Report from incorporation research committee

[Leo Franchi]

Hi everyone,

As discussed in the IRC meeting a while ago, the 4 of us (Leo, Mark,  
Lydia, Jeff) have been investigating and discussing options for Amarok  
to create a more formal governing structure for the disbursement of  
funds and legal organization. We wish to re-iterate once again that  
this structure is NOT to have any power to make technical decisions  
--- this is an open source project and all technical decisions will  
remain with the community at large.  We have always had a consensus  
system for this, and it has worked fairly well so far...we see no  
reason to change it.

However, some sort of legal structure is useful in the efficient and  
fair distribution of funds (which may be increasing if we partner with  
music stores for example) as well as in the ability to allow tax- 
deductible donations for potential donors. What follows is a summary  
of our findings, including what we think is reasonable and what we  
recommend as a good governing structure for the project.

We recommend that the board be small (but odd-numbered). 5 seems to be  
a good number as that forces a split as well as allows inclusion of a  
broad array of opinions. The board will have to have at least a  
president, a treasurer, and a secretary to take official minutes.

First, the legal options. Then, possible voting structures for the  
Amarok project itself to adopt.

Note that in both of these cases, foreign citizens to the home  
organization could be on the board.  Furthermore, it is possible that  
we could do both U.S. and non-U.S. entities, but we may not want to  
split donations up if we cannot easily transfer them back and forth.

US Options
======
Becoming a non-profit entity in the United States is not a terribly  
complicated procedure, but it may take a little bit of time and a non- 
significant amount of funds.

Furthermore, we have been in contact with the SFLC (Software Freedom  
Law Center, http://www.softwarefreedom.org/) and we basically have two  
options.  Both provide tax-deductible donations from donors in the  
U.S.; they may or may not be tax-deductible for other countries (note  
that our current music stores that we either work with or that want to  
work with us have U.S. presences):

1) Go under the umbrella of an organization (Software Freedom  
Conservancy [http://conservancy.softwarefreedom.org/] or Software in  
the Public Interest [http://www.spi-inc.org/].  The details of the SFC  
are below:
     * We lose direct access to our funds. People donate to them with  
our name.
     * They can provide for us a special paypal button which will  
redirect the funds to them in our name.
     * They cut checks to us (basically) when give them receipts. 2-4  
week turnaround time.
     * We make our own decisions about our money.  They interfere only  
if they believe that a request is either illegal or threatens their  
status as a charity organization.
     * Multiple contacts can be authorized to make requests (which  
provides some redundancy in the case of unforeseen problems).
     * No setup, instantly available, some (minimal) charges possible.  
VERY convenient.
     * 5% recommended donations.
     * NO HASSLE. Free tax-deductible public charity status. Immense  
amount of hours saved on our end.

2) Do it ourselves, become a registered 501(c)(3) organization (public  
charity).
     * Manage our own money, donations, expenses, etc.
     * Much more work on our end, especially to set up, and need to  
file paperwork yearly.
     * Potentially register trademarks in our name (not sure, needs  
more research).
     * We need to choose a state to incorporate in, in which at least  
1 of our members resides ideally.
     * Cost is $750 if we think we will be receiving more than $10,000.
     * Yearly filing requirements, certain laws to be aware of when  
distributing money.
     * Very specific requirements as far as what the funding sources  
can be, what distribution they can have, etc.

German options
==========
Registering to become a German e.V. is not that complicated, it just  
requires a few things:
     * 7 members to found.
     * Members voting for by-laws and elect first board at mandatory  
first meeting.
     * Registration at court.
     * Costs ~100 EUR.
     * Yearly meeting required (think e.V. general assembly at Akademy).

This can be done relatively easily it seems, and non-germans can be on  
the board (so would be easy to get everyone involved).

============
Recommendation
============

As both Tradebit and Magnatune (to take two examples) are incorporated  
in the United States, and given the relative size of the United States  
to Germany, if all other things are equal it would make more sense to  
allow tax-deductible donations from individuals or corporations from  
the United States. This would open us up to more potential funding. It  
seems that if we go with the SFC we basically have a very easy way to  
get these donations, while at the same time not impinging on our  
rights to decide what to do with our funds. Furthermore, this fits  
well with our plans to create a board as outlined above --- the board  
would simply be required to decide how to allocate funding, then the  
predetermined SFC contact (on the board) would request a reimbursement  
for the necessary amount.

It is our preliminary recommendation that the Amarok project choose  
the SFC for managing its funds, while considering an additional  
second, German-based entity.

===========
Voting Structure
===========

We need a formal system for deciding who can vote, and how the Amarok  
project as a whole elects board members. Currently, we are proposing  
something like this:

     * Voters are contributors to the Amarok project who have shown  
continued commitment to Amarok as a whole. This means very new  
contributors do not have a vote until they have been around for a bit.
     * Body of voters approves new members to get voting privileges.
     * Voters vote on board members, resolutions, etc.

Of course, before you can vote on new members you need a way to  
determine who the "initial" membership is going to be. In order to try  
to keep things clear and fair, a simple set of guidelines is in order:

     * People who have been active contributors for over 1 year and  
are still around (just means not disappeared).
     * People who have been active contributors for less than 1 year,  
but have been continuously actively and engaged in the community since  
then (e.g. some SoC students).

That said, here is a preliminary list of voters that we feel confident  
about immediately including:

Bart Cerneels
Casey Link
Dan Meltzer
Greg Meyer
Ian Monroe
Jeff Mitchell
Leinir Jensen
Leo Franchi
Lydia Pintscher
Mark Kretschmann
Maximilian Kossick
Nikolaj Hald Nielsen
Seb Ruiz
Sven Krohlas

Once we form the initial group, we will have an immediate voting round  
to include further members who are on the edge of our guidelines.

We are currently discussing options for allocating voting power to  
voters. We do not wish to hold back debate on all of the things  
mentioned above, so we will continue to work out a recommendation  
privately while allowing for a group discussion of all of these  
various options.

========
What is next
========

Lydia is waiting on a response from the KDE e.V. board, regarding  
possible legal help and various other contributions that could help us  
in creating an e.V. in Germany.
Jeff will talk to the SFC more about possibilities for having both a  
US-based entity and a German one. What are the possibilities regarding  
the transfer of money between them? Is that totally OK with the whole  
public charity thing?

As we hear back from these pending questions, we will revise our  
recommendation to provide a more up-to-date solution. Specifically,  
once we hear back from the e.V. board we will be able to more clearly  
explain our options with regard to Germany.

If there are disagreements about our proposed voting system, please  
bring them up.

If there are no disagreements, or once we have reached the end of our  
discussion, we propose to move forward like so:

1) 1 week: Nomination phase: Voters and non-voters alike can nominate  
(5) people to the board
2) 2 weeks: Voting phase: All voters can vote for (5) people. At the  
end of 2 weeks, 5 people with most votes are the new board.

All comments and criticisms are very welcome, we are opening this up  
to the community for further input and discussion. Remember, to state  
once again for the record, this board exists solely to deal with  
administrative and financial decisions, and NOT to decide on the  
technical aspects of the Amarok project. This board has no  
jurisdiction over the development path that the Amarok team chooses.  
It will remain in the community and the decision process will proceed  
as it always has.

Please reply with all your comments and concerns!

Leo, Mark, Jeff, Lydia