Is an umbrella organization a good choice for Gentoo?

The talk of joining an umbrella organization and disbanding the Gentoo Foundation (GF) has been recurring over the last years. To the best of my knowledge, even some unofficial talks have been had earlier. However, so far our major obstacle for joining one was the bad standing of the Gentoo Foundation with the IRS. Now that that is hopefully out of the way, we can start actively working towards it.

But why would we want to join an umbrella in the first place? Isn’t having our own dedicated Foundation better? I believe that an umbrella is better for three reasons:

  1. Long-term sustainability. A dedicated professional entity that supports multiple projects has better chances than a small body run by volunteers from the developer community.
  2. Cost efficiency. Less money spent on organizational support, more money for what really matters to Gentoo.
  3. Added value. Umbrellas can offer us services and status that we currently haven’t been able to achieve.

I’ll expand on all three points.

Long-term sustainability

As you probably know by now, the Gentoo Foundation was not handled properly in the past. For many years, we have failed to file the necessary paperwork or pay due taxes. Successive boards of Trustees have either ignored the problem or were unable to resolve it. Only recently have we finally managed to come clean.

Now, many people point out that since we’re clean now, the problem is solved. However, I would like to point out that our good standing currently depends on one person doing the necessary bookkeeping, and a professional CPA doing the filings for us. The former means a bus factor of one, the latter means expenses. So far all efforts to train a backup have failed.

My point is, as long as Foundation exists we need to rely either on volunteers or on commercial support to keep it running. If we fail, it could be a major problem for Gentoo. We might not get away with it the next time. What’s more important, if we get into bad standing again, the chances of an umbrella taking us would decrease.

Remember that the umbrellas that interest us were founded precisely to support open source projects. They have professional staff to handle legal and financial affairs of their members. Gentoo Foundation on the other hand has staff of Gentoo developers — programmers, scientists but not really bookkeepers or lawyers. Sure, many of us run small companies but so far we lacked volunteers being equipped and willing to seriously handle GF.

Cost efficiency

So far I’ve been focusing on the volunteer-run Foundation. However, if we lack capable volunteers we can always rely on commercial support. The problem with that is that’s really expensive. Admittedly, being part of an umbrella is not free either but so far it seems that even the costliest umbrellas are cheaper than being on our own. Let’s crunch some numbers!

Right now we’re already relying on a CPA to handle our filings. For a commercial company (we are one now), the cost is $1500 a year. If we wanted to go for proper non-profit, the estimated cost is between $2000 and $3000 a year.

If we were to pass full accounting to an external company, the rough estimate I’ve been given by Trustees is $2400. So once our volunteer bookkeeper retires, we’re talking of around $4000 + larger taxes for a corporation, or $4500 to $5500 + very little taxes for a non-profit.

How does that compare to our income? I’ve created the following chart according to the financial reports.

Gentoo Foundation income chart

The chart is focused on estimating expected cash income within the particular year. Therefore, commission back payments were omitted from it. In the full version (click for it), GSoC back payments were moved to their respective years too.

Small donations are the key point here, as they are more reliable than other sources of income. Over the years, they varied between $5000 and $12000, amounting to $7200 on average. Over the years, we had a few larger (>$1000) donations but we can’t rely on these in the next years (especially that they were none in FY2020). The next major source of income was Google Summer of Code that I’ve split into cash and travel reimbursement. The former only counts towards actual cash, and again, we can’t really rely on it reliably happening in the future. Interest and commission have minimal impact.

The point is, full bookkeeping services come dangerously close to our baseline annual income. On average, it would eat half of our budget! In 2014, if not for large donations (which are pretty much 0/1 thing) we would have ended up with loss. We’re talking about a situation where we can end up spending more on organization overhead than on Gentoo!

Even if we take the optimistic approach, we’re talking about costs at around 20% to 45% income according to the past years. This is much more than the 10% taken by SFC (and SFC isn’t exactly cheap).

Added value

So far I’ve been focusing on the effort/money necessary to keep the Gentoo Foundation as-is. That is, a for-profit corporation that spends some money on Infrastructure and CPA, and whose biggest non-infra investment in Gentoo was the Nitrokey giveaway.

Over the recent years, the possibility of becoming a non-profit was discussed. The primary advantages of that would be tax deduction for the Foundation, and tax deduction for donors in the USA (hopefully convincing more people to donate). However, becoming a non-profit is non-trivial, requires additional effort and most likely increases maintenance costs. That is, if our application is not rejected like Yorba Foundation was. On the other hand, if we join a non-profit umbrella (such as SFC), we get that as part of the deal!

Another interesting point is increasing actual spending on Gentoo, particularly by issuing bounties on actual development work. If we were to become a non-profit, some legal advice would be greatly desirable here and again, that’s something umbrellas offer. On the other hand, if we spend more and more money on keeping the Gentoo Foundation alive we probably won’t have much to spend on this anyway.

So why keep GF alive?

That’s precisely the question. Some developers argue that an external umbrella could try to take control of Gentoo, and limit our freedom. However, given that we’re going to sign a specific contract with an umbrella, I don’t see this as very likely.

On the other hand, keeping GF alive doesn’t guarantee Gentoo autonomy either — given the lack of interest in becoming a Trustee, it is possible that Foundation will eventually be taken over by people who want to aggressively take control of Gentoo against the will of the greater community. In fact, until very recently you could become a Trustee without getting a single vote of support if there were not enough candidates to compete over seats (and there usually weren’t).

Then, there are snarky people who believe that the GF exists so that non-developers could reap negligible profits from Foundation membership, and people who would never be voted into the Council could win Trustee elections and enhance their CVs.

In any case, I think that the benefits of an umbrella organization outweigh the risks. I believe sustainability is the most important value here — a reasonable guarantee that Gentoo will not get into trouble in a few years because we couldn’t manage to find volunteers to run the Foundation or money to cover the accounting costs.

9 Replies to “Is an umbrella organization a good choice for Gentoo?”

    1. We’re not going to blindly join unless we’re given guarantees that Gentoo will remain independent of SFC’s politics.

  1. Thank you for taking the time to explain this to the community. There were several surprises here, and that might be a significant point on its own. I wonder if there’s a larger communication issue hiding in the background. How does the Gentoo Foundation communicate with the Gentoo community? I’ve been an enthusiastic Gentoo user* for over a decade, but I’ve barely heard anything. If money will solve the problems, perhaps all the Foundation needs to do is ask.

    1. I think I’m too biased to answer this question. However, I don’t think money will solve any problem. GF has currently lots of savings it is unable to find use for.

  2. would we lose anything if we close the GF and became part of an umbrella organization and than decide to revert these steps?

    1. That’s an important point we’ll have to ask potential umbrellas. From what I’ve read, non-profit umbrellas generally indicate that they can only transfer money to other non-profits, so moving it back to a corporation like GF could be problematic. On the other hand, PyPy recently left SFC and seems to have taken a commercial direction, so there must be a way.

  3. I think it would be good to speak with those who have valuable experience (esp. bad) in this field.
    I suppose the prospective contract may be scrutinized with special attention to terms and omissions which could result in limitations of freedom, but what about the perspective of being brought under control by means of directing the flow of money (would having enough seats in relevant umbrella’s council alleviate it)?
    Also, what impact could nonsubstantive issues, like ideological feuds, make?
    Maybe putting the above in a more general way: would the umbrella foundation be an entity that only takes on some tasks or would it also take over some of the control (and how much)?
    [sentence removed per author’s request]
    One more thing: the problems with GF’s council, that were brought forward in the last paragraph of the post, could be solved by means of: 1. increasing consciousness that, if there are not enough interested people, things may go awry, and, if it’s inconclusive, 2. tuning the number of seats.

    1. Please remove the sentence beginning with “As a side note” from my previous comment or at least the bracket (and it’s contents) from that sentence – I think, I shouldn’t have posted it.
      You may leave this request visible, to indicate that you edited on my behalf.
      I hope that my e-mail address, is enough to authenticate me as the same person.
      And I’m sorry for my inappropriateness and the mess.

      1. Done. Just for the record, I think you were making a valid point. The truth is, this post is kinda lacking context since it is primarily a reply to concerns raised by various people before. It just answers them without actually repeating them.

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