for years.

What a charming thought.

Title: Re: No 501 status on SMF yet?
Post by: pgordemer on November 18th, 2011, 09:07 PM

Please take this in the spririt it's intended - (note: I am not a laywer or accountant)...... but.... having written and obtained about 10 501C3 in Philadelphia area and Southern New Jersey for all volunteer organizations - the application process is far more than its paperwork. Its the concept of "goals of programs" and commiting it to paper. (as well as having all the governance stuff worked out - bylaws, articles of incorporation, etc)

The parts of the existing financial structure aside, one of THE most important parts of the application is called the Narrative. It is where you  state  your goals, dreams and more importantly the "programs" of the organization. Getting a total census of the wording of that Narrative between every member of a board can be tough.

One other part that any people get confused with and that is a Non-Profit doesn't mean you can't make a profit (you have to stay in business), it means the "profits" of the corporation can't be used to benefit it Owners/Directors/Members (with or without stock).

The final part that gets the accounting part hung up is there is a time limit. Its 27 months after incorpoation. Up to that point if the application is approved (and it usually takes 120 days once its received), you can be considered Nonprofit back to the incorporation date. Many groups haven't paid any taxes on the previous years and until those are then filed and paid, the application is denied.

Title: Re: No 501 status on SMF yet?
Post by: AngelinaBelle on November 18th, 2011, 10:23 PM

OMG you understand!

Title: Re: No 501 status on SMF yet?
Post by: pgordemer on November 21st, 2011, 02:37 AM

Quote from AngelinaBelle on November 18th, 2011, 10:23 PM

OMG you understand!

I have written a few in my day.....

The one thing I tell those doing this, is using a lawyer is usually a bad idea, since most lawyers have no idea about the group or the business and they tend to slant the answers to the application to general ones that past a test, but many times are totally unrelated to the actual programs of the organization. Most groups are told they have to use a lawyer, anyone can do it, they just have to be a member of the board or approved member. I used to write them, have them elect me to the board for 30 days to file the applicaiton, then kill of the position.

Title: Re: No 501 status on SMF yet?
Post by: Arantor on November 21st, 2011, 02:44 AM

I can well imagine that a lawyer would foul up a tax return document. How about an accountant, though?

(For the record, I've done my fair share of legal paperwork, though not anything in the US, fairly obviously. My beef with this process isn't that it's difficult or time consuming but if that completing it is a problem, which it appears to be, external help should have been sought much sooner than where things are now.)

Title: Re: No 501 status on SMF yet?
Post by: pgordemer on November 21st, 2011, 04:45 PM

Same answer about the acccountant - they don't know about the programs.

From the accounting side, there is no issue as far as an application. You have to submit either the last 3 years worth of tax returns (or as many as you have) or in the case of a new group a 2 year projection of your finances. Groups that  have no paid staff have it easy, they can just put in zero's, having any paid staff, makes it a bit longer. They are not looking at the validity of the numbers, its more of a general feel for the size of the organization and its operating expenses.

The paperwork itself ISN'T difficult or tiime consuming, gatthering all the information (documentation) from the organization is the time issue. More importantly, the narraritive of the organization (of which all the officers must approve) is the one that drags on in my experience.

Timing of the filing of the application also helps. Its been my experience that applicatons filed in the June-September take 3-4 times long that applications filed in October-May. Speculation is all the people that looks at these are away on vacation as their is only 1 department location where they all go.

Note, my comments are not directed about the SMF situation (not defending or pomoting it), just throwing them out there as general information. The process itself is well documented, but not well understood. If anyone is going to attempt this in the future, the IRS actually produces an excellent website with all the information you need and some samples. Checkout "Lifecyle of a Charity"
http://www.irs.gov/charities/
http://www.stayexempt.irs.gov/

Title: Re: No 501 status on SMF yet?
Post by: Arantor on November 21st, 2011, 04:50 PM

OK, so scratch the accountant, then. (Certainly in this country, you would readily get an accountant to file for the equivalent of NPO and they'd not have a problem with doing it.)

I do think the underlying point stands, though. If you're not familiar with it, get some help. While I appreciate the narrative part is going to be complex, I still suspect that it's taken longer than it needs to because of the lack of ability/desire to actually get it completed, seeking outside assistance as appropriate.

I don't, for example, understand why it has taken in excess of a year - without even getting to the submission stage. I realise the organisation is not the fastest on the planet but that still seems inordinately slow.

Title: Re: No 501 status on SMF yet?
Post by: pgordemer on November 21st, 2011, 04:59 PM

Quote from Arantor on November 21st, 2011, 04:50 PM

I don't, for example, understand why it has taken in excess of a year - without even getting to the submission stage. I realise the organisation is not the fastest on the planet but that still seems inordinately slow.

Yeah, that is a problem and by the time you get to that timeframe, the officers will have changed, and the Narrative and documents need to be updated. I tell people if you can't put it together in 4 months yourself, then don't do it, or pay someone to do it.

Posted: November 21st, 2011, 04:54 PM

One of the things that can make it so easy, but is overlooked is.... All NPO applications are public information and must be provided for public inspection. Many NPO put the approved application on their websites, so there are tons of real life examples you can glean information from (That's how I taught myself to do it).

Title: Re: No 501 status on SMF yet?
Post by: Arantor on November 21st, 2011, 05:02 PM

Quote

All NPO applications are public information and must be provided for public inspection.

I would love to see SM NPO's application. It is not currently public.

Title: Re: No 501 status on SMF yet?
Post by: pgordemer on November 21st, 2011, 08:30 PM

It only becomes public when it has been approved. Once an NPO has received a determination letter, one of its conditions will be that the original application and all attachments must be available for public viewing. They don't define what public viewing requires, but most just make it available on their websites.

Title: Re: No 501 status on SMF yet?
Post by: Arantor on November 21st, 2011, 09:01 PM

Fair enough on all counts. Doesn't mean I'm not curious.

Title: Re: No 501 status on SMF yet?
Post by: Arantor on November 21st, 2011, 09:36 PM

Hmm. Looking back, It seems that the reality isn't as clear cut as originally presented, and as such I revoke some of my hostility on this matter, as the NPO has not had access to all the assets and paperwork for in excess of a year.

While the NPO is older than a year, the final transfer didn't occur until this year, consequently they couldn't have filed for 501 status until that had occurred.

I won't go into the mindfuckery that occurred but let's just say that I was provided a few items of note that I'd suspected but not had confirmation of. But I now understand why there were delays in the transfer, and I'm willing to be a bit more broad minded than I was before.

However, I'm not exempting them from blame in this matter. They've still had quite a few months to work on it, it's been several months since the 2.0 release which post-dates the completion of the transfer, and all in all outside of the 4 months guideline mentioned above. I'm just more understanding now that it's quite a bit less than 14 months.

I will also note that had the team been a bit more open with people like Motoko-chan's request on the matter, the whole attitude could have been avoided.

Title: Re: No 501 status on SMF yet?
Post by: Nao on November 21st, 2011, 11:44 PM

I'm not sure why you bother at all. Whether or not they pay taxes is irrelevant to us. Now if that was about Wedge... Even that would not hold my interest. :^^;:

Title: Re: No 501 status on SMF yet?
Post by: Arantor on November 22nd, 2011, 12:07 AM

I bother because I still care somewhere deep down, and because knowing what I now know, it's actually a miracle things didn't implode.

Title: Re: No 501 status on SMF yet?
Post by: AngelinaBelle on November 28th, 2011, 09:54 PM

It's the season for miracles, isn't it?

You'll be happy to know that we are in contact with outside help, which should help us get the answers to one or two questions.

Title: Re: No 501 status on SMF yet?
Post by: Arantor on November 28th, 2011, 09:58 PM

Awesome news :)