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What Does it Really Mean to be Non-Profit?

26 pointsby robhawkesover 11 years ago

5 comments

philipnover 11 years ago
I suspect the author doesn&#x27;t live in the US, as a few of his points don&#x27;t apply to US non-profit law.<p>In particular:<p>&quot;A charity (except in special circumstances) cannot pay a salary to anyone. Typically everyone who works for a charity is a volunteer.&quot;<p>In the US, when people talk about non-profits they&#x27;re usually talking about organizations with the 501(c)3 tax status (<a href="http://en.wikipedia.org/wiki/501%28c%29_organization#501.28c.29.283.29" rel="nofollow">http:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;501%28c%29_organization#501.28c...</a>). Those organizations are further classified as either public charities or private foundations -- the former being what people typically mean by &quot;non-profit.&quot;<p>US non-profits almost always pay some people for some of their work. There are restrictions on salary, insofar as you have to explain that salaries are justified to the IRS (this really only applies if the salary is beyond normal market rate).<p>&quot;A charity must disclose all of its financials publicly, in great detail, and be audited by several government bodies. &quot;<p>The same is true in the US, though non-profits do not have an audit requirement here. Large non-profits typically hire a CPA to do an audit each year, though, as multi-million foundation grant-givers often require it.<p>&quot;A charity may only do things which have charitable purpose for public benefit, and nothing else.&quot;<p>This isn&#x27;t strictly true in the US. A charity can engage in unrelated business, but it&#x27;s taxed on it and it can&#x27;t account for a substantial amount of revenue. For instance, most Museums have gift shop, and selling stuffed animals isn&#x27;t usually their charitable purpose, so the organization will typically pay tax on that revenue.<p>&quot;A charity receives large amounts of tax-relief from the government for conforming to these rules.&quot;<p>True in the US -- non-profits don&#x27;t pay income tax and donations are tax-deductible.
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bpierreover 11 years ago
Despite the communication around the project [1], Ghost is still waiting to be open sourced: <a href="https://github.com/tryghost" rel="nofollow">https:&#x2F;&#x2F;github.com&#x2F;tryghost</a><p>[1] “Six months ago Ghost was barely an idea, today it&#x27;s a thing. A living, breathing, evolving thing. And it&#x27;s public.” <a href="http://blog.tryghost.org/" rel="nofollow">http:&#x2F;&#x2F;blog.tryghost.org&#x2F;</a>
davidjgraphover 11 years ago
I always smile when I hear &quot;non-profit&quot;. Last year a US non-profit that dealt with military research was looking to buy from us and asked for a discount because they were a non-profit.<p>I looked on their website and their annual revenues were in the ballpark of x1000 that of ours. Maybe it&#x27;s a European view, but I find the idea of a defence non-profit bizarre and the idea we should discount for them on this basis even more so.<p>By being a non-profit, the main beneficiary is their customers (the DoD I&#x27;m guessing) because the pricing doesn&#x27;t need the usual margin of profit. I&#x27;d just be reducing the cost for them, since costs are ultimately just passed on.<p>My point is, this a boundary case of stretching the ethics of &quot;non-profit&quot; way too far. Yes, non-profit is great for open source, but I would be concerned about using it as a vehicle when large companies are the ones benefiting (which isn&#x27;t the case with Ghost).
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thuover 11 years ago
So, in the case of Ghost being non-profit, this is just some kind of statement about how dedicated they are. Because I don&#x27;t see what this brings to the open-source project itself (for instance, anybody can fork it and do whatever they want; the fact the original author is non-profit does not change anything).
qzncover 11 years ago
&quot;neither of us can pay ourselves enormous tax-free dividends&quot;<p>Are dividends tax-free in the UK? They are income for the recipient, so income tax applies in Germany.