Displaying posts tagged Filings
The Importance of Following Community-Oriented Principles in GPL Enforcement Work
byon July 19, 2016
The GNU General Public License (GPL) was designed to grant clear permissions for sharing software and to defend that freedom for users. GPL'd code now appears in so many devices that it is fundamental to modern technology. While we believe that following the GPL's requirements is neither burdensome nor unreasonable, many fail to do so. GPL enforcement — the process to encourage those who fail to correct problems and join our open software development community — is difficult diplomacy.
Our community learned together over the last 20 years how to do this work well. Last year, Conservancy and the FSF published the concise but comprehensive Principles of Communited-Oriented GPL Enforcement. The Principles are endorsed by Conservancy, FSF and gpl-violations.org — the three historic community-oriented GPL enforcement organizations, as well as other non-enforcing organizations such as OSI. Recently, these principles were also endorsed by the Netfilter team, a core and essential group of Linux developers. However, despite our best efforts, we have been unable to convince all enforcers to endorse these Principles. Here, we express our concern and desire to ameliorate that situation as best we can. Furthermore, we also bring some transparency and context where enforcers seem unlikely to ever endorse the Principles.
One impetus in drafting the Principles was our discovery of ongoing enforcement efforts that did not fit with the GPL enforcement community traditions and norms established for the last two decades. Publishing the previously unwritten guidelines has quickly separated the wheat from the chaff. Specifically, we remain aware of multiple non-community-oriented GPL enforcement efforts, where none of those engaged in these efforts have endorsed our principles nor pledged to abide by them. These “GPL monetizers”, who trace their roots to nefarious business models that seek to catch users in minor violations in order to sell an alternative proprietary license, stand in stark contrast to the work that Conservancy, FSF and gpl-violations.org have done for years.
Most notably, a Linux developer named Patrick McHardy continues ongoing GPL enforcement actions but has not endorsed the community Principles. When Patrick began his efforts, Conservancy immediately reached out to him. After a promising initial discussion (even contemplating partnership and Patrick joining our coalition) in mid-2014, Patrick ceased answering our emails and text messages, and never cooperated with us. Conservancy has had no contact with Patrick nor his attorney since, other than a somewhat cryptic and off-topic response we received over a year ago. In the last two years, we've heard repeated rumors about Patrick's enforcement activity, as well as some reliable claims by GPL violators that Patrick failed to follow the Principles.
In one of the many attempts we made to contact Patrick, we urged him to join us in co-drafting the Principles, and then invited him to endorse them after their publication. Neither communication received a response. We informed him that we felt the need to make this public statement, and gave him almost three months to respond. He still has not responded.
Patrick's enforcement occurs primarily in Germany. We know well the difficulties of working transparently in that particular legal system, but both gpl-violations.org and Conservancy have done transparent enforcement in that jurisdiction and others. Yet, Patrick's actions are not transparent.
In private and semi-private communications, many have criticized Patrick for his enforcement actions. Patrick McHardy has also been suspended from work on the Netfilter core team. While the Netfilter team itself publicly endorsed these Principles of enforcement, Patrick has not. Conservancy agrees that Patrick's apparent refusal to endorse the Principles leaves suspicion and concern, since the Principles have been endorsed by so many other Linux copyright holders, including Conservancy.
Conservancy built a coalition of many copyright holders for Linux enforcement so that we as copyright holders in Linux could share with each other our analysis, strategy, plans and diplomacy. Much like Linux development itself, enforcement functions best when copyright holders collaborate as equals to achieve the desired result. In coding, Linux copyright holders seek to create together the best operating system kernel in history, and in an enforcement coalition like ours, we seek to achieve proper compliance in the best possible way for the community. (More collaboration is always better for various reasons, and we always urge copyright holders in Linux, Debian, Samba, and BusyBox to join our coalitions.)
Nevertheless, Conservancy does not object to individual copyright holders who wish to enforce alone; this is their legal prerogative, and with such limited resources for (and political opposition against) GPL enforcement on Linux, everyone who wants to help is welcome. However, Conservancy must denounce anyone who refuses to either endorse the Principles, or (at least) publicly explain why the Principles are not consistent with their efforts to advance software freedom.
There are few public facts on Patrick's enforcement actions, though there are many rumors. That his enforcement work exists is indisputable, but its true nature, intent, and practice remains somewhat veiled. The most common criticism that we hear from those who have been approached by Patrick is an accusation that he violates one specific Principle: prioritizing financial gain over compliance. Meanwhile, some who criticize Conservancy's enforcement efforts ironically believe we are “too nice” — because we don't seek to maximize financial gain, and therefore we ultimately fund some license compliance work with donations from the general public. Despite that criticism, and the simple fact that Conservancy's settlement funds from GPL enforcement usually fail to cover even the staffing costs associated with our enforcement efforts, we continue to abide by the Principle that compliance is paramount over monetary damages. While we sympathize with those who wish GPL enforcement would fund itself, we also see clear problems if an enforcer prioritizes financial gain over compliance — even if the overarching goal is more comprehensive enforcement in other areas.
Conservancy does all our enforcement specifically through a USA 501(c)(3) charity, precisely because that makes us transparently financially accountable. The IRS requires that our work benefit the general public and never bestow private inurement to anyone. Success in enforcement should never personally benefit one individual financially, and a charity structure for GPL enforcement ensures that never happens. Furthermore, the annual Form 990 filings of charities allows for public scrutiny of both enforcement revenue and expenditure1.
Conservancy, as a charity in the center of GPL enforcement, seeks to make enforcement transparent. We devised the Principles in part to clarify long-standing, community-accepted enforcement procedures in a formalized way, so that violators and GPL-compliant adopters alike can discern whether enforcement behavior is acceptable under community norms. We welcome public debate about any enforcement action's compliance with the Principles (i.e., its meta-compliance with the Principles). We encourage all those who enforce GPL to come forward to either endorse the Principles, or publicly propose updates or modifications to the Principles. (We've created the mailing list, principles-discuss, as a public place for that discussion.) We urge developers to state that they support enforcement undertaken in a principled manner, including litigating only as a necessary last resort and to never prioritize financial gain.
We chose the phrase “meta-compliance with the Principles” carefully. Applying the Principles themselves to compliance with those Principles seems apt to us. For example, we publicized the concerns about Patrick's enforcement only after two years of good-faith attempts to discuss the problems with him, and we waited for more than a year before publicizing the problem, and only after both ample warning to Patrick, and discussion and coordination with the Netfilter team. Just as we would with a GPL violator, we exhausted every path we could find before making this statement publicly.
Thus, we now call on Patrick to endorse the Principles or publicly engage in good faith with the community to discuss proper methods of enforcement. We further welcome anyone who does not currently abide by these Principles to join us anew in our coordinated community-oriented GPL enforcement work.
In conclusion, to contrast GPL enforcement with the much more common proprietary software litigation, violators should always have a simple and solid method to quickly resolve the rare legal action around the GPL: compliance. GPL enforcers should always seek compliance as the primary and paramount resolution to any enforcement matter. In this manner, where community-oriented enforcement exists and thrives, the risk for danger from lawsuits diminishes. Today's violators can then become tomorrow's contributors.
Finally, if you are in a situation where you are unsure what your obligations are under GPL, we urge you to read and study the Copyleft Guide to learn more about how to properly comply with GPL and other copyleft licenses.
1 Looking at Conservancy's Form 990s, you can see by examining Page 2 (Part III) (in FY 2011, see Page 25, Schedule O, for continuation) each year how much revenue Conservancy received from enforcement settlements, and how much Conservancy spends on license compliance activity. Most notably, Conservancy has not received a single dollar in GPL enforcement revenue since FY 2012.
2015 YIR: Karen Sandler Speaks about IRS Charity Issues
byon December 11, 2015
[ This is a blog post is the first in our series, Conservancy 2015: Year in Review. ]
Conservancy's 2015 started with the filing of our FY 2013 Form 990. That's the IRS tax(-exempt) form that every charity and trade association in the USA must file annually. Typically, most non-profits ask for the two three-month extensions for filing deadline for the Form 990, and since Conservancy's fiscal year ends in February, our Form 990 is filed by 15 January.
This is the type of essential work that Conservancy does for our member projects. Each member project need not file their own complicated forms to maintain their charitable status and ability to accept earmarked donations for their projects. Instead, Conservancy files one Form 990. We're “looking forward” to spending this holiday season preparing our next FY 2014 Form 990 and completing our mandated annual audit. (Our FY 2013 annual audit is of course already available.)
Fitting with this annual work that Conservancy does, immediately after filing the 990, both Karen and Bradley — thanks to generous travel funding by the conference — quickly boarded flights to LinuxConf Australia in Auckland, New Zealand. At the conference, on the very date of Conservancy's IRS filing deadline, Karen gave talk entitled The Low Down on IRS status for Free and Open Source Software Nonprofits in the US.
Even almost a year later, many of the issues Karen discussed in her talk are not well known in the Free Software community and there are still many confusions in the Open Source and Free Software community about non-profit status and how it works. Enjoy this video now to see more about what Conservancy does for its member projects, and generally to learn more about how both charities and trade associations operate and what they do in our community.
Become a Conservancy Supporter now to help us continue this work in 2016!
The video in this post is also available on Youtube.
It May Be Boring, But Worth Reading Anyway
byon January 16, 2012
For the last few months, I've had the same primary action item on my agenda every single day: finish Conservancy's FY 2010 audit and Form 990. Those who exchange email with me regularly have probably noticed a slowly increasing lag because of this. Fortunately, as for this past Saturday, this work is finally done. Conservancy has publicly posted our FY 2010 Form 990, FY 2010 Independent Auditor's report and our FY 2010 NYS CHAR-500. I know these documents might seem as boring as reading your own tax filings, but I hope in this blog post to convince you that Form 990s are worth reading, by drawing attention to the interesting parts of Conservancy's filings.
What's a Fiscal Year (FY)?
When I first started working in non-profit management years ago, it took me a while to get used to the idea of a fiscal year (often abbreviated FY). The concept, however, is relatively simple. Conservancy was founded in March 2006. As such, Conservancy's first year of operation ended on 28 February 2007, and every year thereafter, Conservancy completes another year of operation on the last day of February.
Therefore, when you take a look at Conservancy's 2010 Form 990, you'll find that the period described is 1 March 2010 until 28 February 2011. So, when you analyze the documents, you have to put your mindset into that period.
What's a Form 990, and Why Is It Public?
I often point out that 501(c)(3) non-profit charities are a form of a government grant. Think of it this way: 501(c)(3)'s not only pay no taxes on any of their income, but also, donors who give to a 501(c)(3) don't (usually) have to pay taxes on the money they give. The USA government (and by extension, the public), in essence, is subsidizing these organizations in two different ways: the government collects no tax money from these organizations, and the donors don't pay any taxes on their donations.
The government permits this because organizations like Conservancy must meet a high burden: they must advance the public good through pursuit of their mission. Conservancy does this by facilitating, fostering, promoting, developing, and defending Free, Libre and Open Source Software (FLOSS) for the general public.
To make sure organizations carry out their mission for the public good, and to allow the public itself to verify this occurs, the USA Internal Revenue Service (IRS) requires that, each year, every 501(c)(3) organization file the Form 990, which outlines all the funds received and spent by the organization, and how the organization used those funds to promote its mission. My hope is that if you read the rest of this blog post alongside Conservancy's Form 990 and Auditor's Report, you might be able to better use it as a tool to figure out what Conservancy was up to between the dates of 1 March 2010 and 28 February 2011.
Quick View of Mission, Revenue and Expenses
The first page of the Form 990 has a brief statement of the mission of the organization, and presents the fiscal overview. The most interesting lines related to income are lines 8 and 9, which contain the total contributions, and total service revenue. For a 501(c)(3), “contributions” are gifts and donations given to the organization by donors. That's the type of income with which those who give to non-profits are most familiar.
Program service revenue, which is also sometimes called “related business income”, refers to income that an organization receives while pursuing its mission. Conservancy's most common program service revenue is registration fees for conferences. Those who attend the conference get something in return (e.g., getting to see the talks live), but these conferences are still within Conservancy's mission (e.g., educating the public about Open Source and Free Software). Thus, the IRS considers the income related to Conservancy's mission.
The interesting lines on expenses are probably lines 15 and 17. Line 15 is salaries, which I'll talk about later, and line 17 is all the other expenses. The best places to get more information on what goes into this line is to jump to Part IX of the Form 990 (page 10), or to look at Page 5 (PDF page 6) of the Independent Auditor's Report.
Expenses By Mission Work
On Page 2 of the Form 990, you'll find Part III. This is perhaps the most interesting part. Specifically, it matches up specific expense totals with parts of Conservancy's mission. Included are texts describing the work that was done with those funds. I think this page is particular interesting, because it provides an easy overview of specific mission work and how much the organization spent on that specific work. In other words, it's a cross-section of the expenses totaled against specific mission work, rather than types of expenses (the latter of which is the default elsewhere on the Form 99).
The Public Support Test
In Schedule A, Part II of the Form 990 (PDF page 14), you'll find the public support test. Since this is Conservancy's fifth year of operation, for the first time, Conservancy must take a public support test. There are various ways of calculating the public support test. Conservancy used the 33⅓% test, which requires that at least 33⅓% of the organization's support come from the public. Conservancy's public support percentage is 45.3%.
Earmarked Funds Summary
I've focused here mostly on the Form 990. However, it's worth noting that FY 2010 was the first year in which Conservancy was required to have an independent audit. This is a New York State Requirement (you can see the detail of this requirements on page 4 of the CHAR-500), but even when it's not mandated, it's good for non-profits to have an independent audit anyway. Despite the amazing amount of work our first audit took (it'll get easier in future years, fortunately, now that Conservancy is used to it), I'm very glad that NYS required us to do it, as there's always the temptation to avoid something that's difficult and not mandatory.
Anyway, the most interesting page of the audit's report, in my view, is page 6 (PDF page 7), which shows the exact totals of all earmarked project funds in Conservancy. Individual Conservancy member projects will probably like to be able to see a third-party confirmation on the amount that was given, spent, and remains for their projects.
Yes, You Can See How Much I'm Paid
Part of public filings include the salaries paid to officers, directors, and key employees of the organization. Part VII of the Form 990 (Page 7) has these details. As you can see, I was the only person that Conservancy paid in FY 2010. When you look at the numbers in this section, note that my role changed over the course of the fiscal year: From 2010-03-01 through 2010-09-30, I was a nights/weekends part-time volunteer. From 2010-10-01 to 2010-12-31, I was a full-time volunteer. For the last two months of the fiscal year, from 2011-01-01 until 2011-02-28, I was a full-time employee.
Feel Free to Ask Me Questions
I've started a thread on identi.ca to discuss Conservancy's Form 990. Feel free to ask me any questions that you have there.
Conservancy Activity Summary, October-December 2010
byon January 2, 2011
I had hoped to blog more regularly about my work at Conservancy, and hopefully I'll do better in the coming year. But now seems a good time to summarize what has happened with Conservancy since I started my full-time volunteer stint as Executive Director from 2010-10-01 until 2010-12-31.
We excitedly announced in the last few months two new Conservancy member projects, PyPy and Git. Thinking of PyPy connects me back to my roots in Computer Science: in graduate school, I focused on research about programming language infrastructure and, in particular, virtual machines and language runtimes. PyPy is a project that connects Conservancy to lots of exciting programming language research work of that nature, and I'm glad they've joined.
For its part, Git rounds out a group of three DVCS projects that are now Conservancy members; Conservancy is now the home of Darcs, Git, and Mercurial. Amusingly, when I reminded the Git developers when they applied that their “competition” were members, the Git developers told me that they were inspired to apply because these other DVCS' had been happy in Conservancy. That's a reminder that the software freedom community remains a place where projects — even that might seem on the surface as competitors — seek to get along and work together whenever possible. I'm glad Conservancy now hosts all these projects together.
Meanwhile, I remain in active discussions with five projects that have been offered membership in Conservancy. As I always tell new projects, joining Conservancy is a big step for a project, so it often takes time for communities to discuss the details of Conservancy's Fiscal Sponsorship Agreement. It may be some time before these five projects join, and perhaps they'll ultimately decide not to join. However, I'll continue to help them make the right decision for their project, even if joining a different fiscal sponsor (or not joining one at all) is the ultimately right choice.
Also, about once every two weeks, another inquiry about joining Conservancy comes in. We won't be able to accept all the projects that are interested, but hopefully many can become members of Conservancy.
In the late fall, I finished up Conservancy's 2010 filings. Annual filings for a non-profit can be an administrative rat-hole at times, but the level of transparency they create for an organization makes them worth it. Conservancy's FY 2009 Federal Form 990 and FY 2009 New York CHAR-500 are up on Conservancy's filing page. I always make the filings available on our own website; I wish other non-profits would do this. It's so annoying to have to go to a third-party source to grab these documents. (Although New York State, to its credit, makes all the NY NPO filings available on its website.)
Conservancy filed a Form 990-EZ in FY 2009. If you take a look, I'd encourage you to direct the most attention to Part III (which is on the top of page 2) to see most of Conservancy's program activities between 2008-03-01 to 2009-02-28.
In FY 2010, Conservancy will move from the New York State requirement of “limited financial review” to “full audit“ (see page 4 of the CHAR-500 for the level requirements). Conservancy had so little funds in FY 2007 that it wasn't required to file a Form 990 at all. Now, just three years later, there is enough revenue to warrant a full audit. However, I've already begun preparing myself for all the administrative work that will entail.
Project Growth and Funding
Those increases in revenue are related to growth in many of Conservancy's projects. 2010 marked the beginning of the first full-time funding of a developer by Conservancy. Specifically, since June, Matt Mackall has been funded through directed donations to Conservancy to work full-time on Mercurial. Matt blogs once a month (under topic of Mercurial Fellowship Update) about his work, but, more directly, the hundreds of changesets that Matt's committed really show the advantages of funding projects through Conservancy.
Conservancy is also collecting donations and managing funding for various part-time development initiatives by many developers. Developers of jQuery, Sugar Labs, and Twisted have all recently received regular development funding through Conservancy. An important part of my job is making sure these developers receive funding and report the work clearly and fully to the community of donors (and the general public) that fund this work.
But, as usual with Conservancy, it's handling of the “many little things” for projects that make a big difference and sometimes takes the most time. In late 2010, Conservancy handled funding for Code Sprints and conferences for the Mercurial, Darcs, and jQuery. In addition, jQuery held a conference in Boston in October, for which Conservancy handled all the financial details. I was fortunate to be able to attend the conference and meet many of the jQuery developers in person for the first time. Wine also held their annual conference in November 2010, and Conservancy handled the venue details and reimbursements to many of travelers to the conference.
Also, as always, Conservancy project contributors regularly attend other conferences related to their projects. At least a few times a month, Conservancy reimburses developers for travel to speak and attend important conferences related to their projects.
Google Summer of Code
Since its inception, Google's Summer of Code (SoC) program has been one of the most important philanthropy programs for Open Source and Free Software projects. In 2010, eight Conservancy projects (and 5% of the entire SoC program) participated in SoC. The SoC program funds college students for the summer to contribute to the projects, and an experienced contributor to project mentors each student. A $500 stipend is paid to the non-profit organization of the project for each project contributor who mentors a student.
Furthermore, there's an annual conference, in October, of all the mentors, with travel funded by Google. This is a really valuable conference, since it's one of the few places where very disparate Free Software projects that usually wouldn't interact can meet up in one place. I attended this year's Soc Mentor Summit and hope to attend again next year.
I'm really going to be urging all Conservancy's projects to take advantage of the SoC program in 2011. The level of funding given out by Google for this program is higher than any other open-application funding program for FLOSS. While Google's selfish motives are clear (the program presumably helps them recruit young programmers to hire), the benefit to Free Software community of the program can nevertheless not be ignored.
GPL Enforcement, primarily for our BusyBox member project, remains an active focus of Conservancy. Work regarding the lawsuit continues. It's been more than a year since Conservancy filed a lawsuit against fourteen defendants who manufacture embedded devices that included BusyBox without source nor an offer for source. Some of those have come into compliance with the GPL and settled, but a number remain and are out of compliance; our litigation efforts continue. Usually, our lawyers encourage us not to comment on ongoing litigation, but we did put up a news item in August when the Court granted Conservancy a default judgment against one of the defendants, Westinghouse.
Meanwhile, in the coming year, Conservancy hopes to expand efforts to enforce the GPL. New violation reports on BusyBox arrive almost daily that need attention.
More Frequent Blogging
As noted at the start of this post, my hope is to update Conservancy's blog more regularly with information about our activities.