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Grex > Coop10 > #102: Grex's 501(c)3 application ready for review | |
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janc
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Grex's 501(c)3 application ready for review
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Apr 27 19:48 UTC 1998 |
I've got the form 1023 application for 501c3 tax-exempt status ready to send
out except
- I need folks to review it here.
- I need to photocopy it.
- I need to fill out form 8718, wherein we give the QRS $150 for thinking
about giving us 501c3 status (this is an easy form).
- Mark needs to cut a check for $150.
I'm not going to enter the full form here. Much of it is extremely boring
stuff like the name of the corporation, when our annual accounting period
ends, whether or not we are a private foundation or a church, and whether
we have any endowments. I'm pretty sure I answered all that right, and if
you don't trust me you can come look at the hard copy. I don't want to
type all that. If you want to see the blank form and instructions, you can
get it (look for Forms 1023 and 8718) from the IRS's web site at
http://www.irs.ustreas.gov/prod/forms_pubs/index.html
Since I didn't want to type a lot of stuff on the form, most of the longer
answers to questions are on attachments. Copies of all 16 attachments are
in the files ~janc/501c3/a01.txt through ~janc/501c3/a16.txt . (These are
identical to what I'm sending to the IRS, except they get ones that are
more prettily formatted.) The data for the financial part of the form is
is ~aruba/reports/501c3 . Some of this appears in the attachments too.
I'm going to enter all the vaguely interesting parts of the form in this item
though. Most of this has been discussed in this conference before.
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| 54 responses total. |
janc
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response 1 of 54:
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Apr 27 19:49 UTC 1998 |
PART I - IDENTIFICATION OF APPLICANT
item 3: Contact Person.
I listed myself and gave my phone number.
item 6: Activity Codes.
Here we have to choose from their list of several hundred catagories.
We choose these two as primary and secondary goals:
123 Discussion groups, forums, panels, lectures, etc.
560 Supplying money, goods, or services to the poor.
item 9,10: Have we filled tax returns?
We haven't. Attachment 1 explains that it is because we have never
earned over $25,000 a year and so are not required to.
item 11: They want copies of our articles of incorporation and bylaws.
These are attachments 2 and 3.
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janc
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response 2 of 54:
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Apr 27 19:52 UTC 1998 |
PART II - ACTIVITIES AND OPERATIONAL INFORMATION
Item 1 in part II is the big enchilada. This is where we explain what we are
doing that qualifies us to be worthy of a tax exemption. Our answer is
attachment 4, which has been modified only in small ways since we last
discussed it here. Here's the whole thing:
Attachment Number 4
Cyberspace Communications, Inc (EID 38-2998091)
Form 1023, Part II, Item 1:
Question:
Provide a detailed narrative description of all the activities
of the organization--past, present, and planned. Do not merely refer
to or repeat the language in the organizational document. List each
activity separately in the order of importance based on the relative time
and other resources devoted to the activity. Indicate the percentage of
time for each activity. Each description should include, as a minimum,
the following: (a) a detailed description of the activity including
its purpose and how each activity furthers your exempt purpose; (b)
when the activity was or will be initiated; (c) where and by whom the
activity will be conducted.
Response:
Cyberspace Communications has activities in the following
four areas:
A. Maintaining and developing Grex. The primary activity of
Cyberspace Communications, occupying about 95% of our organization's
time, is the operation of a public-access computer system called "Grex"
(after the Latin word for "group"). This computer system is currently
housed in a rented room at 416 West Huron Street in Ann Arbor and has
been in continuous operation since June of 1991. It is operated by a
volunteer staff under the direction of the Cyberspace Communications
board of directors and currently has about 18,000 registered users.
Grex provides a wide range of services to the community that further
the mission of Cyberspace Communications:
1. A bank of dial-in modem lines in Ann Arbor (at 734-761-3000)
and an Internet connection (at grex.cyberspace.org) are available.
These allow people in the Ann Arbor area to easily access our
service (through the dial-in lines), but also allows access by
people all over the world (through the Internet connection).
Maintaining our own direct dial-in service means that even
people with only "obsolete" computers (readily available for
less than $40) can easily use all our services.
2. A simple registration process enables users coming in from either
the dial-in lines or the Internet to create Grex accounts for
themselves. This process is designed to be as barrier-free as
possible, encouraging the widest possible range of users to
access our system. Users are not required to pay any fees, nor
are they required to give any information about themselves.
Accounts are created immediately and there is no delay in gaining
access.
This registration process is the key to our charitable mission.
It enables a wide variety of people who could not otherwise
afford Internet services to use our system. We serve many poor
people as well as other users who could not justify paying
commercial rates for services they only use occasionally. People
from all over the world connect over the Internet to access services
that are prohibitively expensive or completely unavailable in
their own countries.
Our open registration policy also supports our educational
mission. Our free and anonymous access means we have a very
large population of young users, as well as many older users
who want to experiment with the Internet without paying to do so.
3. We produce a variety of instructional materials, both printed
and electronic, designed to help people learn to use Grex. We
answer hundreds of user questions a week through E-mail and our
on-line live help facility.
Educating users in the use of Grex is a necessary component of
both our educational and charitable mission.
4. Grex hosts electronic conferences on more than 100 topics, all
of which are open to all of our users. Typical conference topics
include music, the arts, writing, consumer information, housing,
finance, small business, philosophy, living with disabilities,
men's and women's issues, parenting, pets, computers hardware
and software, nature, cyberpunk, and role playing games. There
are also rather non-topical "creative" conferences, and a general
discussion area called "agora". All Cyberspace Communications
policies are discussed and developed in a public conference called
"coop".
These discussion forums are the key to our educational mission.
The only direct teaching done by Cyberspace Communications is
focused on how to use our system. Our broader educational mission
is served by providing and maintaining these discussion forums
where the content is entirely generated by the users. The wide
range of users attracted by our open access policy ensures a wide
range of knowledge and opinion. On-line forums are very effective
in drawing people with diverse backgrounds into shared discussions.
Cyberspace Communications does not attempt to limit discussion to
"serious" topics. We believe that simply socializing on line can
greatly aid the personal development of many of our young users.
On-line forums can be a very non-threatening environment in which
to learn social skills, up to and including those needed to
democratically run a community service, and to gain proficiency
in written communications.
5. Grex provides a range of basic Internet services, allowing all
users to send and receive E-mail, surf the web, and publish their
own web pages. In all cases, our service is of much lower quality
than commercial servers, using older, non-graphical user interfaces
and a rather slow Internet connection, but it is nevertheless usable.
Providing these services for free is an important part of our
charitable mission, and helping people learn their use is an important
part of our educational mission.
6. Grex runs on a sophisticated Unix system, to which all users are
given full access. As a volunteer operation, Cyberspace Communication
constantly works to recruit and train new people to help run Grex.
For several people, experience using or running Grex has been a vital
step in launching or advancing careers in computing.
7. Out of necessity, Grex's staff must be very active in policing
the system, ensuring that hostile users do not abuse our service to
the detriment of our other users or of other systems on the Internet.
However, we recognize that many of the "problem" users are, in fact,
young people who need guidance to become good citizens of the net,
so we strive to respond to problems in an educational rather than
punitive manner. We believe we have had a very good success rate
with this.
B. Publicizing the services offered through Grex. Grex is well-established
and well-known and word- of-mouth advertising already brings us more users
than we can easily handle, so publicity currently accounts for under 2%
of our time. We do do some publicity focused on Ann Arbor area users,
and we increase our publicity whenever we expand our resources.
C. Fundraising to support Grex. We are primarily funded by donations from
our users. We have not been very active in seeking outside funding lest
we lose the sense of being a "grass roots" organization, nor do we like
to pressure our users for money very much lest we scare off people who
cannot afford to pay. Thus our fundraising is very passive, consuming
less than 2% of our time.
D. Repair and distribution of used computers. In the past Cyberspace
Communications has coordinated the repair and distribution of second-hand
computers to people who need them to access Grex and lacked the money or
expertise to obtain them. There has been little demand for this to date,
so this activity has accounted for less than 1% of our time.
Users of Grex engage in a wide range of off-line social activities, but
Cyberspace Communications itself has very little involvement in organizing
or funding these activities.
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janc
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response 3 of 54:
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Apr 27 19:54 UTC 1998 |
Item 2: What are or will be the organization's sources of financial support?
List in order of size.
1. Membership dues.
2. Other individual and corporate donations of money, goods, and services.
3. Special fundraising events (charity auctions, etc.).
4. Sale of promotional items (T-shirts, etc.).
Item 3: Describe the organization's fundraising program, both actual and
planned and explain to what extent it has been put into effect.
Include details of fundraising activities such as selective mailings,
formation of fundraising committees, use of volunteers or professional
fund raisers, etc. Attach representative copies of soliticitions for
financial support.
Cyberspace Communications is not very active in fundraising. It is
primarily supported by voluntary donations from individual users. We
encourage users interested in supporting Grex to become members. Various
messages on the system encourage users to join, and we occasionally ask
users to become members, but solicitations for donations are generally
kept low key to avoid making users who cannot pay feel unwelcome.
About 100 of our 18,000 users are members.
We also hold occasional on-line fundraisers to help purchase new
equipment, and periodically we hold charity auctions where donated goods
and services are auctioned off on-line. We also raise some money by
selling Grex T-shirts, coffee mugs, mouse pads, and similar items.
Cyberspace Communications has never been very active in seeking government
or corporate funding. We have asked local Internet providers to donate
net connectivity, and may in the future solicit donations of equipment and
services. Though we are less likely to seek monetary support in the form
of corporate or government grants, this possibility has not been excluded.
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janc
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response 4 of 54:
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Apr 27 19:58 UTC 1998 |
Next there are a bunch of questions about the names and addresses of the board
members, how much they are paid and whether they are owned by Microsoft. I
checked lots of "No" boxes.
Item 8: What assets does the organization have that are used in the performance
of its exempt function? (Do not include property producing investment
income.) If any assets are not fully operation, explain their status,
what additional steps remain to be completed, and when such final steps
will be taken. If "None," indicate "N/A."
Cyberspace Communications has the following assets:
1 Sun 4/670 dual-processor computer with 6Gig disk. Main Grex
computer. Operational.
1 Sun 4/260 computer with 2Gig disk. Backup computer. Operational.
16 Modems. For dial-in lines. Operational.
2 Chase IOLan terminal servers. To interface the modems to Grex.
Operational.
2 Ascend P50 ISDN routers. To interface Grex to the Internet. Operational.
1 486 computer. Old router, now used for network administration.
Operational.
1 Pentium computer. Future mail server. Awaiting funds to purchase a disk.
A desk, various chairs and shelves and office fixtures.
Various spare parts and tools.
Item 10 asks if we are party to any leases and asks for copies. Attachment
8 is our lease.
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janc
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response 5 of 54:
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Apr 27 20:01 UTC 1998 |
Item 11a. Describe the organization's membership requirements and attach a
schedule of membership fees and dues.
Membership costs $6 a month, or $60 a year. Members must be individuals.
(A category called 'Institutional Members' exists, but they do not have
voting privilege and are thus not technically members at all.) Members
are also asked to provide some form of ID, which is not normally required
from our users.
-------------
Item 11b. Describe the organizations present and proposed efforts to attract
members and attach a copy of any descriptive literature or promotional
material used for this purpose.
The web pages and login screens on Grex contain notices asking users to
consider becoming members. Membership is often mentioned in our public
discussion forums, especially those relating to the administration of
the system. The following text is displayed to users who ask for more
information on-line:
>Thanks for asking how to support Grex. You don't have to pay to use Grex,
>but user's donations pay all the bills. If users don't support Grex, it
>will go away. Please support this valuable community resource.
>
>The best way to support Grex is to become a member. Members get to:
> - vote in Grex elections (if you've paid for three months or more)
> - receive the 'Wizard in Training' manual free (again with 3 months)
> - use our internet link.
>
>Organizations may also support Grex and be recognized as Institutional
>members. Institutional members have the same privileges as regular
>members, except the right to vote.
>
>The minimum membership dues donation - Individual or Institutional - is
>$6/month or $60/year (US currency). Send a personal check or enclose a copy
>of other ID with your dues. Other donations at any time from members or
>non-members are welcome. Write to 'aruba' for more info. Send cash,
>checks or money orders to:
>
>Cyberspace Communications Inc
>P.O. Box 4432
>Ann Arbor, MI 48106-4432
Cyberspace Communications occasionally circulates fliers and places
advertisements in various publications, but these are primarily designed
to attract users to the system, not to win new members.
----------------------
Item 11c. What benefits do (or will) the members receive in exchange for their
payments?
Members receive the right to vote in board elections and run for board
positions. They may call for and vote in referenda.
Members may receive, if they like, a copy of a 23-page photocopied user
manual. This is also available to all users for our cost of one dollar.
Members do not receive in special privileges in connecting to Grex
or using any services on Grex itself. However, they do have have
expanded privileges in connecting from Grex to other computers on
the Internet. The most important Internet services, E-mail and
web browsing, are free to all Grex users, but only members can use
their Grex accounts to do such things as use a 'telnet' program
to log into another system on the net, or use an 'ftp' program to
transfer files to and from other systems on the net, or use an 'irc'
program to access the Internet Relay Chat. These are services that
we cannot offer to thousands of anonymous users because we lack
the resources to support them, and, in some cases, because they
would enable hackers to use our system as a safe base for attacking
other systems on the Internet. Since these services are not of much
interest to most people and are provided with much better quality
by even the least expensive commercial Internet service providers,
they do not seem to be a large incentive for most of our members.
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janc
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response 6 of 54:
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Apr 27 20:03 UTC 1998 |
Item 12a says:
If the organization provides benefits, services, or products, are the
recipients required, or will they be required, to pay for them?
If "Yes," explain how the charges are determined and attach a copy of
the current fee schedule.
I said "Yes". and wrote:
Only as described in the response to item 11c above.
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janc
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response 7 of 54:
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Apr 27 20:11 UTC 1998 |
Next two tricky questions:
Item 13: Does or will the organization attempt to influence legislation?
I checked "Yes"
If "Yes," explain. Also give an estimate of the percentage of the
organization's time and funds that it devotes or plans to devote to
this activity.
Cyberspace Communications does not and will not attempt to influence
legislation as a substantial activity. Legislation is often
discussed on our system by our users, but Cyberspace Communications
does not limit participation in or otherwise attempt to influence
the content of such discussions. Cyberspace Communications may,
in the case of legislation in areas that would directly impact
our ability to perform our mission (e.g., Internet free speech and
privacy), take a public stance on issues, but this would be unusual
and never a substantial part of our activities. Our only such
action to date was supporting last year's "blue ribbon campaign"
against the "Communications Decency Act" by temporarily blacking out
our web page. Given the uncertain future of Internet legislation,
the possibility that Cyberspace Communications would find it
necessary to make more substantial lobbying efforts, as allowed
for under section 501(h), cannot be excluded, but our plan and firm
expectation is that lobbying will continue to account for less than
a hundredth of one percent of our activities.
[Note that generally 501(c)3 organizations are banned from lobbying, so
checking "yes" to this box can be enough to get your application
denied. However, section 501(h) does allow organizations to do so
with in certain limits and doing certain paperwork. So basically all
this says is that we might attempt to influence legistation, but only
within the limits allows for by the law for 501(c)3 corporations.]
14. Does or will the organization intervene in any way in political
campaigns, including publication or distribution of statements?
I checked "No"
If "Yes," explain fully.
Although Cyberspace Communications does not and will not support
any candidate for any office, any of our users may publish,
distribute and discuss campaign materials through our system.
Cyberspace Communications does not limit participation in or
otherwise attempt to influence the content of such discussions,
and people of all views would be welcome to join in.
[Here I explained even though I checked "No". My opinion is that
the kind of thing I described does *not* constitute an action by
Cyberspace Communications, and so "No" describes what we are doing,
but I wanted to be explicit about the fact that users are able to
use our system to endorse candidates.]
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janc
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response 8 of 54:
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Apr 27 20:16 UTC 1998 |
PART III: TECHNICAL REQUIREMENTS
This starts out with lots of check boxes that end up saying that we are
asking only for 501(c)3 status effective when the application is recieved
by the IRS, and not retroactively to the founding of Cyberspace
Communications. That's because it's been too long, so we can't get
retroactive status.
It also says that we are asking for a definitive judgement. The only reason
you wouldn't want that would be if your organization was too new to have a
track record.
It gives a list of all users who have donated more than $476.17 (me and Rob).
It claims that we aren't a church, school, hospital, or child care
organization. (We'd have to fill out more forms if we were, so don't even
joke about it where the IRS can hear you.)
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janc
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response 9 of 54:
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Apr 27 20:24 UTC 1998 |
PART IV: FINANCIAL DATA
Part A of this gives financial breakdown for the last 3.25 years. All these
numbers are in Mark's file ~aruba/reports/501c3
Part B is the current balance sheet as of the end of the first quarter of
1998. It says:
Cash 2303.71
Inventories 384.10
Depreciable Assets 3859.00
Total 6537.00
There are also lots of zeros on the form, like for the corporate stocks we
owne and accounts receivable we have. All the liabilties are zeros too.
There is a breakdown of the Depreciable assets in attachment 16, as follows:
Cyberspace Communications has the following assets reported on line 8 of
form 1023, part IV.B. The prices given are estimates based on recent
market values of similar second-hand equipment, however much of this
equipment is rather exotic and obsolete, and market prices vary widely.
Sun 4/670 computer (main Grex computer) 1650.00
2 Ascend Pipeline P50 routers 1000.00
2 Chase IOLan terminal servers 800.00
15 modems 75.00
Sun 4/370 computer parts 50.00
Sun 4/260 computer (backup machine) 25.00
Other computer parts and equipment 200.00
Office furniture and tools 50.00
=================================================
TOTAL 3850.00
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janc
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response 10 of 54:
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Apr 27 20:29 UTC 1998 |
That's all.
If you have comments or suggestions, please post them here. I'm willing to
make changes.
We need to send this off before the end of May, or else the financial data
will be more than 60 days out of date and we'll have to redo it all. We'd
like to send it out as soon as possible.
I'm not sure what the procedure is to actually decide to send it out.
Technically, we should probably wait for the next board meeting to approve
it. I'd rather get it off my desk, and the sooner it gets sent out, the
sooner people can start deducting their donations (since, if granted, our
501c3 status will be effective as of whenever the IRS receives the
application). But we've waited seven years, I suppose we can wait three more
weeks. Grumble.
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aruba
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response 11 of 54:
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Apr 27 21:32 UTC 1998 |
I think you've done a fantastic job, Jan, and the sooner we send it out the
better. I don't feel the need to wait for the next board meeting; this has
been discussed for a long long time.
The only commentd I have are:
-In #3, when you list our sources of income, I'm not sure the JCC sales, from
which accounted for a fair chunk of our income at one time, fit any of the
categories you list. Possibly "donations of equipment". Perhaps there should
be another item, "Sale of donated items". Or possibly we don't need it.
-There was an apostrophe out of place in the support text you quoted; it said
"user's" where the text says (correctly) "users'".
-There was one place where you said "Cyberspace Communication" instead of
"Cyberspace Communications". Let me see if I can find that...
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aruba
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response 12 of 54:
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Apr 27 21:40 UTC 1998 |
(delete that "from" from my first bullet point)
The missing "s" was in #2, Section A, subsection 6.
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mary
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response 13 of 54:
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Apr 28 00:42 UTC 1998 |
#5, under 11c: "Members do not receive in special privileges in connecting
to Grex or using any services on Grex itself." s/any/in
By the way, I really liked the way you handled that section.
Nice job, Jan.
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janc
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response 14 of 54:
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Apr 28 01:42 UTC 1998 |
Thanks for the corrections. I'll let them accumulate a bit longer and make
them all in a batch.
While the board has certainly agreed to the notion of applying for 501c3
status, and has approved the $150 application fee, it hasn't approved this
specific wording of the application. If the IRS accepts this application,
then Cyberspace Communications will be committed to live by what I've said
here. I've tried to accurately represent what we are already committed to
doing and not tie Grex to doing anything it doesn't already do, but I think
that this is an important enough document that it should have clear board
approval before we send it out. I wouldn't object to just getting all the
board members to say it is OK with them on line instead of formal voting, but
I'm not sure it makes sense to hurry things after waiting seven years.
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rcurl
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response 15 of 54:
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Apr 28 05:27 UTC 1998 |
Institutional members *are* members. The privileges of "members" are
specified in the bylaws and are a matter of *State* law. A Michigan
non-profit corporation is permitted to specify the privileges associated
with different classes of membership. In fact, a charitable non-profit
could have lots of members with *none* being able to vote, but they
would still be members in law.
11c should be edited to recognize two classes of membership and their
respective privileges.
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valerie
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response 16 of 54:
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Apr 28 14:08 UTC 1998 |
This response has been erased.
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keesan
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response 17 of 54:
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Apr 28 18:49 UTC 1998 |
Just what I was going to say.
Does it count as educational that I have been helping grexers with their
English in on-line chats, and once even corrected a term paper written
by a Bulgarian in English? One grexer in Turkey has chatted with me twice,
and received a fair amount of help with English (I make correction in the top
part of the screen while the other grexer is still typing in the bottom half).
This is an extraordinary chance for many people learning English to practice
it in real life communication.
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aruba
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response 18 of 54:
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Apr 28 18:59 UTC 1998 |
And I tutored someone in algebra for a semester, using talk. But I think
Jan is correct, that these are not actions of Cyberspace Communications -
merely facilitated by it.
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mta
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response 19 of 54:
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Apr 28 22:21 UTC 1998 |
I think they might be mentioned incidently somewhere as some of things
we make possible ... but I agree that they aren't actions of Cyberspace
Communications, per se.
I'd approve it in the format presented, with those minor corrections of
typos appended. Yup. It's an extraodinary document, Jan. Thanks!
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bru
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response 20 of 54:
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May 1 14:43 UTC 1998 |
Don't forget yopu owe the city taxes on that$3800 worth of equipment...
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dpc
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response 21 of 54:
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May 3 20:21 UTC 1998 |
I am very, very impressed with this stuff, janc! An excellent job!
My only comments:
1. I think you should say "no" about influencing legislation.
Grex does not hire lobbyists and is not a political organization.
While some of our *users* may post "political" stuff here, that
material doesn't state a corporate position because we don't have
one. The CDA stuff is in the past. I'm concerned that we will
get into a long, counterproductive tailspin with the IRS about this.
2. Yes, I think the Board should approve this application.
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rcurl
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response 22 of 54:
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May 4 04:36 UTC 1998 |
The IRS doesn't get into a tailspin over 'influencing legislation',
so long as one stays within the guidelines, which requires declaring
as a 501(h) [?] organization. The rules are then moderately liberal.
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aruba
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response 23 of 54:
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May 4 05:44 UTC 1998 |
I think Jan handled the lobbying issue very well. We want to be sure to
present ourselves as we are, not as we think they'd like us to be.
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dpc
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response 24 of 54:
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May 9 01:59 UTC 1998 |
My point is that we do *not* "influence legislation" as that term
is understood by the IRS. Also, I'm hardly thrilled at the idea
that we declare as a 501(h)[?] group. The magic category for
donations, etc., is 501(c)(3). Period.
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