Major Change: Create a ProgCode 501(c)(3) entity

[stephenscapelliti]

PROPOSAL

Description

This is a proposal for ProgCode to create an associated non-profit entity which will perform functions that are permissible for 501(c)(3) organizations.

Problem

The organizing of ProgCode in late-2016/early-2017 resulted in our current 501(c)(4) organization. However, the original organizers also considered the eventual founding of a 501(c)(3) entity through which much of the tech development, education, and public outreach can operate. Although fundraising under the c4 structure has enabled ProgCode to maintain basic services such as G-Suite, Heroku, Zapier, and Zoom Conference, donation levels are insufficient for ProgCode to hire operations or tech development staff. Few foundations provide grants to c4 organizations, and a recent grant application was unsuccessful in part because of ProgCode's c4 status.

Benefit

Most, if not all, of the community tech development, education, and public outreach could occur through a 501(c)(3) tax exempt entity.

• The c3 entity could qualify for grants - both public and private - which otherwise are unavailable to a c4 entity.
• Donations to a c3 are tax deductible, and so donors are more likely to donate to a c3.
• Fundraising is crucial to the ability of ProgCode to hire and/or contract for operations and tech staff to manage and sustain the community more effectively, thereby enabling ProgCode to fulfill its mission.
• Where grants are available to both c3 and c4 organizations, ProgCode also could benefit by the association between both entities.
• The c4 organization can remain as an place to engage in activities for which a c3 is not appropriate.

Plan

• Discuss and seek community consent to proceed at the 11-12-18 Community Operations meeting.
• Continue planning and discussions in the #legal channel, and discuss and seek community consent to implement at the 01-28-19 Community Operations meeting.
• If consent to implement is granted, the Board of Directors will pass a resolution authorizing the directors to create a 501(c)(3) entity and take all other actions necessary to obtain tax exempt status for the c3 organization, and further authorizing the payment by the ProgCode c4 entity of filing fees only.
• File articles of incorporation for the 501(c)(3) entity in the State of Michigan.
• Draft and adopt bylaws consistent with the 501(c)(3) purpose and the form of the c4 bylaws.
• File an IRS Form 1023 for the new c3 entity.
• Provide automatic membership in the 501(c)(3) entity to all current members in ProgCode, with opt-out.
• Transfer necessary assets from the c4 entity to the c3 entity, including the ProgCode Slack and current subscriptions and accounts.
• Create a new Slack for c4 members and operations.
• Create a process and protocols for evaluating projects and referring them from the c3 entity to the c4 entity, as necessary for regulatory compliance.

Decision Making

• Discuss and seek community consent to proceed at the 11-12-18 Community Operations meeting.
• Discuss and seek community consent to implement at the 01-28-19 Community Operations meeting.

Optional Information

Reference link(s)

Submit an application for tax-exempt status.

• The process is outlined generally on the IRS website.
• Form 1023
• Form 1023-EZ: Note: projected revenue must not exceed $50,000 in each of the first three years of operation.
• Standard Form 1023
• Form 1023 Instructions
• Change Process

Community Discussion History:

• 02.26.2017 - Issue 81 "Funding Framework"
• 05.15.2017 - Issue 198 "Four Pronged Test for Mission Alignment"
• 06.18.2018 - Issue 236 "Standard Change - Budget Expense Requests"

Additional information

• Treatise on non-profit organizations.
• Treatise on Organization & Structure of Open Source Software Development Initiatives

[PamelaJohn]

I have serious concerns about this timeline and believe it is too early to seek consent to implement anything with regard to a new entity, given we do not have a statement of purpose to implement.

Before the community decided to become a 501(c)(4) organization, we had months of discussions to determine what work the entity would and would not engage in. @stephenscapelliti, while you have posted some statements in the #legal channel, there hasn't been any discussion with the members who have asked questions following those posts.

[stephenscapelliti]

It's only scheduled for consent to proceed. I wasn't done editing it, hadn't shared it in the channel, and took a break for dinner before reviewing the change process requirements. As I explained in #legal, we can modify the proposal in accordance with input from the community. It was intended to be a collaborative effort. I'm deleting it for now.

[PamelaJohn]

Thank you, @stephenscapelliti. A few more initial observations:

1. Change Process There is no link included to the ProgCode Change Process. Since your proposal is a "Major Change" it seems important to include the change process so that members who may not be familiar with it can make sure we are following the guidelines.

2. Timeline and Notice The #team-announcements which was posted at 12:37am ET on 11/10 (screenshot below) says:

Our next Community Operations Meeting will be MONDAY
November 12, 2018 at 5pm PT | 6pm MT | 7pm CT | 8pm ET! :time:
We’ll continue discussion about the creation of a 501(c)(3) organization, along with other topics on the agenda.
As always, it’s open to everyone! Please share your ideas with the community!
Add your own a agenda topics for discussion: http://progco.de/ops-agenda 📝
Join the discussion here: :zoom: https://zoom.us/j/372682946 :zoom:

Meetings will be recorded for later playback if you’re unable to attend!

The above notice does not conform with Steps 2-10 to notify the community of a proposed "Major Change" in accordance with the Change Process.

3. Email Requirement As I mentioned in the ProgCode Slack #legal channel today (11/10 screen shot below), I would also propose that as part of the "Plan" section above, and in accordance with the steps set forth in the "Major Change" process, we email the entire ProgCode community to notify all active/inactive members of the opening of the discussion period so they can participate and weigh in on the role they see for the any new entity, within legal limitations.

Thank you!

[PamelaJohn]

In keeping with ProgCode's culture of transparency, and because ProgCode's GitHub Functions board is the only means of keeping a permanent historical record of Member/Staff proposals and changes, I am attaching 3 screen shots of the original GitHub proposal 250 which was entitled "Major Change: Create a ProgCode 501(c)(3) entity" submitted by Stephen and later deleted.

Screenshot 1

Screenshot 2

Screenshot 3

[jpb5013]

Thanks, Pamela! Very good summary. Good foundation for discussion toward our future direction.

[stephenscapelliti]

Thank you, Pamela. I deleted the issue because of a concern expressed that I drafted it, despite that creating the issue was discussed in an Operations Meeting. I've kept a copy of the original, but we can start from scratch.

[stephenscapelliti]

This proposal has been updated pursuant to the discussion in the Community Operations meeting on 11-12-18. A separate document containing the text has been created for community comment and suggested revisions, and that document will be shared in the #legal channel and other notices to the community.