Re: [atlarge-discuss] finance

["NameCritic" <chris1@telnor.net>]

Thanks for the comments below Judyth. I see we have a lot of common ground.

----- Original Message -----
From: <espresso@e-scape.net>
To: "NameCritic" <chris1@telnor.net>
Sent: Wednesday, October 02, 2002 12:51 AM
Subject: Re: [atlarge-discuss] finance


At 10:44 -0700 2002/10/01, NameCritic wrote:
>Comments are below.
>
>----- Original Message -----
>From: <espresso@e-scape.net>
>To: <atlarge-discuss@lists.fitug.de>
>Sent: Sunday, September 29, 2002 2:05 AM
>Subject: Re: [atlarge-discuss] finance
>

[snip]
>
>Judith wrote: Naturally, an entity with no legal existence or bank account
>does not engage in fundraising, whether it has 1000 members or not
>...unless the parties involve wish to risk being charged with fraud.
>
>Chris wrote: Not quite true, of  course assuming the fundraising will be
>done as a future US Nonprofit Corporation. When you do file the paperwork,
>you simply use, because it asks it exactly this way, the date that you
>started. The paperwork does not need to be finished before any funds are
>raised, but the organization will remain accountable for how it spends
>those funds.

Judith wrote: I will stick to my guns here. Sometimes this and the moral
support of existing organizations is enough to get some kind of start-up
grant. Sometimes one or more of the people involved put up the incorporation
fees. One does *not* engage in fundraising of the usual kind until one has
at least prepared the initial articles under which the organization will be
incorporated and is ready to file.

Chris wrote: Again I think we use our own personal experiences in our
statements here. It is obvious that in different countries the rules are
different. We may need to think on this in a different way. Another
structure as a suggestion you sort of mentioned before. File one umbrella
wherever that is the most advantagious to file, then work on regional groups
also filing in their respective countries. That way we have all the
advantages. Also that may lead to a good democratic structure.

>To satisfy Donors or potential donors is another question entirely.
>Whether they will donate to an organization that has not filed it's
>paperwork yet. Some will if they know it is seed money to pay for all the
>filings and legal fees. In the US, you have a few months, can't remember
>the exact number, I'll have to look it up, to get the actual paperwork
>filed.

I'm not sure about the U.S. (I think it varies with the state) but here in
Canada you can actually start by registering the organization quickly and
inexpensively. Here in Quebec it's $50 and you can check the name against
the database of existing registrations on the spot; though it won't have
non-profit status at that point, it certainly won't be earning any profits
either. This is somewhat comparable to what Jefsey can do in France.

Chris wrote: I did not say there was nothing to file in advance, but here in
california I can file a DBA, begin fundraising and all activities of the
organization with 10 months to get my paperwork completed so I have ample
time to choose a BoD, have legal and accounting experts go over and help
prepare the filing and raise the necessary funds to complete the filings.

Judith wrote: Provincial incorporation takes longer and requires a
declaration of purpose, the names of the four officers, and a full set of
bylaws conforming to the requirements of the Civil Code; the letters patent
are usually issued within a month or two if the paperwork is in order, and
the process cost around $500 the last time I dealt with this, which was
about two years ago.

Federal incorporation is a bit more expensive and requires a wider name
search but you can actually get it done within a couple of days if you can
get to Ottawa to deliver the papers in person.

Chris wrote: Not that much different than here. 501C-3 is the equivalent to
Canada's "registered charity"

>This does not indicate we should procrastinate. It takes up to a year to
>get 501C-3 status confirmation from the IRS, therefore the sooner the
>letter of intent is filed with them, the sooner we can qualify for grants
>and most corporate donations.

Judith wrote: Here, you can't even apply for charitable status based on a
letter of intent: first you need to incorporate with a mission which meets
Revenue Canada's criteria for a charity; once you have that, you can apply.

Note that here there is a difference between a "non-profit corporation" and
a "registered charity". Only the latter can issue tax receipts for
donations, and only for specific types of activities of an obviously
charitable nature. An organization which lobbies governments, etc. does
*not* qualify: it can set up a separate entity such as an education fund
which would meet the criteria but the money can only be used for the
specified purpose.

Chris wrote: Not that much different than here. 501C-3 is the equivalent to
Canada's "registered charity"

>Since some have hinted they have concerns over the name, and Since we must
>approve three choices for submission, a first, second, and third for the
>name search, I make a motion that we do re-vote on the name issue.
>
>I know that will probably make me unpopular, but it is the best
>recommendation I can give to the group.

Judith wrote: We shall see how the others feel about this. Personally, I
think we need to be clear about our mission first, after which we can
re-evaluate whether the chosen name is the best we can do -- preferably with
more than a 20% turnout.

Chris wrote: I agree with let's see how others feel, but don't see picking
another name to be a large task if the membership agrees. I think the
disagreement was more about the way the vote was handled vs a real
preference for that name, especially with new facts and opinions recently
posted.

>Judyth wrote: Obviously I can't speak for anyone but myself but I think it
>should be clear that, while an organization which exists elects a board of
>directors or executive council which is mandated by the bylaws to conduct
>the organization's business and take certain decisions on its behalf, we
>haven't got there yet. Approval of articles of incorporation, constitution
>and bylaws, as well as election of directors and officers, *must* be done
by
>a vote of the membership.
>
>Chris wrote: This isn't exactly how most proceed, but it could be done this
>way. I agree the membership elects the Directors, but normally the
>Directors that are chosen vote and elect the Officers, such as President,
>Secretary, and Treasurer.

Judyth wrote: Actually, in democratic organizations a direct election of the
officers is more common, and they sit on the Board ex officio; a certain
number of directors-at-large are also elected. The Board sometimes votes to
choose its own Chairman; otherwise, the President usually takes the chair.

In more top-down kinds of organizations, the input of "minority
shareholders" (e.g., the membership) is deliberately limited to the annual
rubber-stamping of a Board-chosen slate and Board-controlled financials but
I really don't think that model should apply here.

Chris wrote: I can agree to any structure the membership chooses on that so
long as we DO choose how it will be done.

>Judyth wrote: These are things we can't do anything without and I'd like to
>see us concentrating on preparing this material ASAP, putting it to a vote,
>and then getting on with the mission contained therein.
>
>Chris wrote: Speaking of the word mission. I still maintain the first order
>of business is the Mission Statement or Statement of Purpose. This is the
>defining document of ANY organization. This is the first thing that you do
>so you can define the organizations goals and purpose.

Well, here are a couple of suggestions made to date from the forum.

Sotiris posted on Sat May 11, 2002 8:25 am
Post subject: Preamble/Mission Statement

>>My offering for a possible mission statement:
>>
>>"Our organization is a grass-roots, autogenous, International
>>Community of Individual Internet Users, committed to the goal
>>of effectively representing the interests of its Membership
>>within the ICANN. Formed as a direct response to the ALSC
>>recommendations to the ICANN BoD, the ICANNAtLarge.com Membership
>>is dedicated to a bottom-up, transparent and accountable
>>initiative towards the achievement and maintenance of meaningful
>>and direct participation in ICANN policy and decision making."

... which I'd characterize as the "narrower mission" for which the name
ICANNatlarge.org would be suitable.

It was followed by V. Bertola's message of May 13, 2002 9:24 am

>>>This is the original proposal by Cecily Wood, incorporating some
amendments I proposed back in February, and reorganized a little to make it
clearer. Though I wrote a part of it, I don't necessarily agree with 100% of
it - this is just a contribution to the debate.
>>>
>>>Quote:
>>>Article II: Purpose
>>>
>>>This non-profit organisation is the collective voice of the individual
users of the Internet and World Wide Web. Its mission is:
>>>
>>>1) To monitor and advise on the technical administration of the internet
to make certain that the needs and rights of all users, independently from
their country, language, race, sex, social status and wealth, are not
abrogated by technical, business, military and government interests;
>>>
>>>2) To ensure that the social costs of the technical administration of the
Internet are not detrimental, but enabling, and are fairly supported by
those making a business of it;
>>>
>>>3) To promote, support and exploit those advances in the Internet
technical and organizational structure that benefit all individuals;
>>>
>>>4) To defend the personal freedom of the individual users of the Internet
and prevent any restricted group, political entity or business interest from
controlling the Internet itself.
>>>
>>>This will be practically accomplished by participating to the process of
administration of the Internet by the following means:
>>>
>>>A) This organisation is to serve as the At Large component of the
Internet Corporation for Assigned Names and Numbers (ICANN), and will elect
the At Large Directors to ICANN's Board.
>>>
>>>B) In the event of an ICANN reorganisation, this organisation is to work
toward preserving an end user function in ICANN, and serve as the end user
component of ICANN's replacement.
>>>
>>>C) As the world-wide collective voice of all internet users, this
organisation may also decide to extend its efforts beyond ICANN.
>>>
>>>Now, there are two fundamental issues that we need to debate before
actually formalizing a statement:
>>>
>>>1) Do we think we are the *only* user organization to be formally
recognized in ICANN (ie we want to act as "At Large SO"), or do we want to
be just one of many "user forums" that ICANN will use to gain input from?
>>>
>>>Cecily's draft goes for the first option. Sotiris's one, as far as I
understand, goes for the second.
>>>
>>>2) Do we want to exist specifically as an ICANN-related organization, or
as a more general purpose Internet users organization?
>>>
>>>Also in this, Sotiris's statement is strictly related to ICANN, while
Cecily's one is broader, though (and I really like this) it combines a first
part made of general statements with a second one that states relationships
with ICANN and/or what to do if ICANN is restructured or replaced.
>>>
>>>Personally, I would go for the first ("SO") option in issue #1, and for a
half-way solution in #2, as the one drafted by Cecily, maybe lowering down
the tone a little and making it clearer that we just aim to be practically
participating in ICANN, and not to be ruling the world :)
>>>

This one, which I'll call Wood-Bertola for convenience, can be characterized
as a draft for the "broader mission" approach.

Those two items, designated "page 1 of 1", seem to be pretty much it for the
forum, though there was some further discussion on this list a while back.

My personal preference is for the "broader mission" and its definition as
the "collective voice of Internet users" dictates a grassroots democratic
organization. If the "narrower mission" is chosen instead, strictly speaking
it could be as undemocratic as ICANN itself. The choice of a mission itself
will dictate certain aspects of the organizational structure and procedures.

I still stand by what I wrote:
>Judyth wrote: It's awfully difficult for me to conceive of engaging in
>recruiting and fundraising and such when we haven't even decided what the
>scope of the organization will be, let alone set it up. Meanwhile, the
>Interim Panel is serving under a limited mandate and there are decisions it
>is not empowered to take on anyone's behalf so these things must be voted
>on ... including the scope of decision-making delegated by the membership
>to a future board.
and respectfully disagree with Chris's:
>Chris wrote: You bring up great points, but it seems there is confusion on
>priorities. I suggest the priorities are the following.

>1. Revote for three name choices for the organization with each member
>given the abilty to choose their first, second, and third choices and a
>points system making the final count.

Judyth wrote; If this really were of paramount importance, more than 20% of
the membership would surely have voted. Also, it seems to me rather
inefficient to vote again before determining whether the names are available
in the real world, not just as Internet domains.

Chris wrote: Some of us weren't here at the time of the vote. I hope for a
better turn out also if we do it again.

>2. A vote be taken by the membership on where the Nonprofit will be filed
>and what structure ie 501C-3 shall be used to form the organization. A
>period of comment before the choices are placed on a ballot would be
>necessary first.

Judyth wrote; Your preference for incorporation in the U.S. as a 501C-3 is
duly noted. However, as far as I can tell, nobody has yet tried to determine
what the relative merits of incorporation elsewhere may be. This is the kind
of thing one usually has vetted by lawyers and accountants before
proceeding, and I'm not sure how helpful it would be to vote before we have
a better idea of what we're doing for whom and how. I still disagree with
your assumption that most Internet users and potential donors need U.S.
incorporation for American taxes, and I wonder if there isn't a good reason
why many international organizations are based in Geneva or The Hague.

Chris wrote:  I also would like to hear the advantages of other structures
and locations. I don't prefer 501C-3, just based on my experience it's what
I know most about.

>3. A working group with a panel member chair draft a Mission Statement to
>be subjected to a period of public comment by the membership on it's
>completion. Then a re-draft of the document taking into account the
>comments by the members, then the document be put to a vote for approval by
>the membership.

Judyth wrote; In fact, it might be helpful to check the archives and see
that the "period of public comment" was effectively cut short by discussions
of the Web site, fundraising, domain names, etc. I'd be interested to see
new comments from our quieter members on the two suggestions quoted above.

Chris wrote: maybe a moderator could keep people more focused on the subject
matter.

>4. A working group be put together to build and maintain the website. I'm
>not sure of the reasons for a seperate group for the dns issues for the
>website. They might just combine that effort.

There is a Web WG already, along with a new webmaster. The DNS WG is not
needed for our Web site but to look into the DNS aspects of ICANN and our
mission.

Chris wrote: Thanks for clearing that up.

>5. A working group for fundraising with a panel chair be formed so they can
>begin to work on getting seed money to pay for filings and legal fees. Just
>an example, when we write the letter to the IRS asking for 501C-3 status,
>they charge $500 just to review it.

To me, that seems like another argument against incorporating in the U.S.

Chris wrote: I still would like to see an example of a better structure and
why it is advantagious.

Judyth wrote; To be honest, I really don't see floods of donations from
non-members coming in any time soon. We have over 1000 members now, a
handful of whom have already made donations in money or in kind: if the rest
of us each got hold of US$1 and mailed it in, it would cover the
incorporation fee elsewhere and leave a bit over; those of us who could
afford it might give $5 or $10 or $20 and cover a quick legal consultation.

Chris wrote: Going after sponsors early, when you have contacts that you
know isn't bad, but I'd be willing to do the above.

>6. A working group be formed with a panel member chair to draft a set of
>bylaws, then again put into a period of comment by the membership, then
>redrafted and voted on first by the membership, then adopted by the panel.

Judyth wrote; Note that some aspects of the constitution/bylaws issue will
be dictated by (or perhaps dictate) the choice of a mission and a place to
incorporate.
To my way of thinking, the egg really does come first.

Chris wrote: Thats not even a question Judyth. Of course those things would
be determined by the location. Help me put all this in the right order. And
thats not just to Judyth. Please to all members, participate in this
conversation with us.

>7. A vote be held by the membership to elect the Directors for the BoD.
>Then those Directors vote for the Officer Positions.

Judyth wrote; Officers are not normally chosen at random for good reason. A
person may be a shrewd and capable director without much in the way of
literacy skills or attention to detail ... which effectively means he or she
would make a rotten Secretary or Treasurer. One normally chooses people for
those positions based on their ability to do the specific jobs, just as one
chooses a President and Vice-president for leadership and people skills.

Chris wrote:  I didn't consider directors voting for officers to be "random
selection"

Judyth wrote; Often, the rest of the directors of a non-profit are chosen
from outside the organization itself --often business people with a keen eye
for an error in the financial statements or people with fundraising
experience for other non-profits or a wide range of useful contacts. Where
they are chosen from within a membership-based voluntary association, they
may be elected not simply as directors-at-large but as the chairs of the
standing committees which do most of the organization's work; in that case,
if you're lucky, you can elect people with the right skills for each of
those jobs as well as organizational and leadership skills.

Chris wrote:  Agreed here, in most organizations, however since we are a
very diverse group an initial seven (just a number) directors could be
chosen from within the organization, with a bylaw mandate that the board
expand to another number, say 11, seeking to fill those positions as you
suggested. Just as you say it is easier to fundraise after you are
operational, it is the same for recruiting outside board members.

Judyth wrote; Personally, I think it will be quite difficult enough for us
to get to know our fellow-members without being able to meet them, and I'd
have to know somebody awfully well before I'd vote to let him or her choose
an officer for me!

>8. A working group be formed to draft the articles of incorporation if the
>501C-3 or other corporate structure was chosen. A public comment period to
>be held for members to review the draft, then it be submitted to the new
>BoD for adoption, taking the comments of the membership into account.

Judyth wrote; Again, the nature of the articles of incorporation varies with
the jurisdiction. This paperwork normally consists of the mission
statement/constitution/bylaws package plus the names of the officers and
such details as where the head office will be, how many shares (if any) will
be issued, etc.

Chris wrote: In the US the structure is mission/bylaws/articles of
incorporation/then 501C-3 status. There is also 501C-4, 5, 6, 7, etc for
different types of orgs recognized by the IRS. still not much different.

>9. The BoD to submit the paperwork for the name search, then file the
>articles and bylaws with the state in question, then submit the letter to
>the IRS, again assuming the 501C-3 structure was adopted.

Judyth wrote; A name search isn't rocket science, and it would be wise to do
a preliminary one well before submitting the documents, especially if you
call for a vote on the name as the top priority!

Chris wrote: Agreed. We always do a preliminary name search, but hard to do
so without knowing what names the membership will choose in order of
preference.

>These are just suggestions I am placing out for public comment. I would
>like to see this expanded on by all members until we have a list of
>priorities we can agree on. It may seem to some this is getting too far
>ahead. I don't think so. Plan your Work and Work your plan.

I, too, would like to see comments from others on this -- preferably soon!
I'm still hanging in but so far there's been far more smoke than fire ...

Chris wrote: And here we agree 100%. Looking forward toi this becoming more
than a two-way conversation Judyth. You're tough.

Regards,

Judyth



##########################################################
Judyth Mermelstein     "cogito ergo lego ergo cogito..."
Montreal, QC           <espresso@e-scape.net>
##########################################################
"A word to the wise is sufficient. For others, use more."
##########################################################




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