[Noisebridge-discuss] Fundraising and membership at NB

[Sai Emrys]

On Sat, Jun 19, 2010 at 12:35 PM, aestetix aestetix <aestetix at gmail.com> wrote:
> What does membership actually get you?... It's really just a way to satisfy our
> nonprofit requirement of having a member list.

There is no such requirement. In fact, NB could have been organized as
a non-membership nonprofit corporation.

What you may be thinking of is what's called the "public support test"
to be a "public charity" (as opposed to a "private foundation", which
is the other kind of nonprofit). To quote the IRS:

http://www.irs.gov/charities/charitable/article/0,,id=185584,00.html

"An organization is a publicly supported charity if it meets one of two tests:

1. The organization receives a substantial part of its support in the
form of contributions from publicly supported organizations,
governmental units, and/or the general public.

Example: A human service organization whose revenue is generated
through widespread public fundraising campaigns, federated fundraising
drives, or government grants is a publicly supported charity.

2. The organization receives no more than one-third of its support
from gross investment income and more than one-third of its support
from contributions, membership fees, and gross receipts from
activities related to its exempt functions:

Examples: A membership-fee organization, such as parent-teacher
organization, or an arts group with box office revenue is a publicly
supported charity."


Mind that "membership fee" here does *not* mean "member" in the legal
sense of a person who has voting rights in the corporation. You can
effectively have memberships that are functionally equivalent but do
not in fact grant voting/control rights. Regularly scheduled
"donations" would count towards the public support test.

(Note that membership fees are *not* tax-deductible donations, in
either case, because you are presumptively getting something of equal
value in return. You can only count as tax-deductible cases where you
give something *without* getting something back, or in clear excess of
the value of what you got back.)


The only real reason for being a membership corporation is because you
*want* to give that kind of distributed control - control that would
otherwise rest entirely in the officers and board.

I think this is probably true of NB, and indeed that it ought to be.
The unofficial policy is to divest the board and officers of as much
power as is legally and practically possible.

- Sai

PS "To choose order over disorder, or disorder over order, is to
accept a trip composed of both the creative and the destructive. But
to choose the creative over the destructive is an all-creative trip
composed of both order and disorder. To accomplish this, one need only
accept creative disorder along with, and equal to, creative order, and
also willing to reject destructive order as an undesirable equal to
destructive disorder." - Principia Discordia, Greyface and Negativism.

PPS IANAL, IANYL, but I am a nonprofit corp founder and the one who
had to read all the associated legal crap. Pay a real lawyer if you
want advice you can sue about if it's wrong.