[Foundation-l] [announcement] new staff member in business development

[Erik Moeller]

We have to distinguish tax-exempt activities here from those which are
not.  Much business development is about basic logo & trademark
licensing, e.g. for the purposes of setting up a mobile phone portal.
Such royalties are tax-exempt if they are not combined with the
provision of services, see e.g.:
http://www.independentsector.org/mission_market/tax.htm

The other area of business development have been the live update feed
agreements with companies like Answers.com. These are currently on a
relatively small scale. I cannot comment on whether these need to be
classified as UBIT, but if so, it should not pose a problem.

Should the scale of business development exceed our expectations, we
can spin off a taxable subsidiary if necessary:
http://www.asaecenter.org/PublicationsResources/whitepaperdetail.cfm?ItemNumber=12175

This is what, for instance, National Geographic or Mozilla have done.

Vishal was hired on Carolyn's recommendation. He has previously worked
for us as an intern, and if we had not hired him now, he would likely
have moved on. He is working on business development on a part-time
basis. I do not consider it unreasonable at all to devote staff time
to this source of revenue. As noted above, much of it is not taxable
to begin with, and the small extent to which it may be does not
currently pose a problem. Even if it should become a problem, it's one
of the type I wouldn't mind having.

As for other priorities, we have spoken to candidates for the Legal
and ED position and will likely meet two of them at the next Board
meeting in Amsterdam, June 1-3.


On 5/19/07, Anthony <wikilegal at inbox.org> wrote:
> On 5/18/07, George Herbert <george.herbert at gmail.com> wrote:
> > On 5/18/07, Anthony <wikilegal at inbox.org> wrote:
> > > On 5/18/07, George Herbert <george.herbert at gmail.com> wrote:
> > > > On 5/18/07, Anthony <wikilegal at inbox.org> wrote:
> > > > > The WMF is not a business.  It's a publicly supported charity.  As
> > > > > such, I think the proper solution is to limit business activities as
> > > > > much as possible.
> > > >
> > > > This is insane and irresponsible; any organization with this much
> > > > activity and financial throughput not run as a business (in terms of
> > > > professionalism), specifically INCLUDING real charities, is insane.
> > > >
> > > > The charities and nonprofits I know of all enthusiastically hire
> > > > professional business people to do business stuff... because it's how
> > > > you get things done at that level.
> > > >
> > > This is really a matter of terminology, which I'm not interested in
> > > getting into.  However, the job description of the business developer
> > > makes it clear that this position goes beyond the necessities of
> > > running a charity.
> > >
> > > Obviously the WMF needs to be responsible and professional.  Obviously
> > > they need to hire experienced professionals to do things which can
> > > casually be referred to as "business stuff" (collecting donations,
> > > applying for grants, producing financial statements, writing to
> > > donors, reviewing contracts, etc.)  If the announcement was the hire
> > > of a new grants coordinator, or a controller, or a new legal
> > > coordinator, my reaction would have been completely different.  I'm
> > > not objecting to the job title, I'm objecting to the job description.
> > >
> > > Anthony
> >
> > You don't wish Wikipedia to be involved in business income ventures
> > other than pure donations type relationships?
> >
> I'm not sure the foundation should actively avoid it, but I don't
> think they should be hiring someone to focus on it, especially not at
> this time, when so many more important areas need to be taken care of.
>
> > Most big charities engage in "real business" relationships (selling
> > services, intellectual property or content, training, consulting
> > relative to the charities' activities interactions with the world,
> > etc) as well as asking for donations.
>
> Not to a significant degree they don't.  Shall we choose 10 US-based
> 501(c)(3) public charities and look at their financial statements, to
> see what percent of their revenues come from donations, and what
> percent comes from business activities?
>
> Anthony
>
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>


-- 
Peace & Love,
Erik

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