Subject:
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Re: Organizational business for ldraw.org as pertains to future activities
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Newsgroups:
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lugnet.cad.dev.org.ldraw
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Date:
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Thu, 15 Jun 2000 22:54:17 GMT
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Viewed:
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1265 times
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In lugnet.cad.dev.org.ldraw, Tim Courtney writes:
> In lugnet.cad.dev.org.ldraw, Shiri Dori writes:
> > Reading through the types of charity that the document is referring to, it
> > seems that ldraw.org could be considered either as a private org, or a
> > charitable org. Certainly not any of the others, AFAIK. It seems viable to • say
> > that ldraw is not a private org, so I looked a bit more into "charitable".
> >
> > From the requirements for charitable orgs [2]:
> > "The term charitable is used in its generally accepted legal sense and
> > includes [...] advancement of education or science"
> > "In addition, assets of an organization must be permanently dedicated to an
> > exempt purpose."
> >
> > So the things to consider would be: can ldraw be considered as educational?
>
> In a sense, I would say it is.
>
> > Does it even *have* an exempt purpose?
>
> Debatable. It would be wise to talk to a financial person about these
> issues. Someone in Lugnet, or I have a friend who used to do financial stuff
> who said there's someone I can be referred to. I can try to get some pro bono
> advice if at all possible and necessary.
Definitely a good idea. Also, if you can, try getting a second pro bono
opinion. Remember, lawyers do work in teams and consult each other regularly
for finer points and other considerations and legal precedents (can you say
networking?)
> > Another thing that was mentioned was that in order to file a request for tax-
> > exemption, a copy of the Articles of Organization must be included. So... you
> > want to have that figured out as well.
>
> Yep. I talked to my friend when I was faxing stuff in to X to verify my
> identity for an account (more group work :) - had to go over to church to do
> it cause I don't have fax software) He's an associate pastor who used to work
> as a financial advisor or some bank dude, so he gave me some pointers. I was
> told that you need to file as a corporation, and then file for tax exempt
> status (exempt status isn't given to an individual). The accounts can be in
> the name of the corporation as well. This process may take a while.
>
> > To make a long story short, if ldraw.org has nothing to do with politics, and
> > it is operating for one of these purposes {religious, charitable, scientific,
> > testing for public safety, literary, or educational purposes, or to foster
> > amateur sports competition, or for the prevention of cruelty to children or
> > animals}, it can be exempt from tax.
> > Some of these purposes obviously have nothing to do with ldraw.org. Others
> > might. Mostly I'm talking about educational purposes.
> >
> > To reiterate, the things to consider now would be:
> > =Can ldraw.org be considered as educational?
>
> Yes. Its uses in the educational field are obvious, though to my knowledge it
> has not been used. Not for lack of trying though, I approached higher-ups at
> First Lego League, probably just need more time to talk to them. MIT probably
> uses it as well...Suz? Fred?
Yes. Perhaps LDraw.org can be seen as an organization that seeks to assist the
public in designing and documenting physical and virtual constructions through
the use of its [freeware] computer-aided design tools.
> > =Does it have a (different) exempt purpose?
>
> Not particularly. Just collecting donations for non-profit demonstrations and
> possible educational conventions on its uses.
Umm.. well, putting it that way makes it look like you're trying to avoid
taxes.
> > =Writing a rough draft of the Articles of Organization
>
> Something to look into.
>
> Here's how I see the whole tax status thingie. We can either:
>
> File for a corporation and tax exempt status. This will most likely delay the
> ability to distribut the CD, because any sales made before tax exempt status
> is granted will be taxed. There will be a lot of organizing needing to take
> place. The downside here is the CDs are delayed, but we'd get more $$ to play
> with in the long run if successful for future stuff.
>
> Not file for tax exempt status. This means that we would need to be taxed on
> all income to the group from the CD sales. I could handle the funds myself,
> and count them with my own tax filing for 2000 [1], and keep the group money
> separate (and give a report of how much we've earned for accountability). The
> downside of this is the group would have less money to do things with (promos
> at events, .datfest, etc), but we would get the CDs out sooner.
Less money, and an annual report. Neato.
The other question that needs to be asked is, Would this thing ever make a
profit if sold? Probably not a significant one, if any. In which case, any
surplus [profit] should be used to cover the costs of banners, materials, etc.
Also, consider the way that the IRS would see the basic math:
1) if LDraw.org was for-profit that means it needs, more often than not, to
show a profit in order to avoid an audit; a basic purpose of the corporation
is to make a profit - if it doesn't, it can be pressured into backruptcy,
something I'm sure no one wants;
2) if LDraw.org was non-profit then it wouldn't matter as much either way,
unless there was a huge of amount of cash/money that was not used for the
furtherance of its Purpose. Does anyone actually see that happening?
> [1] This would increase my tax bracket as well, cause I'm probably going to
> make less than $10,000 this year. This will result in less income for both
> myself and for the group.
Not to mention how much time you would spend with Quicken Deluxe every April
14th. :-P
> Something to think about. Discussion? Vote?
Regarding this last issue, IMO, don't rush it at the expense of the superior
choice. Many software companies attend shows ever year with barely-beta-ware
for the showroom floor.. everyone understands late software.
Plus, if you ever have to pass LDraw onto someone else, the easier it is to
take care of, the easier it is to pass, and the longer it should last. Tim,
you yourself have remarked on how much work it is... you're better off house-
breaking the puppy before you try and give it away.
-Tom McD.
when replying, in the olden days, it was a wafer of spamcake that was shoved
into the vampire's mouth.
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