MWStake incorporation

This page documents the project for mwstake incorporation. Members of mwstake decided to incorporate with the two main goals being:

1. Bank account for events (EMWCon, etc.)
2. Accept grants from the WMF as a non-profit

Work that needs to be done includes:

1. Follow instructions to process the grant (✔ Done)
2. Work with lawyer to begin incorporation process
3. Reporting on the outcome (what worked well, what didn't work well, and what you would do differently next time, etc.). Some sample reports are available.

History

The following are the major milestones to date:

1. 15 August 2018 - Rapid Grant Proposal was submitted
2. 15 November 2018 - The rapid grant was approved and moved to funded

Individual statements

Add a header with your name and incorporation ideas. Some questions to consider are listed at the bottom.

Ideally each member of MWStake should have the action item of writing a brief 500 words (or longer if desired) statement of what they would like to see/gain from collaboration in MWStake. It would be helpful if these brief statements address both Mission and Membership, which are both relevant to the selection of the type of incorporation or other organizational form.

Summary

In general, most responses either directly cited or closely aligned with Richard's mission summary for MWStake. Explicitly adding the conference "bank account" to this would be a good start for the MWStake incorporation mission statement. It appears a 501(c)(6) would be the best fit for this effort where "income" would be from membership dues, conference tickets, and any grants received from the WMF; and the money will be used as a "bank account" for the logistics of MediaWiki conferences (SMW, EMW, etc.).

Another use of income (primarily from the collection of membership dues) could be strategic development work (bug fixes, feature enhancements, documentation, etc.). Like Frank and Lex mention, there could be different levels of membership with differing costs and voting rights (i.e. a higher tier membership cost, but ability to vote on directing funding for specific tasks).

Bryan Hilderbrand

I think there is the potential for a group of disparate developers & consultants to form a corporation with the goal of making a profit, spreading the use of MediaWiki software, and donating a portion of the profits directly to the WMF. Gergő Tisza has a very well written position paper describing what this might look like. While this group is likely viable and might be a parallel or future path, the corporation type (for profit) would limit some of the activities that it could engage in.

Since there is an immediate need for a "bank account" for the logistics of MediaWiki conferences (SMW, EMW, etc.), a 501(c)(6) seems to be a good fit for this while allowing for grants from the WMF. The primary income would be from membership dues and any grant money from the WMF.

The following is isn't necessarily all inclusive, but should be a fairly comprehensive list required for setting up an entity and required ongoing activities:

1. Draft a Mission Statement to define the goals
   • Frank started this (he is the owner and you may need to ask for access)
   • Richard's list is concise and well written, explicitly adding the conference "bank account" to this would be a good start
2. Article of incorporation and bylaws. A business attorney in the state of incorporation (likely Pennsylvania since Mark lives there) is highly recommend for this. They would be more aware of the details and requirements, a ball park cost is $3k-$5k
3. Apply for federal and state entity ID numbers
4. Nonprofit application to the IRS and state and receive acknowledgment letters for nonprofit status. This will important to keep on file for easy access
5. Select board members
6. Record meetings
7. Annual tax filings with the IRS and state - even nonprofits still file "tax returns"
8. Bookkeeping
9. Annual information filings with state (statement of information - this is a CA requirement, not sure about other states)

Frank Taylor

The questions of mission and membership will influence our choice of a form of incorporation or another manner of organization for the MediaWiki Stakeholders (MWStake). Our discussions so far have revealed that the participants have diverse viewpoints on both questions.

My viewpoint on the question of mission is that we should focus on the needs of third-party users. One of my priorities would be the compilation and publication of best practices. This focus will complement other priorities such as the management of extensions, the eradication of bugs, the coordination of events, and the certification of consultants.

We might include in the bylaws the possibility of expanding the mission of MWStake at some point to include a list of “trusted providers” or a rotation of “on-call” consultants to handle inquiries for providers who are temporarily unavailable. MWStake will need time to formulate processes to manage these functions, however, so we probably should postpone a decision until a later time.

With regard to the question of membership, my suggestion is that we should include in the bylaws the possibility of at least two classes of members such as “users” and “developers” or a similar division of categories. This bifurcation of membership is relevant to points such as voting rights or privileges, the payment of dues, certification programs, and inclusion among the “trusted providers” or “on-call” consultants.

The choices for the form of organization include a nonprofit corporation within the meaning of section 501(c)(3) or section 501(c)(6) of the Internal Revenue Code (IRC) as well as the possibility of a benefit corporation or certification as a B Corp. Our discussions have included a number of points:

• Whether MWStake will generate revenue or perhaps even a profit (my understanding is that nonprofit status does not prevent the generation of revenue)
• The importance of adopting a form of organization that is compatible with the activities of the Wikimedia Foundation and related groups
• The advantages of organizing in a manner that enables MWStake to perform a role distinct from those of other MediaWiki groups

I think that we can develop a consensus on the organization of MWStake as a nonprofit corporation under section 501(c)(6) of the IRC. We will need to tailor the mission and membership accordingly and adopt measures for sufficient governance, oversight, and transparency, but I think that this form of organization will best accommodate our diverse priorities and viewpoints.

Greg Rundlett

This essay is both my original ideas, plus a reflection upon the "Mission Statement" of the MW Stakeholders Group. Refer to notes from last meeting

I see MWStake as a collaborative effort by consultants, and their customers. Those are the people with a stake. I suppose you could include individual users of MediaWiki software (I setup a wiki that I use to jot down my memoirs and gardening tips, and recipes) if those users collectively feel that they don't have adequate voice in the MediaWiki community. But let's look first at the businesses who's product or service depends on MediaWiki software.

Some companies literally have MediaWiki at the heart of their business technology platform. They have a business need for content that must be indexed, easily edited, or classified etc. and have chosen to use MediaWiki over custom software or off-the-shelf CMS etc.

Some companies use MediaWiki as part of their tech stack, in a 'traditional' role: usually for documentation (especially for software documentation - but it could be for any process documentation or general documentation) and knowledge sharing. These companies have chosen MediaWiki over competing documentation or knowledge platforms because of it's flexibility, familiarity, ease of use and the ability to 'control' and own your content.

Regardless of the type of company, and their use of MediaWiki, they are a stakeholder in the development and feature set of the platform. They need to know what's coming, and plan accordingly. They need long-term support.

The consultants who offer MediaWiki upgrades, installations, training, support, hosting and other services are obvious stakeholders in the software.

I think these constituents need a way to communicate with each other. A way to find each other.

Lex Sulzer

Phase 1

1. MWStake's mission shall be to support its members in their strategic and daily work to satisfy their customers' requirements.
2. MWStake's membership shall stay coherent, efficient and effective.
3. MWStake shall dogfeed on its dedication to structured information and structure its addressed aspects e.g. in accordance with Enterprise Knowledge Management Roles Use Cases and Tools Methodologies
4. Membership could cost e.g. $100.-/year/vote.
5. The money shall be allocated solely to code development projects.
6. Potential code development projects are to be sent in to the moderator including user stories to be implemented.
7. At monthly MWStake meetings the moderator moderates a discussion on current code development projects addressing corresponding user story priorities and estimated cost.
8. Fundable code development projects get voted on.
9. Fundable code development projects that get at least 50% of all entitled votes get authorization.
10. Authorized code development projects get a single product owner and at least one developer (must not be the same people).
11. The single product owner gets remunerated with the equivalent of 3h of development work.
12. The developer gets remunerated in accordance with the cost estimation agreed to.

Mark A. Hershberger

Once again, reviewing Richard's summary of the mission (also copied below) of #mwstake, I find it is very applicable. I also think that the WMF is, more than just the “800 lb. gorrilla” in the MediaWiki namespace; Instead, because it owns the Wikipedia (and MediaWiki) brand, affiliation with the Foundation is essential. Whatever people's current use of MediaWiki, their first impression was most likely Wikipedia. We need to continue to foster a good relationship with them.

This means that we shouid continue to use the WMF-affiliation that the user-group status provides.

By necessity, this influences choices we'll make around the incorporation of the organisation and focus of activities for #mwstake. Creating a for-profit company is not in scope, but providing a sort of business league would be.

The first sort of business league that was suggested (before the formation of #mwstake) was a 501(c)(6). After having spent so long thinking about the actual form of incorporation, using the clearly non-profit structure of a 501(c)(6) (as opposed to a more ambiguous—in my understanding—B. Corp) seems make #mwstake more clearly compatible with the goals of the WMF.

With that in mind, it would be helpful to point out some limitations that this puts on our activities. Specifically, a 501(c)(6)'s purpose “is an association of persons having some common business interest, the purpose of which is to promote such common interest and not to engage in a regular business of a kind ordinarily carried on for profit.”

As it currently stands, #MWStake is clearly an associate with a common business interest: using MediaWiki to help organisations manage their focused body of knowledge, whether that knowledge is freely, publicly available or not.

The other ideas that have been mentioned here could probably be included under this umbrella as long as we “encourage the use of products and services of the industry as a whole” (emphasis mine) and not strictly for the purpose of its members. It may be that this bit serves as the death knell of the 501(c)(6) idea, but I don't think it has to.

Richard Heigl

Communication and coordination among MediaWiki users
We will be a nexus of support for MediaWiki users outside the Wikimedia sites. Users outside the WMF have a lot of experience. Still, there is a need to provide answers to their support questions. These users improve MediaWiki with extensions and share common problems. MediaWiki Cooperation aims to give them a voice to share their experience and coordinate their efforts.

Coordination between different groups of MediaWiki developers and operators
Core changes can sometimes break widely used extensions, but they also have the potential to greatly improve widely used extensions. Extension developers find bugs, improve core code and simply rely on the core. Operators of wikis outside WMF have their own issues, but could greatly benefit from and contribute to the experience of people running the Wikimedia sites.

Foster the ecosystem around MediaWiki
We recognize there is a range of developers, consultants, and companies that work with MediaWiki and improve functionality for their customers. We want to build a friendly environment for them to share their work and give them visibility. In addition, we want to make it easier for people seeking professional services and support to be able to find help.

Facilitate implementation of MediaWiki features
There is a need for features that are not in the core focus of Wikimedia sites, but could greatly improve the user experience of other wikis. Through the MediaWiki Cooperation, we aim to be able to support the development of these features.

Improve documentation of extensions and MediaWiki visibility
The documentation of MediaWiki, especially its extensions, is a key success factor for its use outside of Wikimedia sites. We aim to improve the quality of documentation and make it easier for outside users to assess the benefit and quality of extensions.

Contribute to the development of MediaWiki
By watching the proposed changes to MediaWiki and assessing the impact to users outside of the Wikimedia sites, we want to ensure the full utilization of the software by on non-WMF wikis. We will also commit to contributing our improvements and work towards their inclusion in the main product.

Questions to consider

1. What is the best format for this conversation?
   • Open discussion on MWStake Incorporation (posted in the open)
   • Email conversation (shouldn't post this in the open)
     • Reply to all
     • Reply to me and I'll consolidate the content
   • Restricted Google Doc (shouldn't post this in the open)
   • Other?
2. What are the Goals/Mission of an incorporated MWStake?
   • Promote MediaWiki for 3rd party use and not engage in regular business for profit
   • Coordination and planning of conferences
   • Funding development work for extensions related to 3rd party use, changes to core for 3rd party use, documentation, marketing, and other related activities that are critical to 3rd party use but neglected by the WMF
   • Vetting of consultants/developers to provide a Angie's List (general idea, without any negative connotations)
   • Funding of a bug bounty system
   • Voice for 3rd party users to the WMF for support of their needs (not breaking 3rd party functionality with updates, core improvements for 3rd party needs, etc.)
   • For profit company, handles customers directly
   • For profit company, collects a referral fee when passing work to consultants/developers
   • For profit company, donates percentage of proceeds to the WMF
   • Others?
   • Richard Heigl created an outline, do you agree
   • Some notes on incorporation based off a meeting with me (Bryan), my wife (CPA), Frank, and Mark (it's a protected document, but Mark is the owner and everyone on this email should have access. There is also a link to a draft Bylaws that Frank started, he is the owner and you may need to ask for access)
3. How do members join
   • Open to anyone
     • Enroll with form
     • Enroll by adding name "signing" a list (for example on a wiki)
     • Enroll through participation
   • After approval
     • Enroll with application
   • See Markus' notes on Etherpad
   • Other?
4. Where would the money come from for the MWStake corporation?
   • Dues
   • Ticket sales (conferences)
   • Grants (mainly the WMF)
   • Grants (other)
   • Customers (direct)
   • Customers (referral fee, etc.)
   • Other
5. How would MWStake's money be used?
   • Solely as a bank account for logistics of MediaWiki (SMW, EMW, etc.) conferences
   • Bug bounty
   • Marketing
   • Creation of "missing" functionality for 3rd party use
   • Improving documentation
   • Maintaining existing extensions/functionality
   • Donations to the WMF
   • Other?

Non-profit type

It looks like after incorporation (C Corp), there is a choice between non-profit types, the two considered are 501(c)(3) & 501(c)(6).

501(c)(3)

A standard 501(c)(3) (technically called a public charity, it is what you think of when you think of a non profit) must receive a certain percent of its funds from the broad general public. A private foundation typically receives their funding from one source (or a few), invest it, and pay out the earnings. This is what many wealthy individuals set up. There might be certain requirements about needing to distribute a certain amount each year otherwise there is a 30% penalty. Donations from individuals would be tax deductible to a 501(c)(3). Key points:

• Donations/Grants can be tax deductible
• Types:
  1. Public Charity - Normally receives a substantial part of its income, directly or indirectly, from the general public or from the government. The public support must be fairly broad, not limited to a few individuals or families.
  2. Private Foundation - Receives most of its income from investments and endowments. This income is used to make grants to other organizations, rather than being disbursed directly for charitable activities.
  3. Private Operating Foundation - Considered hybrids, often maintain active programs similar to public charities, but may have attributes (such as close governance) similar to a foundation. Most of the earnings must go to the conduct of programs. Donation deductibility is similar to a public charity.
• Notable 501(c)(3)s:
  1. Linux Foundation
  2. Gentoo Foundation
  3. Subversion Corporation

501(c)(6)

A 501(c)(6), typically called business leagues or associations, are organized and operated primarily to promote the common business interests of its members. Income is usually from dues/membership but they can receive grants, however, any donations from individuals would not be tax deductible to that person. They would not qualify if its principal activities consist of securing benefits and performing particular services for members. 501(c)(6) organizations must rely on membership dues as a significant, though not necessarily primary, means of financial support.

• Business League - Represents an association of persons having a common business interest, whose purpose is to promote the common business interest and whose activities improve business conditions rather than actually conduct the business itself. Members of the organization must be of the same trade, business, occupation, or profession in order to qualify.
• Chamber of Commerce - Promote the common economic interests of all the commercial enterprises in a given trade or community.

Exceptions:

• An association that promotes the common interests of certain hobbyists would not qualify because the Internal Revenue Service does not consider hobbies to be activities conducted as businesses.
• An organization whose primary activity is advertising the products or services of its members does not qualify because the organization is performing a service for its members rather than promoting common interests. If an organization's primary activity is advertising the products or services of its members' industry as a whole, however, the organization will generally qualify if it also performs other services for its members.

Standard types:

1. Chambers of commerce
   • Promote the economic interests of all businesses in a given area, such as Chicago or the Florida Panhandle.
2. Trade associations
   • Form of business league
3. Real estate boards
4. Professional associations
   • Form of business league
5. Pro football leagues
6. Boards of trade
   • Promote the economic interests of all businesses in a given area, such as Chicago or the Florida Panhandle.
7. Business leagues
   • An association of people with a shared business interest
   • The league must promote the common interests of its members, must not be engaged in business for profit and must not provide services to individuals the way a for-profit business does
   • A business league must represent an entire industry or the industry segment within a specific area. Representing just businesses associated with a specific brand doesn't qualify

Comparison

Similarities:

• Both can hold conferences and speaking events.
• Both can lobby, although at different levels, and both can be public advocates for issues that impact their communities.
• Both are exempt from federal income tax, and sometimes state and local tax.

Differences:

• Missions
  • 501(c)(3)s can have the widest range of possible missions including those focused on the arts, culture, humanities, education, the environment, health care, religion and the public sector.
  • 501(c)(6)s are focused on supporting overall industry needs, and may be involved with industries like telecommunications, food, professional and many more. They put on seminars, trade shows, write newsletters, journals, offer classes, and certification programs.
• 501(c)(3)s have an advantage when it comes to raising funds from private foundations, which can give freely to public charities without having to do expenditure responsibility under U.S. Code §4945. Grants to any other 501(c) entity by a private foundation triggers these rules, reducing the likelihood the foundation would give to such entities.
• Funding:
  • A 501(c)(3) is supported on contributions and grants, and can have other fee for service revenue or member revenue.
  • 501(c)(6)s are very dependent on member revenue for support as not being able to offer a tax deduction for gifts dramatically limits their ability to fundraise for contributions and grants.

References

501(c)(3):

• https://en.wikipedia.org/wiki/501(c)(3)_organization
• https://www.501c3.org/what-is-a-501c3/
• https://ballotpedia.org/501(c)(3)
• https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-section-501c3-organizations
• https://www.foundationsource.com/learn-about-foundations/what-is-a-private-foundation/

501(c)(6):

• https://en.wikipedia.org/wiki/501(c)_organization#501(c)(6)
• https://smallbusiness.chron.com/501-c-6-organization-60734.html
• https://www.irs.gov/pub/irs-tege/eotopick03.pdf
• https://www.irs.gov/charities-non-profits/other-non-profits/business-leagues
• https://ballotpedia.org/501(c)(6)

501(c)(3) vs. 501(c)(6):

• https://www.raffa.com/newsandresources/publications/pages/501c3-versus-501c6-organizations-examined.aspx
• https://bizfluent.com/info-7758501-difference-between-501c3-501c6.html

List of FLOSS Foundations (c3 vs. c6):

• http://flossfoundations.org/foundation-directory