Charitable, in turn, has its own specific meaning: it includes "relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency."
See http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organi...
In light of these requirements, and poking around the Yorba website, I'm not shocked that Yorba was denied. Though it may claim to be a "charitable, scientific, and educational" organization, it certainly looks to me like its purpose is to make free software. It does not exist to educate people, it does not exist to further a field of scientific study, and it does not appear intended to do any of the things covered by "charitable purposes." It may do some of these things incidentally (education, in particular) but that won't cut it. Ars's argument that open-source software has educational value misses the point: education has to be the purpose of the organization, not simply a benefit that flows from the organization's work.
And the IRS's concern is not just that corporations might indirectly benefit from the work of non-profits (though that seems to . The IRS is also concerned about corporations intentionally spinning off projects for the purpose of sheltering some of their activities from taxation.
http://blogs.gnome.org/jnelson/2014/06/30/the-new-501c3-and-...
Personally, they're one of the places I interviewed at right out of college (I got wrecked pretty hard as they were my first ever whiteboard test haha). They're driven and they firmly believe in trying to help people with free software. It's a real shame they got denied.
Seems like a pretty shitty reason to deny a possible open source company non-profit status on the grounds they aren't tracking their users.....
What red flags you normally for things like that is explicit connections to the for-profit (shared officers, board members, highly paid employees, etc.)
It is impossible to know whether this is what the IRS had in mind. But I can tell you that, according to my understanding of the term, and the dictionary definition, it seems pretty clear that it does not cover open source software.
I'd say Yorba falls under that if you take "works" to include digital artifacts.
Yorba's application appears to have been more along the lines of, "We make free software. Poor people can use free software and other programmers can learn from it." (I'm basing this on the IRS's response — I can't find a full copy of Yorba's application anywhere.) So I can kind of see why that appears less compelling from a "public works" perspective to the IRS.
> Software is not a public work. The development and distribution of software is not a public work even if published under open source or creative commons compatible licenses because software is not a facility ordinarily charitable to include "erecting or maintaining public buildings, monuments, or works." This language slightly broadens the original formulation from four centuries ago.
It goes on to quote the Charitable Uses Act of 1601.
But it's not just "works" but "public works." As in, "a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community." http://en.wikipedia.org/wiki/Public_works (Yes, it's Wikipedia, but this definition is about right.)
http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organi...
> Structures (such as roads or dams) built by the government for public use and paid for by public funds.
There is also a maxim of statutory interpretation in law that a word it known by its fellows. In this case, that would mean preferring an interpretation of "public works" that yields a certain kinship between that term and "public building" and "monuments." This would seem to militate in favor of the Black's/Wikipedia definition. Note also that these three are followed by "lessening the burdens of government" which might be another hint. (I.e., organizations that support public works are deserving of tax exempt status because they lessen the burdens of government.)
I can also tell you anecdotally that, at least among lawyers, the term is very well known and is definitely widely understood as having the definition given by Black's and Wikipedia. There may be a creative argument to be made that an open source project is a public work (could make a fun law review article!), but I doubt it would go very far.
If they are specifically writing software to be used for scientific research, or are carrying out significant research into computing and releasing papers/patents freely, then they might qualify.
https://upload.wikimedia.org/wikipedia/foundation/9/90/501%2...
To go further, I'd look up exactly what "Public Charity Status 170(b)(1)(A)(vi)" is, and then compare that to how they describe themselves here: https://wikimediafoundation.org/wiki/FAQ/en
Which is not surprising at all, since the Apache HTTP Server had its roots in the National Center for Supercomputing Applications (NCSA), a scientific institution.
Python Software Foundation also got a scientific and educational exemption.
Wikimedia is a global movement whose mission is to bring free educational content to the world.
From the previous discussion this link is probably the best advice someone can get:
https://news.ycombinator.com/item?id=7969202
> Generally speaking, they may not like that a for-profit business can use your organization's by-product to make lots of money for themselves.
> Nevertheless, just releasing OSS is NOT an exempt purpose. If you read the IRS regulations, they are very specific as to what a core exempt purpose is. You'll need to pick one that fits best. Generally speaking, it's 1) Church stuff 2) Scientific advancement and research 3) Furthering of the arts 4) Education 5) "Charity," meaning helping people who are disadvantaged in some way 6) Some others that I'm not remembering.
> Most OSS 501(c)3 don't get exemption by just releasing open source software-- they get exemption by being an educational institution.