Forming a Koha Foundation

=Forming a Koha Foundation=
We started discussing forming a Koha Foundation at KohaCon and the Koha Developers Week 2006. It is expected that this will be a collection of random thoughts and brain dumps, so feel free to add your two cents :-)
This page is for any relevant information about forming Not For Profit organisations that will be useful for these discussions.
Official Meetings
==Foundation-forming Meeting, 15 September 2009==
Desires
Vote in a straw poll on these
* “If we had a foundation, the proceeds might be able to foster new businesses that supported Koha according to Open Source principles. In addition, it could sure up old ones that might be in dire straits. A third function could be funding non sexy but highly necessary jobs such as revamping and optimising old code.” - BWS Johnson
* “It is more reasonable for Taiwanese that Koha is supported by Koha Foundation. We could told potential Koha clients that Koha Foundation promises to back up your library technically. Local company/volunteers would do the rest.” - Anthony Mao
* “provide open source solutions for all tasks a library does daily. secure the Koha name. promote OSS solutions in libraries. be owner of the copyright. provide things like backup servers, opensearchportal for all koha installs, … ” - Paul Poulain
* " 
# Ensuring that the Koha project is ongoing and vital (full of life).
# To facilitate ways the Koha community can work together
# Reassurance that Koha is bigger than a couple of vendors and is not tied into their success and failure
# A vehicle to seek funding for
## further development of features
## Future Koha user/developer conferences/user group meetings.
## usability/ accessibilty studies
## more translations/localisation
## deployment/adoption in developing countries (partnering with other oss projects and hardware vendors) - Probably a long term goal, but the NPO could open up these possibilities.
## Kaitiaki (guardianship) role - recoginses the importance of this role and the amount of time it takes (would make sense to move this role to NPO.” - Russel Garlick
* “I see setting up a foundation as a tool for selling an idea to libraries, and possibly as a way to ensure the ongoing shared governance of the project - which is what clients want I believe” Rachel Hamilton-Williams
==Candidate Locations==
There are several candidate locations for setting up a new Koha Not For Profit organisation.
At this stage the most likely candidates are:
===Nowhere===
There is no absolute need to form a Koha Foundation. Any task it could perform is already being done by one or more charity/non-profit organisations, some of which Koha can join and get many of the benefits of being a foundation, while minimising the overheads (such as regulator fees, legal/accounting fees, management time).
The most likely drawbacks are that being part of a larger foundation may reduce the project's ability to obtain library-specific grants (anyone got examples?) and non-developers may not be interested in joining a general-purpose software foundation.
“One argument that was made was that some companies (I think BibLibre was one?) noted that it can be easier to go after grant money, etc. if the nonprofit asking for it has been formed in the country you are going after the money in– in other words, a US-based international nonprofit would not be as effective in going after French grants as a French nonprofit.” Tina Burger
Would the benefit from library-specific grants and more non-developer members outweigh the time spent setting up and running a Koha-specific foundation?
Existing foundations we could join:-
French Based Holding Organisations
[French Home for Projects Held by the Software Freedom Conservancy]
“Bradley M. Kuhn, Conservancy's president, is working with well known Free Software developer Loic Dachary on a French affiliate for Conservancy that may give more options for a French non-profit existence.” Bradley Kuhn.
=====Benefits:=====
Not in the US avoids the litigious US culture. France along with the whole of the European Union does not recognise patents covering software which are a small be but real litigation risk in the US.
=====Drawbacks/Questions: how does it work?=====
One could apply through the Software Freedom Conservancy in the US and consider the French home as an option if that option becomes available.
===New Zealand Based Holding Organisations===
====Horowhenua Library Trust====
http://www.library.org.nz/
=====Benefits:=====
mature, stable, library-based with long Koha link.
=====Drawbacks/Questions: how does it work?=====
Horowhenua Library Trust is a registered Charitable Trust in NZ. Set up by Horowhenua District Council in 1996, for reporting purposes we are a Council Controlled oganisation and are audited by Audit NZ annually. FAQ: http://kete.library.org.nz/trust/topics/show/28-faq-about-horowhenua-library-trust The Trust board comprises of 5 - 7 Trustees appointed by Horowhenua District Council. 85% of our funding comes from Council, 15% through fundraising, sponsorship, user fees and charges. We developed Koha back in 2000 and are still 100% committed to the Koha Community development model.
How would it interact with koha? The Trustees have neither the skills, resources, time or commitment to take a big busy proactive role in developing or promoting Koha. We are, however, highly supportive of the Koha community model and a 'light hand'. They need to know what it is that will be required of them and what they would be signing up for. Do not think HLT will 'drive' this because they will not; it has always been our believe that Koha thrives through an active, participatory community. The Community needs to sort out what they want and how it will happen.
How would international representation be handled? The Trust has the power or authority to form subcommittees, and probably the esaiest way would be to form a seperate Koha subcommittee of the Trust comprised of individuals put forward for appointment by the community.
Would HLT be open to the appointment/election of trustees from outside of NZ? No - almost certainly not. The Trust Deed states that HLT Trustees are appointed by Horowhenua District Council (The Settlor). They are charged with running a local library service; participating in and supporting the Koha community is but 1 of many of its performance measures.
See the section below about NZ Charitable Trusts.
Deed of Trust: HLT.
===United States Based Holding Organisations===
====Apache Software Foundation====
http://www.apache.org/foundation/
=====Benefits:=====
mature, stable, well-known processes.
=====Drawbacks:=====
Koha has no Apache members and would need invitations from existing members; might take a while to leave incubation; substantial changes to the Koha project management required
Holding the Koha project within the Apache Foundation is not a possible option without relicensing all the code under the Apache license. The Apache foundation is only open to projects using the Apache license.
There may be much to be learnt of use for the Koha project by studying the Apache Foundation bylaws.
====Software in the Public Interest====
http://www.spi-inc.org/
=====Benefits:=====
mature, stable, easy free contributing membership process, slef and chris are already SPI members and others could join already.
=====Drawbacks:=====
conservative, already-large electorate, need to describe the Koha project's current structure (which could provoke a split between the pro-Kaitiaki and post-Kaitiaki developers).
US Internal Revenue Service rules do not allow the transfer of assets from a non-profit US 501(c)(3) such as SPI or SFC except to another US 501(c)(3) which could trap some unspendable assets including any copyrights, trademarks, and so on in the US. See http://comments.gmane.org/gmane.org.spi.general/917
Small risk of being sued for innocently developing software is greater in a US jurisdiction with its litigious culture.
====Software Freedom Conservancy====
http://conservancy.softwarefreedom.org/
=====Benefits:=====
mature, stable, solid legal experience.
=====Drawbacks/Questions:=====
 self-perpetuating undemocratic organisation, requires exclusivity (no splitting assets between SFC and another foundation).
Note: SFLC (see below) are one of SPI's legal advisors.
Who are they?
The Software Freedom Conservancy (SFC), they refer to the themselves as the Conservancy for short, http://conservancy.softwarefreedom.org/ was established in 2006 by the Software Freedom Law Center (SFLC) http://www.softwarefreedom.org/ which was in turn set up in 2005 as a business friendly legal foundation by people from the Free Software Foundation (FSF) http://www.fsf.org/. The Consevancy is relatively new, however, it draws upon the expertise of people at SFLC who have amongst the longest standing experience with free software of anyone.
The Conservancy has a volunteer staff which draws heavily on the people at the SFLC. Bradley Kuhn is president of the Conservancy which is controlled by an independent board of directors.
The SFLC was started by Eben Moglen, Daniel Ravicher, Bradley Kuhn, and others; and subsequently attracted several very clever lawyers exercising their expertise in law for FOSS. Eben Moglen is a copyright law expert and Columbia University law professor who has been general council to FSF from 1994 and was a member of FSF board from 2000-2007 before leaving to devote more time to legal work. Daniel Ravicher is patent law expert who is the executive director of the Public Patent Foundation and Benjamin Cardozo School of Law professor. Bradley Kuhn was vice president of FSF from 2001-2005. His role at SFLC where the lawyers are in charge is primarily technical and administrative. SFLC provides legal council to FSF and other prominant FOSS organisations. Unlike the somewhat similar Electronic Frontier Foundation, SFLC does not much pursue publicity even for its activities independent of particular clients.
How would it work?
Answers from the Conservancy are shown in italics below.
Q.1. SPECIFIC ADVANTAGE OF CONSERVANCY AFFILIATION.
Q.1.A. Beyond the obvious factors well stated on the Conservancy website how would becoming a Conservancy project benefit a project if the project had legal questions for which it needed some answers?
Conservancy does not provide legal advice. We refer projects to our colleagues at the Software Freedom Law Center, and it is worth noting that two of Conservancy's primary volunteers are also employees of the SFLC.
The intake process between Conservancy and SFLC are completely separate. However, many Conservancy members are also clients of the SFLC.
Q.1.B. Is there any advantage for Conservancy projects in seeking answers to legal questions which any free software project would not have in contacting the Software Freedom Law Center to obtain such answers?
As above: Conservancy doesn't provide legal advice but encourages projects to take advantage of the SFLC's services.
That said, Conservancy does work closely with the SFLC with regard to legal questions related to non-profit and governance issues, which are the types of issues that Conservancy handles on behalf of its member projects.
Q.2. GOOD GOVERNANCE ADVICE.
Q.2.A. What guidance would the Conservancy provide to a Conservancy project in drafting a good set of bylaws for formal project governance?
As part of the application process, the project leaders and the Conservancy negotiate a formal agreement which sets for forth the non-profit governance structure for the project. Technical governance (i.e., leadership issues related to the software development itself) are left entirely to the project. From the point of view of the project, it is like a “division” of the Conservancy that operates mostly independently, but is overseen by the Conservancy when it needs to do things other that software (e.g., handle funds, agree to contracts, etc.).
Typically, the projects don't have bylaws, since they are not incorporated entities, but a member of the Conservancy and subject to its corporate bylaws.''
 I want to know about the availability of guidance over best governance
 practises with model bylaws etc. This is an important question as I
 and others have witnessed organisations failing because a poor set of
 bylaws introduced a formal mechanism for failure which had been too
 easily exploited.
We typically talk carefully with projects about this issue at intake time, and embody the governance structure within the formal agreement. Generally speaking, we defer to the projects to tell us what structure works best for them and try to embody it.
Q.2.B. How would the availability of any such guidance from the Conservancy differ from the availability of similar guidance which might be available to any free software project through the Software Freedom Law Center?
''
SFLC can help a project incorporate as a non-profit entity of its own. This is usually recommended for very large projects with many volunteers willing to do administrative and non-profit governance work. The SFLC helped establish the Software Freedom Conservancy precisely because the burden of doing this work was too much and it was rare that any project had that much volunteer effort for the annoying aspects of non-profit governance.''
Q.3. ASSET LOCK.
What form of asset lock is there on assets of a Conservancy project?
''
As mentioned above, the governance structure is decided as part of the formal agreement between Conservancy and the project. This governance usually indicates whose approval is needed to dispose and/or license assets (e.g., license trademarks, spend money). Each project has restricted fund inside Conservancy, and Conservancy follows the procedures outlined in the formal agreement when acting in this regard.''
Q.4. WITHDRAWAL PROCESS.
What is the process for a project to leave the Conservancy and adopt a different home perhaps as an independent entity for the project?
Usually, with 60-90 days notice (term length negotiable), a project can leave the Conservancy, provided it has another 501(c)(3) non-profit home created and available to take over for the project. The latter part is mandated by the IRS rules, which will not allow funds and assets in a 501(c)(3) to go anywhere but to another 501(c)(3).
Typically, this level of detail is not worthwhile discussing until the project has been offered membership in the Conservancy. Being offered membership doesn't require acceptance, and usually no one wants to go through the trouble until the offer is made. Once we make an offer, the project is sent a draft agreement for their review, which contains many of the details.''
The application materials follow in italics.
----
To apply to the Conservancy, we ask project leader(s) send us the following (links to online documents where the information is already published is fine):
* Detailed description of the project.
* FLOSS License(s) used by the project
* Roadmap for future development.
* link to the website.
* Link to the code repository.
* Have you ever had funds held by the project, or by any individual on behalf of the projects? How and for what did you spend those funds?
* Brief history of the project, including past governance decisions.
* Existing for-profit or non-profit affiliations, funding relationships, or other agreements that the project or its leaders have with other organizations.
* Names, email addresses, and affiliations of key developers, past and present.
* Information about any past for-profit or non-profit organizational affiliations the project has had.
Please note that this information will be shared with Conservancy's Board of Directors, its Evaluation Committee (which is currently just a subset of the Directors, but that may change in the future), and with some of Conservancy's existing member projects leaders. We like to get as much input as possible from Conservancy's existing project base when evaluating new projects for membership.
Also, please be advised that we currently have a backlog of applications, and it is currently taking about 3-6 months for projects to be considered by our evaluation committee. Usually, our evaluation committee comes back with a list of questions, and then if you answer quickly, it is one month later that the project is given a decision. We are prepared to take on more projects, but we do so carefully to be sure that the influx of new projects doesn't overtax our resources.
There has been overwhelming interest in the Conservancy, and we are evaluating projects on a first-come, first-evaluated basis. We are also prioritizing our work to make sure the needs of already accepted projects are met before we proceed on the evaluation and acceptance of new projects. Please understand that our delay is primarily to make sure projects already in the Conservancy get what they need, and should your project ultimately join the Conservancy, your project will be a beneficiary of that. Like most non-profits, we are struggling to match very scarce resources with a growing demand from the community that we serve. We have only two part-time staffers, whose time is graciously donated by the SFLC.
Feel free to submit the information I described, and anything else you'd like us to review in considering an application, and we will add you to the queue. We appreciate your understanding regarding the delay.
Finally, we ask that applying projects consider donating a percentage of their funding to the general operating costs of the Conservancy. This is a way to assure we can continue providing a high level of service to all Conservancy projects. This is, however, voluntary and negotiable.''
Drawbcks?
3-6 month waiting list for applications to be considered.
SFC would control the assets under the direction of the Koha project.
US Internal Revenue Service rules do not allow the transfer of assets from a non-profit US 501(c)(3) such as SPI or SFC except to another US 501(c)(3) which would trap all project assets in the US. All assets really means all assets including any copyrights, trademarks, etc.
Small risk of being sued for innocently developing software is greater in a US jurisdiction with its litigious culture.
==Locations for an Independent Koha Organisation==
===France===
KohaLa is up and running as an Association Sans But Lucratif (not-for-profit association) for more than a year.
===New Zealand===
Two options:
# Incorporated Society
# Charitable Trust
Horowhenua Library Trust is a Charitable trust, so this is another possibility.
The following was snipped from the NZ Companies Office Site for Societies:
INCORPORATED SOCIETYSUITED TO Not for profit organisations where members have a common interest (eg sport, hobby and community interest) CHARITABLE PURPOSE Can have a charitable purpose SIZE Minimum 15 members DECISION MAKING By members at general meetings and by the committee in accordance with the rules MEMBERS Membership requirements determined by the rules ACCOUNTABILITY Committee accountable to the members LIABILITY Limited liability - unless members run the society for their own profit (pecuniary gain) AUDIT No � unless required by the rules* PROFITS Must be used to run the society to achieve its purpose. Profits cannot be distributed to members HOW TO INCORPORATE Send applications to the Registrar: - an application form - 2 copies of the rules - rules certification - $NZ100MAINTAINING REGISTRATION AFTER INCORPORATION Send this information to the Registrar: - annual financial statements - rule changes (including names) - change of contact details
WINDING UP According to the rules � surplus assets can be distributed amongst members
CHARITABLE TRUST
CHARITABLE TRUST
SUITED TO
Not for profit organisations with a charitable purpose (e.g. education, religion, relief of poverty and other purposes that benefit the community)
CHARITABLE PURPOSE
Must have a charitable purpose
SIZE
Minimum 2 trustees
DECISION MAKING
By the trustees in accordance with the trust deed
MEMBERS
No members � the trustees run the trust to benefit the beneficiaries
ACCOUNTABILITY
Trustees are accountable to the beneficiaries and must comply with the trust deed and the Trustee Act 1956
LIABILITY
Trustees not liable unless they fail to comply with requirements of trust deed or the Trustee Act 1956
AUDIT
No � unless required by the trust deed*
PROFITS
Must be used to run the charitable trust to achieve its purpose.
HOW TO INCORPORATE Send applications to the Registrar:
- application form
- a copy of the trust deed or rules
- statutory declaration
MAINTAINING REGISTRATION AFTER INCORPORATION
Send this information to the Registrar:
- rule changes (including names)
- change of contact details
WINDING UP According to the trust deed � surplus assets must be distributed to other charitable organisations
===United States===
* Requires the setting up of a not-for-profit corporation under the laws of a U.S. state. Application must then be made for 501-c-3 tax exempt status. 
# KUDOS
# KSF formed by LibLime - this has not been announced, nor have its bylaws been published.
[9/23/2010 BEGIN] LibLime has the following ideas for a Koha Software Foundation - we seek your comments.Bold text
LibLime favors the approach of establishing governance for the Koha project through a US-based 501(c)3 corporation led by board of directors representing the major international stakeholders.
Prior to its acquisition by PTFS, LibLime filed paperwork with the State of Ohio for the formation of a Koha Software Foundation. PTFS offers to contribute this shell organization and will fund the remaining legal and procedural work to bring the corporation into the legal and operational status that is needed to serve as the governing body for Koha. This commitment includes IRS approval for non-profit status.
Once the Koha Software Foundation has been legally established, a board of directors will be elected and Bylaws established. At this point LibLime will transfer assets related to Koha to the Foundation.
LibLime, by virtue of its donation of intellectual assets to the Koha Software Foundation and its standing as a major contributor would expect permanent representation on its board of directors. Initially, LibLime would request 40 percent of the positions in the board of directors, which would be reduced to 20 percent once the organization becomes financially self-supporting or after 24 months, whichever happens first.
LibLime will help provide financial support for the Foundation for some period of time yet to be established.
LibLime envisions that the foundation would involve a membership program that includes organizational stakeholders such as libraries
that use the software and firms involved in support, hosting, or development services. Some system of dues or membership fees would
support the work of the foundation.
A board of directors would oversee the foundation and participate in any needed decision-making with involvement from the broader membership. Directors of the foundation would be voluntary and would not receive financial compensation.
 
At some point in time the foundation should involve some full or part-time employees, such as an executive director, release manager, or other roles needed to manage the Koha project.
''
While there are many details to iron out we hope that this framework will help to start the process.[end 9/23/2010]
''
# Link in more here
* Organisation requires 3 directors, only 1 of whom can work for the corporation/foundation
* Not for Profit status can take up to 18 months to get approval, IRS challenges at each step. The advantage of this is that once you pass all these criteria and get this status, it is much easier to recieve outside funding and grants. Donating organisations are easier to attract as the validity and nature of the not for profit is essentially proven or vouched for by the IRS
Comment: With respect I believe some of the concerns about use of the U.S. IRS 501-c-3 status are not entirely accurate. I have established several 501-c-3 organizations. On February 19, 2009 a 501-c-3 application was filed for the Northeast Kansas Library Foundation, with approval by the IRS on July 1, 2009, a total time of less than 5 months. However the process can certainly take longer in other cases. The process is not inherently difficult, but is highly detailed and time consuming. The terms "public charity" and "private foundation" have particular meanings in U.S. tax law, primarily related to their sources of funding, but either is a fully tax-exempt organization. Probably the funding sources of a Koha organization would lead to its having the status of a private foundation. Any 501-c-3 is also incorporated in a U.S. state as a not for profit corporation, an extremely simple process.
An association is really not a meaningful legal term, so a Koha Association could in fact be legally established as a foundation. The distinctions in governance and control that are of obvious concern would depend upon the bylaws and some details of the 501-c-3 application, rather than than either its name, or whether its legal status is as a charity or foundation. There are connotations to words that might make the Koha community more comfortable with a particular name for the organization. That would present no obstacle to the 501-c-3 process.
Rebuttal: An association is a meaningful legal term, at least in some jurisdictions (England for one - our National Rail is run by an unincorporated association, for example). If it is not meaningful in the US, then that is another drawback of the US.
A foundation gives special status to its founders (hence the name), such as the above suggestion of giving Liblime permanent seats on the board. Being a foundation is usually incompatible with being an association.
* If Liblime has permanent places on the KSF board, how is that an independent foundation in the usual understanding of the term? Should this proposal need moving to another section, such as "Company-linked Foundation"?
==Examples from other projects==
Example FOSS foundation membership pages:
* http://www.linuxfoundation.org/about/join/individual/join
* http://www.linuxfoundation.org/about/join/corporate
** seems to be pay-to-play, with the ability to buy directorships. Is that dangerous?
* http://www.apache.org/foundation/sponsorship.html
** ASF is discussed above.
* http://www.python.org/psf/membership/
** PSF has some similarities to ASF.
* http://www.fsfe.org/donate/donate.en.html
** a partially-democratic pay-to-play foundation.
* http://foundation.gnome.org/membership/
** a fully-democratic open project foundation.
** GNOME was previously an associated project of SPI.
* http://www.kuali.org/about/members.html
** a semi-democratic pay-to-play foundation.
==Commentary==
"Thoughts on Koha" by Stuart Yeates (2009-09-15)
 My thoughts on this issue are pretty simple:
* A not-for-profit is a fabulous idea
* Reusing one of the existing software not-for-profit (Apache, Software in the Public Interest, etc) introduces a layer of non-library complexity. Libraries are have a long history with consortia, but tend to very much flock together with their own kind, I can see them being leary of a non-library entity.
* A clear description of a forward-looking plan written in plain language that everyone can understand is vital to communicating the vision of the community, particularly to those currently on the fringes
"An open letter to the Koha community" by Marshall Breeding
Foundation-forming Meeting, 15 September 2009 – Minutes/Notes/Attendees
Category:Koha_Foundation