TWiki> Main Web>HackerHive>HackerHiveLegalStructure (11 Aug 2009, SimonDorfman)

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Group Legal Structure

We made the decision after visiting the Maker's Local 256 Hacker Space to file as a 501(c)(3) non-profit charity. To get the filing done, it'll cost approximately $1000. If you're interested in helping to divide this fee up, sign your name on the CharterMember page.

Non-Profit 501(c)3

Pros

  • donations will be tax-deductible, then we can solicit funds like this but we’ll also have the incentive of tax-deductible donations
    • IRS pdf about charitable donations
    • donating to a non-profit only saves you money on your taxes if you donate enough to make it worth doing an itemized deduction. This articles lists the numbers:
      • If you itemize your deductions for 2008, you get to deduct your charitable contributions. You'll itemize only if the total of your itemized deductions is greater than your standard deduction.

        For 2008, that's $10,900 on a joint return, $5,550 for a single. For 2009, that's $11,400 on a joint return, $5,700 for a single.

        For years, Congress has been talking about a charitable deduction for non-itemizers, but the provision has yet to be passed.

        Each dollar you contribute gives you a tax benefit equal to your marginal tax bracket. Let's say you're in the 25% bracket. A $100 contribution saves you $25 dollars in tax. In the 35% bracket, you save $35. The real cost of your donation is only $65.

  • possibility to apply for grants (art group grants?, research grants? open source soft[hard]ware grants? we should start a list of grants that we might apply for)
  • free webhosting from dreamhost
  • Google has lots of goodies for non-profits: http://www.google.com/nonprofits/
  • including upgrading our free google apps to the version with more features
  • free email from Vertical Response

Cons

  • lots of red tape

HowTos

Contacts/Local Resources

  • my friend at the Arts Council of New Orleans pointed me to the Entertainment Law Legal Assistance (ELLA) Project (a partnership of the Arts Council, Tipitina's Foundation, and Tulane Law School - Created in 2005, the ELLA Project has provided free, personalized legal assistance to over 500 Louisiana artists and cultural organizations.) I emailed Gene Meneray with the Arts Council to ask about how to get started with this. -- SimonDorfman - 15 Apr 2009
    • I filled out the Application For Free Legal Assistance and sent it back to Gene. Now waiting to schedule an appointment with him. For the question about our group's mission, I wrote this: TBD – Rough draft: Provide a space for members to work on projects. We would like to work on projects that we couldn’t accomplish as individuals, but can be accomplished as a group. Possible idea: teach classes on various topics that a member has an expertise in. -- SimonDorfman - 20 Apr 2009
      • I heard back from Gene: "At think at this point, it wouldn’t be in your best interest to create a non-profit. That time may come, but right now, before creating a legal corporation, it would be best to figure out what you’re looking to do, and if you need a non-profit to make that work. I’d be happy to talk this over with you. Please give me a call at 504-218-8869 when you get a moment." -- SimonDorfman - 21 Apr 2009

Issues/Clarifications

  • I (SimonDorfman) spoke with an attorney in the family and she said that if we want all members to own their own intellectual property (as opposed to the Non-Profit owning the I.P.), we will need an agreement that is signed by the current president and each member as they join

LLC

Pros

  • pretty easy to set up
  • Dealing with the profit (could actually produce income for members)
  • if we come up with some great idea(s), we might do like NYCresistor did with the MakerBot
    • Pulling together as a team and starting a business.
    • Getting the actual business license.
    • Deciding to make our own machine inspired by RepRap research, but being totally build-able from a kit, thus cutting the hassle out of the material sourcing process.
    • Obtaining a bank account and having the bank manager go get the boss at the bank who just looked at us incredulously. "Really? You're starting a robot company in NYC?"
    • Getting funding from three excellent people, Jake Lodwick and the wonderful couple, Christine and Adrian Bowyer.
    • Hiring Ryan Destroys, employee #1.
    • Not sleeping for 3 nights in one week while finishing the first prototype. We put it in a box about an hour and a half before sending it on a plane to SXSW and having the robot work perfectly for a solid 3 days.
    • Finishing the second prototype, feeling like it was the final prototype...
    • Finishing the third prototype and knowing it was the final prototype and the prototype process was over.
    • Getting awesome press! (Thank you internet and media and friends!)
    • Running our laser-cutter for days on end.
    • Figuring out what we wanted and then sourcing the materials from all over the place.
    • Endless Daft Punk and Bass Drive.
    • Watching people on Thingiverse become friends, share digital designs, and be awesome.
    • Packing up the kits and counting a lot. We really need to figure out how many pieces are in this kit. I'm guessing something like 3000.

Cons

  • Dealing with the profit (group dynamics, tax implications)

HowTos

-- SimonDorfman - 13 Apr 2009
 
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