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Beathan
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Nonprofit

Post by Beathan »

Have we considered incorporating the CDS as a nonprofit corporation? I see that creating a nonprofit would give us discounts on islands. Further, it might get us in the road to grants and RL publicity.

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Fernando Book
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Post by Fernando Book »

It seems a good idea. The International Spaceflight Museum did it a few weeks ago, in order to receive grants and that kind of support.
But I have only a question: can our in-world political bodies control a RL corporation?

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Post by Diderot Mirabeau »

[quote="Fernando Book":1vehfjeo]It seems a good idea. The International Spaceflight Museum did it a few weeks ago, in order to receive grants and that kind of support.
But I have only a question: can our in-world political bodies control a RL corporation?[/quote:1vehfjeo]

I'm not afraid to answer in the affirmative to the question of whether our political bodies can manage an RL association. The only problem would be in the possible unwillingness to disclose one's RL identity in situations where it might be needed i.e. in the interface to RL authorities.

I guess it comes down to weighing together the following factors:
- The community's willingness to suffer disclosure of RL identities to the extent that it is required by the relevant legislation to achieve non-profit status
- The benefit vis-a-vis Linden lab in receiving discounts on tier, private islands, grants and so on.

Can anyone clarify further in regard to the following questions:
1) What is the relevant jurisdiction under which a non-profit would have to be incorporated to achieve meritable status in relation to Linden Lab?

2) What does the legislation for incorporating non-profits under the relevant jurisdiction entail in terms of disclosure of RL identities?

3) What can Linden Lab offer explicitly in terms of reduced pricing?

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Fernando Book
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Post by Fernando Book »

I don't have any doubt about our ability to run the corporation, but I ask if the RL regulations allow that the by-laws of the corporation state that the Board of Governors is under the control of the Representative Assembly.

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Aliasi Stonebender
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Post by Aliasi Stonebender »

This is a question that has come up before; Sudane provided an admirable analysis. The end conclusion was that the bother and expense did not, at that time, match what we could afford.

That said, I think it is a question we should continually re-examine. I don't think now is necessarily the time - we've barely started to grow from that last time. But I think it could be in the near future.

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Post by Beathan »

[quote:2n9c6gd8]This is a question that has come up before; Sudane provided an admirable analysis. The end conclusion was that the bother and expense did not, at that time, match what we could afford.
[/quote:2n9c6gd8]

Can I find that analysis somewhere? There might be items of expense that we can disregard (attorney's fees for instance). In my State, the administrative cost of incorporating is fairly modest, and might be a cost I would be willing to personally donate to the cause.

The benefits I see, aside from any savings on purchases from LL (which I saw on the LL site right before I posted this topic, but haven't been able to find again -- help), can be substantial. I see increasingly likelihood of RL liability and lawsuits from SL activities. A corporate form, including a nonprofit form, would protect us as RL people from some RL liaiblities arising in SL.

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Post by Beathan »

I see that Linden has some special deal on island purchases by a qualified 501 (c)(3) nonprofit. Because the CDS project is an educational project in online government, the purpose of the CDS should qualify under 501 (c)(3). The only other step (besides maintenance of corporate formalities after creation) is to incorporate as a nonprofit in some U.S jurisdiction. I could do that for us -- and I would recommend incorporating in Washington State because I have forms ready to hand for that jurisdiction. Following incorporation, we should have a discussion on corporate formality. However, our government structure is already well-suited to such a structure. The Chief Executive could be President; the Treasurer, Treasurer; the RA the Board of Directors.

Nonprofit incorporation has benefits in pricing. [quote:31xzr66d]Islands are priced at US$1,675 for 65,536 square meters (about 16 acres). Monthly land fees for maintenance are US$295.

We offer a discount to verified real world educators and academic institutions (e.g., universities/schools) or 501(c)3 non-profit organizations that will be using the regions to support their organization's official work. For these organizations, small islands are priced at US$980 for 65,536 square meters (about 16 acres), and monthly land fees for maintenance are US$150.

[/quote:31xzr66d]

In addition, nonprofit incorporation would give us other benefits -- not the least of which is insulation from personal liability.

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Patroklus Murakami
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Post by Patroklus Murakami »

I have a couple of questions about how this would work. I'm not familiar with US laws on incorporation as a non-profit organisation. I do think this is worth exploring further but we'll need to be sure we've thought of all the angles before committing to this.

One question relates to the status of the officials of the non-profit (who would be elected within our system). Is there any issue with some (or all) of the Board members, President etc being non-US citizens? It is conceivable (if unlikely) that [i:1ltqkcpj]all[/i:1ltqkcpj] these positions could be held by people outside the US at some point. Also, wouldn't this also involve all CDS officials having to give their RL information to a US jurisdiction? I prefer to keep some distance between my RL and SL selves but I'd probably be prepared to accept the 'outing' of my RL self! But wouldn't this restrict government office to those who were prepared to do this?

Are we confident that we would get the discounts from Linden Lab? The section you have quoted says they offer this to "501(c)3 non-profit organizations that will be using the regions to support their organization's official work". Since our official work is totally set within SL and we would going to non-profit status from SL (rather than moving non-profit work into SL), isn't there some wriggle room for LL to refuse to accept that status? I'm not sure how we investigate this but it might be worth sounding out the Lindens before taking the plunge.

I still think this is worth investigating further but there are clearly a number of issues that need to be addressed first.

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Sudane Erato
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Post by Sudane Erato »

Pat raises some good points. I'm not sure where my analysis that Aliasi mentions can be found (I'm horrible at finding *anything* in the forum history!), but here are some thoughts.

In RL I'm the Treasurer of a very small "not-for'profit" 501(c)3 corp such as Beathan mentions. In addition, prior to my current work in a commercial corp, most of my career was managing larger non-profits in the arts world.

My experience is in New York State, which can't be *that* different than Washington State, since most of the qualifying is done with the Internal Revenue Service. The initial qualifying process is quite substantial, for which we should surely welcome Beathan's offer. My experience has been that so long as the IRS can contact a RL person, if they are so inclined, at a RL address, they pay little attention to the other names on the application and on the reporting documents. Probably there is some "terrorist screening" going on now which did not happen when I was forming these things, but I'm sure our avies don't show up on terrorist lists.

The biggest burden I find with maintaining a non-profit is the reporting. Every year a 990 report must be filed with the IRS, which is the equivalent of a corporate tax return. In essence, this report documents your compliance with the operating rules which enable the tax-exempt status. Even for a small corp, it is not inconsequential. There is no fee attached to this report.

In addition, New York State requires its own "Charities Registration" report, which is basically an overview of the 990, with the 990 attached. I would guess that Washington State has something similiar. In NY, there *is* a fee attached to this, the amount dependent on the annual revenues.

There may also be sales tax reporting required, depending on how we show our revenue. Employment department reporting would probably not be an issue.

These all together are not *huge* burdens. But once the corporation is created, they must be taken very seriously. My understanding is that the IRS and other state-based bureaus are extremely aware of disappeared non-profits, since it often means that the principals in the group have absconded with the assets. Since those assets were gained by the benefits of tax-exemption, they are technically the property of "the public". The penalties for late filing are immense, and they are *not* related to amount of revenue.

It is a truism in the arts world, with which I am most familiar, that everyone wants onto the non-profit corp bandwagon, since then they can accept foundation grants and a variety of other benefits. But everyone finds it far harder to maintain the level of responsibility that the status requires. And terminating a non-profit is far more difficult than starting it.

I don't mean to discourage this exploration; it may hold great benefits for us. My intent here is only to instill a sense of the level of obligation that forming a non-profit corp entails. If and when our community is ready to face that responsibility, it may well be a great idea.

Sudane.....

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Post by Chicago Kipling »

And it may be wise for use to consider the FL cost of paying someone to put together these reports and manage these financial numbers. Even if it is one of our own, it would only seem fair that some compensation was given.

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Ashcroft Burnham
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Post by Ashcroft Burnham »

One question is whether having such corporate status would place undesirable restrictions of action on our legislature and executive, especially if they are to be the board of an RL corporation that has to follow detailed RL regulatory rules. Perhaps Beathan could enlighten us?

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