Subject: Re: economic efficiency of free software
From: "Stephen J. Turnbull" <>
Date: Sat, 07 Feb 2004 19:37:54 +0900

>>>>> "Forrest" == Forrest J Cavalier, <Forrest> writes:

    Forrest> How could the entity running this be non-profit?

The point of non-profit status is so that you don't pay tax when you
have a temporary surplus of revenue over expenditure---all non-profits
that aren't in big trouble are going to behave like that (ie, running
surpluses much of the time).

Anyway, the money it takes in is not going to be "income".  It has
taken custody of someone else's assets, not received income from them.

    Forrest>   Taking in money and holding on to it with payouts in
    Forrest> the indefinite future is going to trip over some banking
    Forrest> laws I think.

I don't think so.  A bank is in the business of taking in money, and
_using it for its own purposes_ (such as lending to businesses or
homeowners), on the strength of a promise to pay back under certain
conditions (which might be "on demand") plus interest.

This is more like an advance on expenses, like a lawyer's retainer.

The tax and banking implications for internal transfers are a bigger
deal.  Yes, I think that a transfer to a member would have to be
considered reportable income.  Also, internal transfers means you're
implementing a payments scheme.  I don't know whather that would cause
you to fall under banking laws (does PayPal?  VISA?  I dunno offhand).

IANAL, but that gives you some idea of what I think you should worry
about first.  :-)

I'll be looking at the idea itself more carefully.  :-)

Institute of Policy and Planning Sciences
University of Tsukuba                    Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
               Ask not how you can "do" free software business;
              ask what your business can "do for" free software.