[sudo-discuss] Legal Status

Fri Jul 19 11:34:21 PDT 2013

Here's to SELC. I've looked at some co-op options with members of their
circle before for other projects. If anyone wants to join me at their next
event, do! and we'll raise these questions.
Tue, July 23, 6:00pm – 8:30pm at hub Berkeley, 2150 Allston Way, Suite 400

On Thu, Jul 18, 2013 at 8:54 PM, Eddan <eddan at clear.net> wrote:

> When I've asked around for suggestions of who to talk to about this stuff,
> coming from the perspective we're coming from, and all roads lead to the
> Sustainable Economies Law Center (http://www.theselc.org/). If you
> haven't been to any of their events - these people are pretty awesome. They
> host regular Legal Cafes where anyone can ask a wide range of questions and
> find out for themselves what the deal is, including different options for
> the very things we're talking about. They also do regular Happy Hours where
> you can meet like-minded folks - there was one nearby at Make Westing last
> week.
>
> It was in fact from Janelle Orsi, its Executive Director, that I got the
> idea that 501(c)(7) may be most appropriate. I got a chance to speak to her
> about Sudo Room at the last Legal Cafe event. She has her own law practice (
> http://janelleorsi.com/), and its my understanding that there's a long
> line of organizations who want to work with her. Interestingly, the SELC
> have seriously considered getting an office next to Sudo Room and still
> have not settled on any (semi-)/permanent location.
>
> Recommendations for who else is best to talk to, especially in relation to
> crowd-funding, have also inevitably led to another founder of the SELC -
> Jenny Kassan. She's a partner at K2 Legal downtown here on Broadway (
> http://k2-legal.com/aboutus/ourteam/jenny/). She is also the CEO of
> Cutting Edge Capital (http://www.cuttingedgecapital.com/), who seem to
> consistently break new ground for finding possible ways to raise money in a
> cooperative structure. When I spoke to her recently, she intimated that
> they may have a crowd-funding platform operational in the next few months.
> She also mentioned that they would be looking for a whole bunch of new
> projects as candidates for launch on this platform. She was very pleased to
> hear that there are a lot of interesting and ambitious projects being
> hacked and hatched here at Sudo Room.
>
> The other organization that always comes up when I've asked around is the
> East Bay Community Law Center (EBCLC) (http://www.ebclc.org/), which is
> also connected to Berkeley Law School Clinics. This is also an impressive
> and inspiring organization. They host the Neighborhood Justice Clinic (
> http://www.ebclc.org/njc.php) open to the public and helpful in getting
> questions answered.
>
>
>
> On Thu, Jul 18, 2013 at 11:07 AM, mark burdett <mfburdett at gmail.com>wrote:
>
>> I'd say talk to a lawyer about this first, because the typical 501(c)3 is
>> a corporation - the usual route is incorporating and then awaiting tax
>> exempt status for the corporation.
>>
>> (On the other hand, an LLC could make sense if sudoroom wants to keep
>> around a non-501(c)3 entity that doesn't have all the restrictions of a tax
>> exempt org... I know some enterprising (literally) artists who have created
>> both LLCs and non-profit orgs so they can get grants and also operate as a
>> business....)
>>
>> See also
>> http://www.nolo.com/legal-encyclopedia/nonprofit-tax-exempt-status-501c3-30124.html
>>
>> This section requires that you attach a copy of your articles of
>> incorporation and your bylaws<http://www.nolo.com/legal-encyclopedia/nonprofit-formation-documents-articles-incorporation-bylaws-minutes-30311.html> to
>> the application form. (Most nonprofits seeking 501(c)(3) status are
>> corporations. If your entity is an LLC<http://www.nolo.com/legal-encyclopedia/limited-liability-company>
>> , unincorporated association<http://www.nolo.com/legal-encyclopedia/five-reasons-incorporate-nonprofit-association-30266.html>,
>> or nonprofit trust, you should seek the help of a lawyer<http://www.nolo.com/lawyers> with
>> experience in nonprofit tax law to complete your Form 1023 application.)
>>
>> --mark B.
>>
>> On Thu, Jul 18, 2013 at 10:50 AM, Marina Kukso <marina.kukso at gmail.com>wrote:
>>
>>> thanks bill, very helpful!
>>>
>>> what are the advantages to filing as an LLC?
>>>
>>> also, i think that jenny recently had a call with james from the school
>>> factory - jenny, could you possibly share some of what you both discussed?
>>>
>>> - marina
>>>
>>>
>>> On Thu, Jul 18, 2013 at 10:43 AM, William Budington <bill at inputoutput.io
>>> > wrote:
>>>
>>>> Hey all,
>>>>
>>>> I talked to Danny O'Brien (Noisebridge's financial functionary)
>>>> yesterday about the sudoroom legal status.  I know this has been an
>>>> ongoing discussion so I'm going to summarize the options we've already
>>>> looked into and present the new information Danny has brought to my
>>>> attention.
>>>>
>>>> *Why do we need a legal status?*
>>>> Over the past few months we've found various challenges to our normal
>>>> operations since we don't have a legal status.  We aren't able to sign
>>>> up for services like Stripe without having a federal tax id.  In
>>>> addition, since we are formally under one person's name, he is liable if
>>>> anything happens at sudoroom.  Also, we aren't able to sign up for most
>>>> banks -- only the Community Bank of the Bay will actually give us a bank
>>>> account with our status as a DBA.  And as we've seen, Community Bank of
>>>> the Bay is not the most web-savvy organization, and so it's hard for us
>>>> to actually check our balances.
>>>>
>>>> *What we've looked at*
>>>> Our eventual goal has been to get 501(c)3 status for sudoroom.  This is
>>>> a status that would allow us to accept tax-deductible donations and be
>>>> incorporated formally as a nonprofit.  A lot of Hacker Spaces go this
>>>> route, and it seems like a reasonable long-term goal.  One of the
>>>> problems we've been warned of is that it takes a long time to actually
>>>> be granted 501(c)3 status - upwards of 2 years, which can as I
>>>> understand be expedited to 10 months.
>>>>
>>>> Because of this delay, we've looked into some other options -- namely
>>>> being umbrella'd under another organization's 501(c)3 status.  This
>>>> would involve 10% of our revenue going to said umbrella organization to
>>>> cover costs of the books.  I've been in contact with Danny at
>>>> Noisebridge and Jenny has been in contact with (Steve?) at the School
>>>> Factory and discussing if this is a possibility.  It is certainly one
>>>> way to go, but as for Noisebridge they've only umbrella'd Noisetor, and
>>>> they didn't need a separate account for that.
>>>>
>>>> *What I've learned recently*
>>>> Danny mentioned that his partner is looking into nonprofit status for a
>>>> new feminist hacker space in SF, and has investigated these options as
>>>> well as others.  In order to have a certain degree of autonomy, it is
>>>> probably in our interests to actually not go the umbrella route and
>>>> pursue separate legal status altogether.  He also mentioned that there's
>>>> no reason why we couldn't incorporate as an LLC or other corporate
>>>> status before pursuing 501c3 status, and that even if it takes a number
>>>> of years to be granted non-profit status we can transition from an LLC
>>>> without much of a problem.  There's no real disadvantage to having LLC
>>>> status in the meantime, as I understand it.  The main advantage of
>>>> nonprofit status is tax deduction, but that is usually superseded on
>>>> most peoples taxes by the standard deduction.  The main place where it
>>>> does make a difference is when employers do matching donations for their
>>>> employees, then it can make a difference.
>>>>
>>>> *The plan*
>>>> It makes sense to me to pursue the options that would resolve our
>>>> short-term problems without impeding the path to our long-term goals.
>>>> It seems to me reasonable as a short-term goal to register as an LLC
>>>> (Jenny tells me this can be done in an afternoon and with $50 with a
>>>> drive to Sacramento), and as a longer term goal actually pursuing
>>>> nonprofit, 501c3 status.
>>>>
>>>> *Disclaimer*
>>>> There may be caveats to this plan and I'm not a lawyer.
>>>>
>>>>
>>>> Bill
>>>>
>>>> _______________________________________________
>>>> sudo-discuss mailing list
>>>> sudo-discuss at lists.sudoroom.org
>>>> http://lists.sudoroom.org/listinfo/sudo-discuss
>>>>
>>>
>>>
>>> _______________________________________________
>>> sudo-discuss mailing list
>>> sudo-discuss at lists.sudoroom.org
>>> http://lists.sudoroom.org/listinfo/sudo-discuss
>>>
>>>
>>
>> _______________________________________________
>> sudo-discuss mailing list
>> sudo-discuss at lists.sudoroom.org
>> http://lists.sudoroom.org/listinfo/sudo-discuss
>>
>>
>
> _______________________________________________
> sudo-discuss mailing list
> sudo-discuss at lists.sudoroom.org
> http://lists.sudoroom.org/listinfo/sudo-discuss
>
>
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://sudoroom.org/pipermail/sudo-discuss/attachments/20130719/b2ea8a35/attachment.html>