[gentoo-project] Is an umbrella organization a good choice for Gentoo?

[gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Andreas K. Hüttel]

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https://blogs.gentoo.org/mgorny/2020/08/25/is-an-umbrella-organization-a-good-choice-for-gentoo/

While I'm not the author, I think it's an excellent writeup.

-- 
Andreas K. Hüttel
dilfridge@gentoo.org
Gentoo Linux developer 
(council, qa, toolchain, base-system, perl, libreoffice)

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Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Matthew Thode]

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On 20-08-26 21:23:41, Andreas K. Hüttel wrote:
> https://blogs.gentoo.org/mgorny/2020/08/25/is-an-umbrella-organization-a-good-choice-for-gentoo/
> 
> While I'm not the author, I think it's an excellent writeup.
> 

Yep, looked good.  The one thing I'd like to see it compared to is
re-incororation as a non-profit (which may be a requirement to be
absorbed under an umbrella org anyway).

-- 
Matthew Thode (prometheanfire)

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Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Andreas K. Hüttel]

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Am Mittwoch, 26. August 2020, 21:27:56 EEST schrieb Matthew Thode:
> On 20-08-26 21:23:41, Andreas K. Hüttel wrote:
> > https://blogs.gentoo.org/mgorny/2020/08/25/is-an-umbrella-organization-a-g
> > ood-choice-for-gentoo/
> > 
> > While I'm not the author, I think it's an excellent writeup.
> 
> Yep, looked good.  The one thing I'd like to see it compared to is
> re-incororation as a non-profit (which may be a requirement to be
> absorbed under an umbrella org anyway).

If it's just about being absorbed, well, giving away assets is easier for a 
corporation than for a non-profit. 

I personally suspect re-incororation as a non-profit will in that case a) cost 
us unnecessary time and money, and b) potentially make our life harder once we 
finally get rid of the foundation.

-- 
Andreas K. Hüttel
dilfridge@gentoo.org
Gentoo Linux developer 
(council, qa, toolchain, base-system, perl, libreoffice)

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Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Alec Warner]

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On Wed, Aug 26, 2020 at 12:05 PM Andreas K. Hüttel <dilfridge@gentoo.org>
wrote:

> Am Mittwoch, 26. August 2020, 21:27:56 EEST schrieb Matthew Thode:
> > On 20-08-26 21:23:41, Andreas K. Hüttel wrote:
> > >
> https://blogs.gentoo.org/mgorny/2020/08/25/is-an-umbrella-organization-a-g
> > > ood-choice-for-gentoo/
> > >
> > > While I'm not the author, I think it's an excellent writeup.
> >
> > Yep, looked good.  The one thing I'd like to see it compared to is
> > re-incororation as a non-profit (which may be a requirement to be
> > absorbed under an umbrella org anyway).
>
> If it's just about being absorbed, well, giving away assets is easier for
> a
> corporation than for a non-profit.
>

> I personally suspect re-incororation as a non-profit will in that case a)
> cost
> us unnecessary time and money, and b) potentially make our life harder
> once we
> finally get rid of the foundation.
>

Is getting rid of the Foundation a foregone conclusion? It's unclear to me
what folks actually want to do.

-A


>
> --
> Andreas K. Hüttel
> dilfridge@gentoo.org
> Gentoo Linux developer
> (council, qa, toolchain, base-system, perl, libreoffice)

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Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Andreas K. Hüttel]

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> 
> Is getting rid of the Foundation a foregone conclusion? It's unclear to me
> what folks actually want to do.
> 

I suggest you actually read the write-up that we are commenting on.

-- 
Andreas K. Hüttel
dilfridge@gentoo.org
Gentoo Linux developer 
(council, qa, toolchain, base-system, perl, libreoffice)

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Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Alec Warner]

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On Wed, Aug 26, 2020 at 12:42 PM Andreas K. Hüttel <dilfridge@gentoo.org>
wrote:

> >
> > Is getting rid of the Foundation a foregone conclusion? It's unclear to
> me
> > what folks actually want to do.
> >
>
> I suggest you actually read the write-up that we are commenting on.
>

I read the write up. It's one person's opinion on how to proceed. Which is
why I asked "is this a foregone conclusion"? Is this what people want?
Obviously it's what mgorny wants; but he is just 1 person, hence my
question of "what do other people want."

-A


>
> --
> Andreas K. Hüttel
> dilfridge@gentoo.org
> Gentoo Linux developer
> (council, qa, toolchain, base-system, perl, libreoffice)

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Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Andreas K. Hüttel]

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Am Mittwoch, 26. August 2020, 22:44:52 EEST schrieb Alec Warner:
> > > Is getting rid of the Foundation a foregone conclusion? It's unclear to
> > 
> > me
> > 
> > > what folks actually want to do.
> > 
> > I suggest you actually read the write-up that we are commenting on.
> 
> I read the write up. It's one person's opinion on how to proceed. Which is
> why I asked "is this a foregone conclusion"? Is this what people want?
> Obviously it's what mgorny wants; but he is just 1 person, hence my
> question of "what do other people want."
> 

Shrug. It's also the proposal that got you elected for trustee. :)

-- 
Andreas K. Hüttel
dilfridge@gentoo.org
Gentoo Linux developer 
(council, qa, toolchain, base-system, perl, libreoffice)

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Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Matt Turner]

On Wed, Aug 26, 2020 at 12:39 PM Alec Warner <antarus@gentoo.org> wrote:
>
> On Wed, Aug 26, 2020 at 12:05 PM Andreas K. Hüttel <dilfridge@gentoo.org> wrote:
>>
>> Am Mittwoch, 26. August 2020, 21:27:56 EEST schrieb Matthew Thode:
>> > On 20-08-26 21:23:41, Andreas K. Hüttel wrote:
>> > > https://blogs.gentoo.org/mgorny/2020/08/25/is-an-umbrella-organization-a-g
>> > > ood-choice-for-gentoo/
>> > >
>> > > While I'm not the author, I think it's an excellent writeup.
>> >
>> > Yep, looked good.  The one thing I'd like to see it compared to is
>> > re-incororation as a non-profit (which may be a requirement to be
>> > absorbed under an umbrella org anyway).
>>
>> If it's just about being absorbed, well, giving away assets is easier for a
>> corporation than for a non-profit.
>>
>>
>> I personally suspect re-incororation as a non-profit will in that case a) cost
>> us unnecessary time and money, and b) potentially make our life harder once we
>> finally get rid of the foundation.
>
>
> Is getting rid of the Foundation a foregone conclusion? It's unclear to me what folks actually want to do.

It seems like getting rid of the Foundation and moving to an umbrella
organization is the best thing to do, IMO.

Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Aaron Bauman]

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On Wed, Aug 26, 2020 at 01:27:56PM -0500, Matthew Thode wrote:
> On 20-08-26 21:23:41, Andreas K. Hüttel wrote:
> > https://blogs.gentoo.org/mgorny/2020/08/25/is-an-umbrella-organization-a-good-choice-for-gentoo/
> > 
> > While I'm not the author, I think it's an excellent writeup.
> > 
> 
> Yep, looked good.  The one thing I'd like to see it compared to is
> re-incororation as a non-profit (which may be a requirement to be
> absorbed under an umbrella org anyway).
> 
> -- 
> Matthew Thode (prometheanfire)

I agree with both the article and Matthew. We also need to explore the
possibility of reincorporation.

We all should consider the possibility that no umbrella takes
us for various reasons. We may be to large/small, we may have to
reincorporate first to clear taxes fully, they may not have the
resources to handle our project, etc.

Additionally, the article is correct and an umbrella is ideal given
certain factors (e.g. overhead cost, like ideals, etc.)

Finally, we should consider (should no umbrella take us) whether
reincorporation + retention of services will interest more for "running"
the Foundation.

There are a few options here and I think we can set ourselves (as a
distro) up for success by preparing and discussing all possible options.
Let's not sell ourselves on one idea simply because it looks appealing
right now.

-- 
Cheers,
Aaron

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Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Michał Górny]

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On Wed, 2020-08-26 at 13:27 -0500, Matthew Thode wrote:
> On 20-08-26 21:23:41, Andreas K. Hüttel wrote:
> > https://blogs.gentoo.org/mgorny/2020/08/25/is-an-umbrella-organization-a-good-choice-for-gentoo/
> > 
> > While I'm not the author, I think it's an excellent writeup.
> > 
> 
> Yep, looked good.  The one thing I'd like to see it compared to is
> re-incororation as a non-profit (which may be a requirement to be
> absorbed under an umbrella org anyway).

There are a few details I've established in the linked post.  However,
I don't think anyone has done a detailed research on this option.

To recap:

1. We need to do some work to apply for this status, and there's no
guarantee we'll be approved.

2. There is a running theory that enabling US citizens to deduce
donations from taxes will increase donations.  No clue how much we can
actually count on that, though, and how many % of current donors live
in the USA.

3. As a non-profit, we'll be able to save some on taxes.

4. However, we're going to pay more for CPA services.  I don't know how
much we'll actually save if we consider this.

5. We're still going to be stuck with the current reliability problems,
and running a non-profit will require more work and cause more
responsibility.  I mean, just logically speaking, you get a whole new
area of potential mistakes.

In my opinion, it's not worth the effort.  It is unlikely to solve any
of the existing problems, it may not work at all and it will certainly
make things even harder considering we're understaffed.

-- 
Best regards,
Michał Górny


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Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Rich Freeman]

On Wed, Aug 26, 2020 at 5:13 PM Michał Górny <mgorny@gentoo.org> wrote:
>
> 2. There is a running theory that enabling US citizens to deduce
> donations from taxes will increase donations.  No clue how much we can
> actually count on that, though, and how many % of current donors live
> in the USA.

After the last round of tax changes I think this is pretty unlikely.
95% of Americans can't deduct any charitable donations now - or rather
they can deduct them whether they actually make them or not, so there
is no incentive to make them.

That said, being 501c3 does potentially open you up to receiving
support from other 501c3s.  I'm not sure how much we need this, unless
it is for all the accounting work we'd probably need to be a 501c3 in
the first place.

You can argue that it makes you more accountable for what you're
doing.  However, this of course entails a LOT more paperwork, and I'm
sure it would only take everybody 10min to find an example of somebody
famous abusing a foundation for personal gain...

-- 
Rich


-- 
Rich

Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Alec Warner]

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If the objective is to compare the cost of the Foundation to an umbrella;
I'm all for it!

My primary critique of the blog post is in the financials and income
forecasting. I have two major objections.

(1) The foundation makes more than simply individual donations. The
methodology where we ignore a large portion of revenue seems rather
arbitrary to me. I might work on a more numerical model. Really what I
think we want is some moving average of past years (by revenue source) and
we say things like "well we make an average of Y$ from source Z, and we
made this over a period of A years, so we can forecast some of this revenue
into future years." It would be a discounted model, but I don't think it's
valuable to discount these extra sources of revenue to 0. Or to put this
another way; why don't we discount individual paypal donations to 0 also?
The answer appears to be because we have a historical model that says we
are likely to get some recurring donation revenue...which then leads me to
ask why we are not applying this same heuristic to other revenue sources
for the Foundation? So in short, I don't agree with only using paypal
donations and we should forecast other revenue sources.

(2) A follow on from (1) is that the actual income of the foundation
matters for efficiency calculations. If we spend 5k on ongoing costs (CPA,
taxes, etc.) and we make $7200 (according to the blog revenue model), we
are very inefficient on a percentage basis. Efficiency is a function of
expenses and revenue. Expenses are actually somewhat fixed; so a revenue
forecast that provides more revenue will also reflect a higher efficiency
for the company. I believe the model in the blog post basically makes the
existing cost structure worse than it is (and it does this by under
forecasting future revenue.) The revenue forecast also impacts alternative
structures. If we join SFC and we pay 10% of revenue as fees...obviously
the fees are directly tied to revenue, so under-forecasting revenue will
make SFC look more attractive on an absolute cost basis (the percentage
cost is of course fixed at 10%). If our revenue is 7200$, then the SFC is a
steal on an absolute basis. If our revenue is 20,000$, the SFC is less than
half the cost of the existing structure. If our revenue is 60,000$, then
SFC costs more than the existing structure.

The question of financial efficiency is basically a function of size then.
If Gentoo was bigger, the nonprofit would make fiscal sense (we could be
more efficient than SFC.) If Gentoo remains its current size, then the SFC
seems ideal and we can use a slimmer operational structure and likely still
support Gentoo. To me this decision is about what we want from this kind of
body. This sort of decision is part of what will be discussed in my
President's letter to members later this week, so it's not a question I
really pose here; but I want folks to think about:
 - How an organization, like the foundation at its current size could
support Gentoo.
 - How an organization, at double the current size, could support Gentoo.

Then thinking about which one to pursue. I think many people view the
foundation as perhaps a necessary evil, or as an opponent. I would instead
like folks to consider what the Foundation could do as an ally to the
community.

-A



On Wed, Aug 26, 2020 at 11:23 AM Andreas K. Hüttel <dilfridge@gentoo.org>
wrote:

>
> https://blogs.gentoo.org/mgorny/2020/08/25/is-an-umbrella-organization-a-good-choice-for-gentoo/
>
> While I'm not the author, I think it's an excellent writeup.
>
> --
> Andreas K. Hüttel
> dilfridge@gentoo.org
> Gentoo Linux developer
> (council, qa, toolchain, base-system, perl, libreoffice)

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Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Michał Górny]

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On Wed, 2020-08-26 at 19:39 -0700, Alec Warner wrote:
> If the objective is to compare the cost of the Foundation to an umbrella;
> I'm all for it!
> 
> My primary critique of the blog post is in the financials and income
> forecasting. I have two major objections.
> 
> (1) The foundation makes more than simply individual donations. The
> methodology where we ignore a large portion of revenue seems rather
> arbitrary to me.

Any model is 'rather arbitrary' by the very definition of it.  I've
never claimed it's perfect or precise.  I've explicitly considered
the worst case scenario.

>  I might work on a more numerical model. Really what I
> think we want is some moving average of past years (by revenue source) and
> we say things like "well we make an average of Y$ from source Z, and we
> made this over a period of A years, so we can forecast some of this revenue
> into future years." It would be a discounted model, but I don't think it's
> valuable to discount these extra sources of revenue to 0. Or to put this
> another way; why don't we discount individual paypal donations to 0 also?
> The answer appears to be because we have a historical model that says we
> are likely to get some recurring donation revenue...which then leads me to
> ask why we are not applying this same heuristic to other revenue sources
> for the Foundation? So in short, I don't agree with only using paypal
> donations and we should forecast other revenue sources.
> 

I've included all sources in the chart to let people decide. The main
thing about 'small donations' is that they're distributed over a lot of
people.  So yes, arbitrarily it makes sense to assume that all of people
donating to Gentoo won't suddenly stop doing that.

The problem with 'big donations' is that they're bound to a single
entity.  They're a binary thing.  Either we get them, and we have lots
of money, or we don't and we don't.  One year a person donates $15000
and we're rich.  Another year only $5000, and our revenue halves.  Yet
another year there's no such donation.  Yes, surely you could try
averaging it and assuming that *maybe* next year there will be another
$5000 donation and it will even out.  Or maybe not because it was just
one person donating.

Commission and interest are small enough we can skip them for now.

GSoC money is somewhat constant lately but it all hangs on decision of
one entity.  Google says we're in, cool.  Google says we're out,
we don't have that money.  And it's not exactly that our GSoC project
count is improving.

-- 
Best regards,
Michał Górny


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Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Alec Warner]

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On Wed, Aug 26, 2020 at 11:33 PM Michał Górny <mgorny@gentoo.org> wrote:

> On Wed, 2020-08-26 at 19:39 -0700, Alec Warner wrote:
> > If the objective is to compare the cost of the Foundation to an umbrella;
> > I'm all for it!
> >
> > My primary critique of the blog post is in the financials and income
> > forecasting. I have two major objections.
> >
> > (1) The foundation makes more than simply individual donations. The
> > methodology where we ignore a large portion of revenue seems rather
> > arbitrary to me.
>
> Any model is 'rather arbitrary' by the very definition of it.  I've
> never claimed it's perfect or precise.  I've explicitly considered
> the worst case scenario.
>
> >  I might work on a more numerical model. Really what I
> > think we want is some moving average of past years (by revenue source)
> and
> > we say things like "well we make an average of Y$ from source Z, and we
> > made this over a period of A years, so we can forecast some of this
> revenue
> > into future years." It would be a discounted model, but I don't think
> it's
> > valuable to discount these extra sources of revenue to 0. Or to put this
> > another way; why don't we discount individual paypal donations to 0 also?
> > The answer appears to be because we have a historical model that says we
> > are likely to get some recurring donation revenue...which then leads me
> to
> > ask why we are not applying this same heuristic to other revenue sources
> > for the Foundation? So in short, I don't agree with only using paypal
> > donations and we should forecast other revenue sources.
> >
>
> I've included all sources in the chart to let people decide. The main
> thing about 'small donations' is that they're distributed over a lot of
> people.  So yes, arbitrarily it makes sense to assume that all of people
> donating to Gentoo won't suddenly stop doing that.
>
> The problem with 'big donations' is that they're bound to a single
> entity.  They're a binary thing.  Either we get them, and we have lots
> of money, or we don't and we don't.  One year a person donates $15000
> and we're rich.  Another year only $5000, and our revenue halves.  Yet
> another year there's no such donation.  Yes, surely you could try
> averaging it and assuming that *maybe* next year there will be another
> $5000 donation and it will even out.  Or maybe not because it was just
> one person donating.
>
> Commission and interest are small enough we can skip them for now.
>
> GSoC money is somewhat constant lately but it all hangs on decision of
> one entity.  Google says we're in, cool.  Google says we're out,
> we don't have that money.  And it's not exactly that our GSoC project
> count is improving.
>

I understand why you modeled things this way. I think my problem is that
when modelling I have two goals.
 - Be accurate
 - Be as simple as possible

I think your model meets goal 2, but not goal 1, because it wildly
underestimates future revenue of Gentoo Foundation Inc and this causes
profound problems in accuracy (as I stated earlier.)

I'll try to propose an alternative that uses moving averages; so we can
better understand.
 - Recurring paypal revenue
 - one-off paypal revenue
 - Large donations
 - GSoC (minus reimbursements)

Again I'm not saying "we will book the same revenue year over year" for
these items, but its unlikely we will book 0$ every year[0]. Sadly when I
discussed this with 2 accountants they basically said there is no real
standard for forecasting revenue. There are common ways to model...but I
can't just recommend some forecasting accounting standard because one does
not exist to my knowledge :(

-A

[0] Down years are fine given our cash reserves. At our current burn rate
we can likely fund Gentoo for 10 years without earning another cent in
income for that entire 10 year period. That is crazy! But it also means we
don't need to care too much about annual fluctuations in revenue because we
have small expenses and large cash reserves. If our cash reserves go down
or our expenses go up, this becomes more of a pressing concern because down
years may cause cash flow problems....but this is not a problem for Gentoo
at this time.


>
> --
> Best regards,
> Michał Górny
>
>

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Re: [gentoo-project] Is an umbrella organization a good choice for Gentoo?

[Michał Górny]

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On Thu, 2020-08-27 at 01:05 -0700, Alec Warner wrote:
> Again I'm not saying "we will book the same revenue year over year" for
> these items, but its unlikely we will book 0$ every year[0] [...]

I'm not saying that either.  All I'm saying is that *it is possible*,
and it is more likely (though not very likely) than small donations
going down to $0.  It's the 'all eggs in one basket' thing.

> [0] Down years are fine given our cash reserves. At our current burn rate
> we can likely fund Gentoo for 10 years without earning another cent in
> income for that entire 10 year period. That is crazy! But it also means we
> don't need to care too much about annual fluctuations in revenue because we
> have small expenses and large cash reserves. If our cash reserves go down
> or our expenses go up, this becomes more of a pressing concern because down
> years may cause cash flow problems....but this is not a problem for Gentoo
> at this time.

I'm not sure if we're on the same page here.  My goal is to find what's
best for Gentoo -- and in my opinion this means 1. long-term
sustainability, and 2. maximum revenue spent on Gentoo.

I don't think the argument 'we have so much reserves that even if we
neglect everything we'll survive for many years ahead!' works here.
 Burning up reserves doesn't help Gentoo, and even if it works for a few
years, it doesn't guarantee long-term sustainability.

When a dam starts cracking, you don't say 'at this rate, the water
in the reservoir will last for another 10 years!'.  Because you ought to
know the crack will only get bigger and the whole thing's gonna fall
apart sooner than later.  And once it starts falling apart, it will be
much harder to stop.

-- 
Best regards,
Michał Górny


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