July 8, 2014

Is Python Under Threat from the IRS?

Readers should remember that I no longer have any official standing in the Foundation other than my long-standing membership, but this post is informed by eight years on the board, over three of them as its chair.

Nicholas Tollervey (author and performer of A Programmer Pythonical) asked an interesting question on the Python Software Foundation's membership list today. Despite his misgivings it is one that will be of interest to many Python users, so I am grateful for his permission to quote the essence of it here.

I've noticed rumblings on the web about the IRS denying nonprofit/charitable status to various free software based foundations/organisations/legal entities similar to the PSF. In case you've missed it, here is a high level summary.
My questions are:
1) Is the PSF likely to be affected by this change of view from the IRS?
2) If so, do we have contingency for dealing with this (basically,
what are our options)?

The answer to the first question is absolutely not. The PSF is a long-standing 501(c)(3) non-profit in good standing. The recently-reported issues are all to do with current applications for non-profit status. It's fair to say that the IRS is applying scrutiny to such applications, but they are, after all, responsible for making sure that applications are genuine. As long as an existing non-profit makes the necessary returns and complies with all applicable laws, and as long as it continues to honor its requirement to maintain broad public support, there is no reason why the IRS would represent any kind of threat.

The IRS does not exist to help open source
devotees to build a bright new world

Some of those rejected have been advised to apply for a different form of non-profit status, others are reconsidering their options. Good legal advice is imperative when starting any such enterprise, and that requires a specialist. There is a feeling that the IRS might make better decisions if it could be better-informed about open source. From my limited knowledge of the recent cases I'd say that it's essential to ensure that your application has a sound basis in non-profit law. The IRS does not exist to help open source devotees to build a bright new world.

The answer to the second question is that loss of non-profit status would be a blow to the Foundation, but there's no reason why even that should be fatal to Python, though I very much doubt there is serious planning for such an eventuality. Ultimately the Foundation's the bylaws include a standard winding-up clause that requires asset transfer to a similar/suitable non-profit, so assets cannot be stripped even under those circumstances, including the ability to license Python distributions.

The developers could simply migrate to a different development base. They aren't directed or controlled in any way by the Foundation, which in the light of recent decisions it turns out is probably a good model. If the PSF were directing the development of the language there might have been a real risk of it being seen as no different from a software house or vendor, and it is at that point that doubts about non-profit status can be raised.

The Foundation's mission is ... therefore
genuinely educational and charitable

The Foundation's mission is to promote the growth of the language (check) and the development of the international Python community (check) and its mission is therefore genuinely educational and charitable. So even were it to apply again today I suspect the application might succeed. Fortunately, that doesn't have to be put to the test.

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