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Mozilla The Internet The Almighty Buck

Mozilla Foundation Now IRS 501(c)(3) Approved 116

Posted by Hemos from the get-out-the-donations dept.
jesus_X writes "We at MozillaNews have discovered that the Mozilla Foundation is now officially 501(c)(3) approved by the IRS, meaning you can now deduct donations made directly to Mozilla.org from your income tax returns. This is separate from, and obviates the Open Source Applications Foundation donation method mentioned in August on MozillaZine."
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Mozilla Foundation Now IRS 501(c)(3) Approved More

Mozilla Foundation Now IRS 501(c)(3) Approved

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  • Not good (Score:1, Funny)

    by Anonymous Coward
    Do they really want such an intimate relationship with the Imperial Revenue Service?

    • Re:Not good (Score:1)

      by Anonymous Coward
      How can this be bad? It is more for the benefit of the donators anyway. If you don't want to give money to open source instead of the government then by all means donate to Bush. Meanwhile we can support something that is actually helping people...

      • yep, it's not good (Score:3, Informative)

        by zogger ( 617870 )
        there are a lot of hidden gotchas once you have that status, many of them political. For instance, say you had candidate A who really supported open source, and a candidate B who wanted to restrict heck out of it. Moz . org could no longer issue press releases or endorse candidate A officially about it. It's hit a lot of not for profits lately. A lot of churches now for instance are abandoning their 501 c 3 status because of those restrictions. The government can legally outlaw some things a preacher might
        • You wrote:

          The government can legally outlaw some things a preacher might preach about if they are incorporated under 501 c 3.

          Churches and 501(c)3 organizations are just prohibited from campaigning for/against or endorsing specific candidates. These orgs can still advocate on issues and for/against ballot questions such as inititives, referenda, amendments, etc.

          Churches (more specifically the Christian Coalition) have been circumventing this for years by using a Voter Guide (also allowed under the la

          • direct from the irs, so we can all be on the same page here with what we are talking about:

            http://www.irs.gov/newsroom/article/0,,id=12288 7 ,0 0.html

            Charities May Not Engage in Political Campaign Activities

            IR-2004-59, April 28, 2004

            WASHINGTON -- Charities should be careful that their efforts to educate voters comply with the Internal Revenue Code requirements concerning political campaign activities, the tax agency said today in a presidential election-year advisory.

            Organizations described in section 5

  • Hah! (Score:5, Funny)

    by SeinJunkie ( 751833 ) <seinjunkie@gmail.com> on Monday July 12, 2004 @09:35AM (#9674509) Homepage
    Let's see Microsoft do that!
    • Well, they would, but it would likely cost them more to set up the paperwork then they would get in return donations :)

    • Re:Hah! (Score:5, Funny)

      by Anonymous Coward on Monday July 12, 2004 @09:39AM (#9674556)
      Actually IE users would use the tax code section that covers Gambling Losses.

    • Re:Hah! (Score:2, Interesting)

      by ZipR ( 584654 )
      Microsoft may not be 501(c)(3) approved, but they do get some nice tax breaks, which I'm sure help:
      Microsoft enjoyed more than $12 billion in total tax breaks over the past five years. In fact, Microsoft actually paid no tax at all in 1999, despite $12.3 billion in reported U.S. profits. Microsoft's tax rate for the past two years was only 1.8 percent on $21.9 billion in pretax U.S. profits.
      Taken from here: http://www.ctj.org/html/corp0402.htm

  • This is great... (Score:5, Insightful)

    by mp3LM ( 785954 ) on Monday July 12, 2004 @09:37AM (#9674536) Homepage
    I think this is going to make a lot more people donate, because it has double benefits.
    • Don't know how to count double but you can add one time more benefit to Mozilla if you employer also has a matching gift program like Bellsouth [givingprograms.com]
    • I completely agree. I typically only donate to charitable organizations that allow me to deduct the donation from my tax bill. I'm generous with my donations, but I'd like to get a little off of my taxes in return. It's very nice to know that I can now donate to the Moz Foundation in this manner.

  • A few more reviews needed! (Score:1, Informative)

    by Anonymous Coward

    We need to get up to around 1,080 reviews on download.com (ie 1,000 more than there were before the campaign started). Currently at 1,040, so if you haven't done a review yet, please add one!

    http://www.download.com/3302-2356_4-10299359.html [download.com]

  • All the cool people are doing it... (Score:5, Informative)

    by LostCluster ( 625375 ) * on Monday July 12, 2004 @09:39AM (#9674562)
    Roll calling a few of our other favorite groups...

    Free Software Foundation: Yep, say they're tax-deductable. [fsf.org]
    Electronic Frontier Foundation: Yep, they say they have 501(c)(3) compliance. [eff.org]
    FreeBSD Foundation: Yep, section 2.5.1 on this page says they're tax-deductable too. [freebsd.org]

    Seems like it'll take some work to find an OSS-supporting group that can't accept tax deductable donations.

  • I bought a shirt.... (Score:5, Funny)

    by croddy ( 659025 ) on Monday July 12, 2004 @09:40AM (#9674568)
    I bought a t-shirt from mozillastore ... does that count?

    (fingers crossed)

    • Re:I bought a shirt.... (Score:5, Informative)

      by LostCluster ( 625375 ) * on Monday July 12, 2004 @09:42AM (#9674599)
      Not usually. If you get something in return for what you paid, then you didn't make a donation. However, if the ammount you paid is dramatically more than the value of what you got in return, you can deduct the overage.

      So, how overpriced was the shirt?

      • Re:I bought a shirt.... (Score:1, Funny)

        by Anonymous Coward
        if the ammount you paid is dramatically more than the value of what you got in return, you can deduct the overage

        Hmmm...might want to deduct my ex-wife...

        Ring.............2 mo salary
        Wedding..........$25K
        Divorce..........$10K
        being free and
        clear of her.....PRICELESS!
      • Not usually. If you get something in return for what you paid, then you didn't make a donation. However, if the ammount you paid is dramatically more than the value of what you got in return, you can deduct the overage.

        Then does that mean that all those that downloaded and use Mozilla can't make a deduction because they got something (better software) in return?

        Or are you meaning any amount that we donate should be deductable because it is "free?"

        I'm confused.
      • basically, if you donate, you cannot use Mozilla.
      • Actually you get dramatically more money in return, considering all those girls who won't date you for wearing it.
    • My understanding is that if a premium is given in exchange for a donation, the premium has a fair market values (FMV) associated with it. The donor may deduct the value of the donation minus the FMV. Therefore, if the donation is in the form of a sale, the difference will reasonable be zero, which will also be the allowed deduction. IANATA, This is just a guess.

  • Very stupid question... (Score:5, Interesting)

    by Midnight Thunder ( 17205 ) on Monday July 12, 2004 @09:40AM (#9674576) Homepage Journal
    At a business level, what is the technical difference between a non-profit organisation and a traditional business. Maybe better: to what extent can it non make a profit? Surely a non-profit organisation still needs to assure it has money in the bank and pay its employees.
    • Surely a non-profit organisation still needs to assure it has money in the bank and pay its employees.

      Yes, but a traditional business is supposed to also pay its shareholders / owners, ie make a profit instead of being non-profit.

    • Re:Very stupid question... (Score:5, Informative)

      by afidel ( 530433 ) on Monday July 12, 2004 @09:45AM (#9674628)
      Non-profit's typically have to burn off their cash within a year of aquiring it if it is not for a specific aproved capital function (like buying a new building to house the organization). There are also rules as to executive compensation (often flaunted) and other operational differences. But most importantly a not for profit entity can not go to the stock market for funds because they are not able to return the money to investors that they investors would be looking for.
      • Non-profit's typically have to burn off their cash within a year of aquiring it if it is not for a specific aproved capital function (like buying a new building to house the organization).

        Non-profits have a variety of different revenue streams including membership dues, donations, and grants.
        Grants, which are typically given by foundations, often have a time period constraint, but they are not always one year. As an example, see the financial reporting guidelines [hewlett.org] given by the William and Flora Hewlett [hewlett.org]

      • This means that . . . (Score:5, Funny)

        by Prince Vegeta SSJ4 ( 718736 ) on Monday July 12, 2004 @11:00AM (#9675440)
        because they are not able to return the money to investors that they investors would be looking for.

        I can deduct most of my investments from the late 90's, since 90% of the companies from the dot.bomb era must have been nonprofits! w00h00

        • I can deduct most of my investments from the late 90's, since 90% of the companies from the dot.bomb era must have been nonprofits!

          Actually, a lot of people will cut their losses on some of their investments, when other investments have done well, in order to cut down on their taxable income.

          In other words, if you've made a lot of money, but have a bunch of stock that if you sold it you'd be selling it at a loss, you can minimize your losses by saving in taxes from the capital gains that actually made

    • Re:Very stupid question... (Score:5, Informative)

      by marnargulus ( 776948 ) on Monday July 12, 2004 @09:46AM (#9674632)
      Exemption Requiredments: none of the earnings of the organization may inure to any private shareholder or individual.
      it may not attempt to influence legislation as a substantial part of its activities and it may not participate at all in campaign activity for or against political candidates.
      The organization must not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. No part of the net earnings of an IRC Section 501(c)(3) organization may inure to the benefit of any private shareholder or individual. A private shareholder or individual is a person having a personal and private interest in the activities of the organization. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any managers agreeing to the transaction.

      That is from www.irs.gov basically saying that:
      1: No making money for yourself.
      2: No political funding as a main purpose.

    • Re:Very stupid question... (Score:5, Interesting)

      by alexatrit ( 689331 ) on Monday July 12, 2004 @09:47AM (#9674643) Homepage
      Part of it is about the goals of the organization. It's easier to receive 501(C) status if you give back to the community, so to speak. Free publications, software groups, churches... these organizations provide something without expecting anything in return. They are allowed to report income and expeditures. This includes salary to the management of the organization. But at the end of the year, the books (in theory) shouldn't be too far in the black. Historically you're less likely to be sued as a 501(C) non-profit, since it's on the books that there isn't a lot of extra money floating around. There are tax benefits to incorporating as well.

    • Re:Very stupid question... (Score:5, Informative)

      by LostCluster ( 625375 ) * on Monday July 12, 2004 @09:50AM (#9674674)
      The key difference is that a non-profit doesn't have "owners" and therefore there's nowhere to send a dividend. When a non-profit makes more income than it's spending, they either have to spend more on whatever they do, or put the money in the bank for a rainy day.

      The IRS 501(c)(3) standard takes that definition a bit further to require that the non-profit must be doing something for the public good, rather than just giving money to the people who set it up. Here's the IRS.gov page on the matter [irs.gov].
      • The IRS 501(c)(3) standard takes that definition a bit further to require that the non-profit must be doing something for the public good, rather than just giving money to the people who set it up
        To clarify a bit: many non-profits aren't tax exempt, like a local social or hobby club. To be tax exempt you have to be an organized religion or provide some community service. Guess Mozilla claimed the former!

    • Surely a non-profit organisation still needs to assure it has money in the bank and pay its employees.

      I work at a large non-profit, and the name is a bit of a misnomer. Non-profit doesn't mean that they don't want increased revenues, nor does it mean that the people working for them don't make considerable salaries. The CEO at my company (name intentionally omitted) makes over a million a year, and most of the technical workers earn six figures.

      As discussed, they have to spend all of their revenues

  • Where does the money go? (Score:5, Insightful)

    by Anonymous Coward on Monday July 12, 2004 @09:41AM (#9674589)
    WHen you donate to Mozilla, where does the money go, is it purely on the server, does any of it go to the programmers? Who decides where the money goes? If we donate money to them, can we get any say as to where it goes?

    • Re:Where does the money go? (Score:5, Informative)

      by Anonymous Coward on Monday July 12, 2004 @09:50AM (#9674672)
      Usually, it goes to whatever the folks running the Foundation want it to go to. Their expenses include servers, and also the programmers, and other staff.

      Doesn't look like they have anything set up for it, but in general with non-profits, you can restrict your donation. They either have to obey your condition, or refuse to accept the contribution.

      If you're giving them $10, then restricting it is just going to be a pain the arse, and cost more to administrate than your donation than it's worth. If you want to give a larger amount that's restricted, drop them a line (address is on the donations page [mozilla.org]) and ask.
      • "Restrict your donation"? Bah. Money is fungible. If you donate $1000 to their Server Fund, that's $1000 out of general expenses that WON'T be going to the server fund.

      • Re:Where does the money go? (Score:5, Informative)

        by guacamolefoo ( 577448 ) on Monday July 12, 2004 @10:38AM (#9675157) Homepage Journal
        Usually, it goes to whatever the folks running the Foundation want it to go to. Their expenses include servers, and also the programmers, and other staff.

        You can find out where some of the money is going by requesting a copy of their informational tax return.

        If you request it, they must provide you with a copy. No, really, it's true [nonprofits.org] -- they have to do it.

        So, if you have questions, write to the Mozilla Foundation and ask for their tax return info.

        GF.
    • I have heard that when you donate money to an organization you can tell them that the money has to be used for (fill in the blank). Do not just take my word for it. Do some research, and I believe you will find that what I say is true.
      • Didn't happen with the red cross. after 9-11 they were accepting donations for the victims and survivors. A whole heaping boat load of that money DIDN'T go to the victims and survivors, it went to a lot of other weird stuff though, like anti guns rights orgs for instance.

    • Re:Where does the money go? (Score:5, Informative)

      by alexatrit ( 689331 ) on Monday July 12, 2004 @09:52AM (#9674688) Homepage
      Part of requesting 501(C) status is presenting a copy of your organization's corporate resolutions. It should outline the answers to these questions, although I haven't been able to find it online.
    • WHen you donate to Mozilla, where does the money go, is it purely on the server, does any of it go to the programmers?

      501(c)3 organizations are required to file IRS Form 990, 'Return of Organization Exempt from Income Tax' [irs.gov], if the organziation's gross receipts are over $25,000 per year.
      Form 990 will include functional expenses, a balance sheet and the salaries of board members and key employees. There is a great primer on how to read a Form 990 here [npccny.org].
      Any 501(c)3 should be able to provide you a copy of

  • corporate donations - bigger deal (Score:5, Informative)

    by Potlucker ( 19278 ) on Monday July 12, 2004 @09:42AM (#9674600)
    this allows corporations as well to donate and take the write-off.

    this is big since it makes the foundation significantly more likely to recieve large donations.

    IRS Tax Information for Charitable Organizations [irs.gov]
  • If those of us outside the US could also avail of this loophole^H^H^H^H^H^H^H^Hcharitable work.

    Though it will be funny to see bigwigs who go to dinner parties with Gates,McBride and Co. donating to an opposing organisation.

  • That Is Nice But (Score:5, Insightful)

    by ArchAngel21x ( 678202 ) on Monday July 12, 2004 @09:48AM (#9674645)
    I am thinking of donating a small portion to Mozilla since Firefox is my main browser now. However, my motive is not fueled by a tax break. I want to support an organization that makes good software.

    I encourage everyone who uses a Mozilla browser to donate at least $5. Come on, that is only the price of a value meal at a fast food joint. Just think what the organization could do if we all donated.

    • I am thinking of donating a small portion to Mozilla since Firefox is my main browser now. However, my motive is not fueled by a tax break.

      This is the reason behind the UK's Gift Aid [inlandrevenue.gov.uk] scheme. Most individuals give money because they beleive in a charities aims, not because they want to claim against their income. Why not give the tax break to the charity if the donor does not want it.

      • Re:That Is Nice But (Score:3, Insightful)

        by swillden ( 191260 ) *

        Why not give the tax break to the charity if the donor does not want it.

        That's really no different from the US approach, it just shifts the paperwork from the donor to the charity and reduces the government's contribution with respect to a particular tax rate.

        Assume I'm donating $5 and I paid $1 in taxes on that money.

        Under the Gift Aid approach, if I give $5, the charity gets $5 and then can file to get the other $1, for a total of $6. Net, the charity is up $6, $5 from me and $1 from the governmen

    • A donation drive would be nice as I'm sure they've got a lot of expenses building up around the forthcoming Firefox and Thunderbird 1.0 releases. The main cost I can imagine would be the servers particularly update.mozilla.org as people go to explore all those brilliant extensions.

      OT: Here's a marketing idea which has probably thought of before. Link the Firefox page saying how/why to switch from IE (http://www.mozilla.org/products/firefox/switch.ht ml) to the words 'Internet Explorer' to increase Firefo

  • Doh! What about last year's return? (Score:5, Funny)

    by buzban ( 227721 ) <{ten.nabzub} {ta} {zub}> on Monday July 12, 2004 @09:48AM (#9674647) Homepage
    um...

    meaning you can now deduct donations made directly to Mozilla.org from your income tax returns

    what if I've been deducting donations for a year or so now? :P

  • Great. (Score:2, Funny)

    by Scrab ( 573004 )
    I can claim it on my tax returns. All I need now is to actually have any money......

    *sigh*

  • UK donations? (Score:2, Interesting)

    by 16K Ram Pack ( 690082 )
    Any way we can donate and get some extra money for Mozilla?


    I don't know if an open source software project would be able to get charity status in the UK.

  • When does this take effect? I purchased the $50 donation with t-shirt gift a couple weeks ago. Am I going to be able to include that for 2004 on my tax return?

    • Re:retro-active? (Score:3, Informative)

      by sunilonline ( 609351 )
      I am on the board of a 501(c)(3) [realyouth.org] and when we got the designation from the IRS they said it was retroactive to the date that the organization started.. I don't know if this applies to all organizations or not.

  • Only if you itemize (Schedule A) (Score:5, Informative)

    by jabberw0k ( 62554 ) on Monday July 12, 2004 @10:33AM (#9675080) Homepage Journal
    You can only deduct charitable contributions if you itemize your deductions on Schedule A.

    See the IRS page, "Should I Itemize?"
    http://www.irs.gov/taxtopics/tc501.html

    For those of us without mortgages or major charitable contributions, the Standard Deduction is far greater than what can be achieved with Itemization...

    Permitting charitable contributions even for apartment renters would surely have a huge positive impact socially and economically... but as things stand, I and many others are foreclosed from realizing any *financial* advantage (as opposed to a warm fuzzy feeling) from charitable donations.

  • 501(c)(3) != deductability! (Score:4, Informative)

    by weav ( 158099 ) on Monday July 12, 2004 @11:08AM (#9675539)
    IIRC, 501(c)(3) status just means the entity doesn't have to pay income tax on its revenues. Being certified as a public charity to whom contributions are deductible is a DIFFERENT THING.

    Don't try to write off Mozilla contributions until you hear they're classified as a public charity...

    Danger, Will Robinson!
  • Maybe, since there are already so many(!) tax lawyers in this thread, someone can tell me whether this is a valid deduction in Canada if it's recognized in the Excited States. I've been wanting to give a little love back to the lizard for a while. Cheers!
    • IANAL, but I believe you have to apply to be a registered charity in Canada with the CRA [cra-arc.gc.ca]. See the documentation [cra-arc.gc.ca] to become a registered charity.
      • Thank you for responding - that part I knew, as I'm "business manager" (read "IT guy, HR guy, financial guy, assistant director, etc., etc.") for a non-profit here in Canada. I'm just wondering about the tax-deduction status of orgs that are registered in the US but not with the CCRA. Cheers!

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