FOTSC/interview Mitch

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MV Day to day paperwork associated with charitable hackerspace operation

Day-to-day

Who donates what needs to be tracked. What percentage comes from what people. There will be a test (after 5 yrs) to prove you are a public benefit. Be prepared for an audit.

MV: How do you give back to those who Volunteer dinner?

Mitch: There's no equity in this. There are volunteer appreciation things - that's totally common Charities can spend plenty on individuals who spend money and time on the space

You can't give people money that looks like a bonus. Make sure nothing looks like tax fraud.

If a non-profit hosts a benefit, is it doors open to anyone, or is

Mitch: There's nobody really looking at things with a magnifying glass. You don't need to dig into details. If you want to express appreciation, do it any way you want. Burito or expensive dinner. If you want to offer a giant robot reward, totally fine. Don't worry about it. Giving a check. . . how do you account for that? There are charitable institutions that pay people very well. There's just no

MV: Do we have a good resource for brain-picking

The lawyer who helped Noisebridge was a fantastic resource. She works cheap and is a spectacular resource. Carol Gee.


Hannah: Some people suggest business incubator, education, what we should tell the IRS and how to back that up?

Mitch: At noisebridge they decided education. They also considered a spiritual organization. Churches are fully tax exempt. Many saw this as a spiritual endeavor. Some of the spiritual requirements were strange. Mitch wanted people to learn and teach and share. Most Hackerspaces are educational, it doesn't have to be that way. Take a look at the different ways people make this work... There is no way to have the legal structure acknowledge all the things a hackerspace is. The legal structures don't exist for it, but they found 501(c)3 membership education benefit association. There are, by contrast, clubs. You can be a membership organization that is a public benefit. They wanted the board to be fired for any reason at any time by the membership. Power trips happen. This created conflict, but they were on the board, and if it's not a membership organization the board is really the entity in charge. It's the board members that have the legal liablity at noisebridge. Directors, officers, and insurance are there to protect the board (that's specific to the directorship insurance) that's tacked on to regular liability insurance.

There aren't really any recurring costs. Being a treasurer is a lot of work. Donations are hard to track, but it's a lot of time.


Joe Saunders: To fulfil the education public benefit, what do you do?

Mitch: You have to write a mission statement that fits in to being a public benefit or education. You have been around for a while, so you should have a history of this. People have learned as a result of your efforts. Noisebridge had lots of examples of why they were already a public benefit. Those classes and workshops you have had build that background. People one on one teach each other how to use tools - that's education too! The public can be brought in. People come and learn. If you have offers to public/private schools. Talks at libraries. All those things you do count. Look at what you have done.

Joe Saunders: The public can come in. Exactly how much do we let people walk in?

Mitch: Noisebridge does let anyone walk in whenever, but that's not necessary. You're not a school, that's a different category You are an organization that promotes education.

Jeff: The crux of the issue is. If we offer classes, and we only offer those to members, at what point to we risk our charity status?

Mitch: If you want to be an educational charity, you do have to help the community. Keep doing things for the community at large. These are the things we do, these are our programs.

Jeff: A lot of the concern is that we have to modify our behaviour as a hackerspace. If we become a charity we have to do more. We are guilty of doing the bare minimum.

Mitch: Just what you've been doing is a public good for education

Mert: In terms of noisebridge, has being a charity have you recieved grants and donations? Has that given you income support?

Mitch: There are people that work at google and microsoft. These companies offer matching funds for money donated. When people give money those companies match the gifts (2x donation) Membership dues by the way, are not donations, that's an expense and not tax-deductible. We haven't looked for grants, there are others that have. We have had programs, such as Tor node, that is seperately funded. People can donate to that as a tax deduction. We can do that as a 501(c)3 and that's why Tor came to use with that proposal. Artists have approached noisebridge to have them operate under the umbrella, so that they could shoot for a grant under the umbrella. It hasn't worked, but that's a cool idea. If they were approved we would have gotten some amount of money as their overhead. A lot of individuals have donated money and stuff (donation 'in kind') due to the tax deductions. The thank you letter provides proof of that process, for tax deduction purposes. The value of the 'stuff' is determined by the donor, not the charity. As the treasurer he always encourages people to tell the maximum amount. EG: Goodwill doesn't tell you the value of all those sweaters was. In the end a PDF over email 'thank you' is enough.

Joe: The other big concern is that we've got a lot of people that are hopeful to spawn business. Is that affected by being a non-profit?

Mitch: No, you can do whatever you want there. Hypothetically if you used the !profit to get a thing that only you used or benefited from that would be fraud. Fraud requires intent. You can't just be accused (The IRS does require you to prove innocence rather than prove guilt) It's not fraud unless it was purposeful. You still lose taxes, but you won't go to jail. You can use the facilities for your profit, that's no problem. There's no law that says people can't engage in activities that make them money.

Jeff: Any observations? Things that are good about charity?

Mitch: When a hackerspace makes money there are challenges involved! It's okay for people to get money out of it, but... The group tends to think that the project which makes money has priority over the other individual activities. Many times the money Probably the first hackerspace died that way: The Loft, there was a lot of drama when they started making money, and this became a conflict.

We wanted to run the organization to promote exploration and doing what you love. We didn't want to worry about money. The important thing is to support things they love: science, and technology, and food, and art & craft. These are all things they wanted to promote through education, and those were the things that pushed NFP We also knew that it doesn't take much to run a hackerspace. $60K per year is our budget. A large number of people giving a small amount can do it. The tax breaks just make that easier.

all: Thanks!

Mitch: Get me any way you can. If you have questions, just give me a call. That's much better than the wall of email I face.




Mitch: One time costs of the hackerspace


Mitch To become a charitable hackerspace... 3+ months of a lot work. Lots of forms to fill out. You need to do it in a way that the IRS examiner doesn't even blink. They just approve without thinking. If there are follow-up questions, you need lengthy writeups (those you can see on noisebridge's website) many other hackerspaces.

$2K was spent on a lawyer total, that's a low pitch

bylaws. mission statements. bunch of things to prove you are a public benefit Lots of hackerspaces can help on the charitable transition... (i3C)