I’ve seen a lot of good conversation here, but not too much about the second question of how a foundation would fit into governance structures and requirements for a foundation’s operation, so I wanted to offer some of my own knowledge and experience with foundations.
Short version: Foundations have bunches of legal requirements, especially if they want to be tax exempt (and/or if they want to be considered charitable). Lawyers are necessary. I can see many different roles, such as handling budgeting, contracting/license use agreements, and even just paying to maintain domains and spaces. A foundation (if established under certain criteria) would also provide a place for those who want to offer support via treasure, rather than talent or time (if, perhaps they lack those things).
Long version:
Broken into sections:
- Brief on Types of Foundations
- Brief on Foundation Governance & Management
- Potential Use Cases for a Foundation within the Project
Note: My knowledge is USA based, so its usefulness may vary. I am also going to comment generally on ‘a foundation’ not specifically on the Geeko Foundation, since I don’t know very much about Geeko’s structure other than that I do strongly support the work they outline.
My background: I’ve been on boards and am currently involved in the creation of a charitable foundation.
1. Types of Foundations
There are multiple types of foundations. Foundations can be a not-for-profit organization (such as a not-for-profit company) or a charitable organization. The difference is whether or not the foundation is subject to taxes (particularly income taxes) and how much those taxes are.
Foundations can be organized in multiple ways as well; typically they are either organized as a corporation or as a trust. In some ways (and countries/states), corporations are better, since they have perpetual life in most places and allow for limited liability of board members (legal things that matter). But trusts have advantages too.
Foundations of all types can pay staff, make grants, and support operations of a charitable program or set of programs.
1a. Charitable Foundations
Charitable foundations (aka Charities) offer an advantage in that they are tax-exempt and can provide a tax-exempt option for supporters who want to donate. However, they typically have stricter operating requirements than non-charitable not-for-profit foundations. These operating requirements include how they can collect funds, what they can spend funds on, and often how much of their funds must be spent annually.
Charitable foundations also come in two basic sub-flavors: Grant-making, and Operating. A grant-making foundation supports its causes by giving grants to other parties; i.e. writing a check with conditions about what it is supporting, often to another charitable organization. An operating foundation exists to support its charitable cause; i.e. a museum that uses admission fees, donations, and endowment to pay its electric, water, lights, staff, etc. Operating foundations can make grants to other entities, but they do not typically have the sort of ‘minimum required amount of money given to other charities’ that grant-making foundations have; instead, they have a minimum amount they must spend on the operation of their charity.
In the US, charitable foundations also have two more sub-flavors (for anyone still following this binary tree there are at least 4 types of them). They can be private or public. A private charitable foundation requires only that the founder(s) legally establish the foundation and appropriately give away the money (via grants or operating). To qualify as a public charitable foundation in the US requires a declaration of intent, five years (or more) of specific operating ways, and a certain amount of fundraising from non founder parties (and maybe more conditions).
Charitable foundations are also subject to lots of rules regarding who they give money and support to, if they want to maintain their tax exempt status. (For example, there is a rule about not supporting terrorism.) These rules may cause a foundation to need to exercise more control over the Project in some way(s). It would be good to get some legal advice on activities that could/could not be supported before this road is followed.
2. Foundation Governance & Management
Foundations are typically managed by a Board. In the US, if the foundation is a corporation, it will be managed by a Board of Directors; if it is organized as a trust, it will be managed by a Board of Trustees. There are subtle differences in the legal responsibilities of these two types of individuals (Directors & Trustees). In other countries, this can be different. The Board is required to have regular meetings (sometimes just once a year) to conduct the business of the foundation.
Foundations are typically required to have bylaws and/or other guiding documents upon their founding. These guiding documents will include things like a mission, how the foundation operates, how board members are selected, and more. In addition, many foundations choose to craft a strategic plan, an asset allocation plan and other guiding documents.
Among the duties of the Board are managing the foundation’s assets. This can be delegated to professional asset managers, or, if Board members have the correct expertise, can be conducted by the Board or a subcommittee. Legal responsibility is a factor here too.
The Board may also hire and oversee project directors and others, either directly or through project directors. The Board bears the legal responsibility for the operations of the foundation while the conduction of the operations may be carried out by hired or volunteer staff.
3. Foundations & The Project: Potential Use Cases & Things to Consider
A foundation could serve in many different roles, one or all of the following and probably a bunch more I’m not thinking of. To start, I’m going to make two lists, one for non-profit (but taxable) foundations, and one for charitable foundations.
Non-profit, but taxable, foundations could:
- Serve as an operating organization that manages the budget, licenses, trademarking, and domains, maintaining space for the Project to conduct development. If the foundation’s only role is to maintain space, this would need to be clearly delineated that they host a web space, but don’t influence inclusion or development of the OS or other projects.
- Serve as an operating organization that also strategies about the Project and perhaps even hires/contracts for support to complete certain projects when funds are available.
Charitable foundations could:
- Support the Project through provision of grants to host space, complete initiatives, etc; without hosting or maintaining the Project.
- Support the Project with direction, managing funding for trademarking, domains, space, and so on, including contracting for support.
One thing to keep in mind is that, due to the requirements on charitable foundations, it may be the case that a charitable foundation needs to exert more control over the Project (e.g. to insure it isn’t including malicious software, or accidentally violating any rules) in order to support the Project fully. On the flip side, being a charitable foundation, it would have some significant tax advantages and be eligible to receive other grants and charitable donations, which could be a huge plus.
Some things that should be done before decisions are made on this matter, in no particular order:
- Determination of what types of control we can accept and not accept on behalf of a foundation. E.g. could we accept it if a foundation had to have the final say over everything in the official repos? Does our answer change if unoffical repos can be hosted, or if they have to be offsite (i.e. a different webpage).
- Additional research, with legal assistance, into the types of activities that different foundation options would be able to engage in.
- Research on foundation structures and types of rules in various countries for determination of host country.
- Consideration of the bylaws, board, and how founders would be recruited (starting a foundation requires time and money).
- Consideration of how assets will be collected and managed, and how an income stream will be generated for the continued work of the organization.
So, that was a novel, thanks for taking the time to read it! Just some ideas to keep in mind for the foundation discussion.
