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:
- 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.
- Cost efficiency. Less money spent on organizational support, more money for what really matters to Gentoo.
- 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.
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.
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.
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).
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 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.