response 1 of 138:

Jul 2 01:59 UTC 1997

We are required to include copies of our articles of incorporation and bylaws
with the application.  I think our bylaws are fine.  They say things like
"The Corporation is organized for such charitable and educational purposes
as may qualify it for exemption from the federal income tax under Section
501(c)3 of the Internal Revenue Code of 1986 [...].  More specifically, such
purposes include, but are not limited to, the advancement of public education
and scientific endeavor through interaction with computers, and humans via
computers, using computer conferencing. Further purposes include the exchange
of scientific and technical information about the various aspects of computer
science, such as operating systems, computer networks, and computer
programming."

That's a little weird, but the explicit statement that Grex is limited to
doing things allowed under 501(c)3 law is what the IRS wants to see in our
articles of incorporation.  (By the way, if there are still people who thing
Grex shouldn't be 501(c)3 around, article 6, section 3 of our articles of
incorporation already binds us to obey the 501(c)3 rules and has since Grex's
founding).

I'm less satisfied with the bylaws.  The PREAMBLE says:

  It is the objective of this organization to provided an
  open-access computer conferencing system for the education,
  intellectual enrichment, and entertainment of its users through
  the peaceable interchange of information and ideas.  To this end,
  we establish these bylaws for the governance of the
  organization.

I'd prefer to see at least a nod to Grex's charitable mission in that. 
Somethign about provide free or low-cost services.  Luckily, bylaws are easily
changed.

response 3 of 138:

Jul 2 02:53 UTC 1997

Couple notes.  I think that we should consider doing a pass through Grex's
bylaws to make various changes that will have no particular effect on how Grex
is run.  I've heard lots of people complain about wording, and I think the
statement of purpose could more completely reflect our goals.  It would be
nice to be able to bundle up a lot of these cosmetic and hopefully
non-controversial changes and pass them in one vote.  I don't think this is
necessary for the 501(c)3 project, but it would be nice.

Also, I am under the impression that various other organizations had offered
or even given Grex copies of their 501(c)3 applications for us to use as a
partial template.  I, however, haven't seen any, and I would kind of like to.
If anyone knows where we can get something along those lines, I would find
it helpful.

response 5 of 138:

Jul 2 03:23 UTC 1997

Here is a first draft of a narrative describing our activities.  I think it
still needs a lot of work, including being more explicit about hitting the
points they asked for in the question above.  I need to be clearer about
planned activities, if only by saying we plan to stay on much the same course.
I think the organization can be tightened up a bit too.

My goal is to give a fairly complete description of what we do.  I don't want
to try to hide things like the largely social nature of much of what goes on
here, because I want to get into the situation M-Net found itself in where
lots of people were trying to bend Arbornet to fit their reading of it's
501(c)3 status.  I want to get approval for Grex as it is, and as we want it
to be, warts and all.

Which is not to say I won't try to put the best possible light on everything.
I honestly think that warts and all, Grex is very well qualified for 501(c)3
status.  This is an amazingly good organization from a public service stand
point.

OK, here's my draft:

=============================================================================

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."  This computer system is currently housed in a rented room at
416 West Huron 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 15,000
registered users.  Grex provides a wide range of services to the community
that further the mission of Cyberspace Communications:

(1) We maintain a bank of dial-in modem lines in Ann Arbor (at 313-761-3000)
    and an Internet connection (at grex.cyberspace.org).
   
    This allows 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).  "Obsolete" computers and
    modems readily available for less than $45 are more than adequate to use
    all of Grex's dial-in 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 an 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 the 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 common 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
                                                                  
(5) Grex provides a range of basic Internet services, allowing all users to
    send and receive E-mail, surf the web, post their own web pages, and
    retrieve files off the Internet.  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) As a volunteer operation, Cyberspace Communication constantly works to
    recruit and train new people to help run Grex.  For several people,
    experience 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.

Other activities of Cyberspace Communications include:

 * Publicizing the services offered through Grex.  Since Grex is well-
   established and well-known and already badly overburdened with users,
   this activity currently accounts for under 2% of our time.  We increase
   our publicity whenever we expand our resources.

 * Repair and distribution of used computers to people who need them to
   access Grex and lack the money or expertise to obtain them.  There has
   been little demand for this to date, so this activity has accounted for
   less than 2% of our time.

 * 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 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.
============================================================================
This is possibly over-long, but I don't know what the normal length is.
There is a large blank on the page, but it is pretty clear that they don't,
in general, expect all the answers to fit in the blanks.  I probably want to
do some compatification of this document, if only to improve its readability.

response 7 of 138:

Jul 2 03:39 UTC 1997

Next moderately interesting question is:

   (8)  What assests 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
        operational, explain their status, what additional steps remain
        to be completed, and when such steps will be taken.

I don't really believe they want a detailed list of every bit of broken
computer hardware we own.  I think they just want to get a feeling that
the organization actually exists and has the wherewithal to actually pursue
activities it claims to pursue.  I'll probably list something like:

   Sun 4/260 - Main Grex computer - operational
   486 PC - Grex router - operational
   Sun 4/670 - Future replacement Grex computer -
      currently being set up to replace the Sun 4/260
   Many Modems - operational
   Many spare computer parts, office furnature, etc.

response 9 of 138:

Jul 2 04:38 UTC 1997

 (13)  Does or will the organization attempt to influence legislation?
       If "Yes" explain.  Also, give an extimate of the percentage of the
       organization's time and funds that it devotes to this activity.

This is a tricky one.  From the instructions:

  An organization is attemtping to influence legislation if it contacts or
  urges the public to contact members of a legislative body, for the
  purpose of proposing, supporting, or opposing legislation, or if it
  advocates the adoption or rejection of legislation.

  If you answer "Yes", you may want to file Form 5768, Election/Revocation
  of Election by an Eligiable Section 501(c)3 Organization To Make
  Expenditures To Influence Legislation.

I want to answer "yes" to this one, just to keep the door open for Grex to
do things like black out its web page in protest of the CDA and even issue
statements opposing such legislation.  This isn't really a primary purpose
of Grex though.  People wanting to do such things are probably better advised
to use organizations like the EFF or ACLU as their vehicle.  Still we should
leave Grex some leeway on this.

Political activity is kind of a sensitive area of tax-exempt organizations.
From the IRS's publication 557 ("Tax Exempt Status for Your Organization"):

   POLITICAL ACTIVITY.  If any of the activities (whether or not substantial)
   of your organization consist of participating in or intervening in, any
   political campaign on behalf of (or in opposition to) any candidate for
   public office, your organization will not qualify for tax-exempt status
   under section 501(c)(3).  Such participation or intervention includes
   the publication or distribution of statements.
    Whether your organization is participating or intervening, directly
   or indirectly in any political campaign on behalf of (or in opposition
   to) any candidate for public office depends on all of the facts and
   circumstances of each case.  Certain voter education activities or
   public forums conducted in a non-partisan may not constitute political
   activity under section 501(c)(3); while other so-called voter education
   activities may constitute prohibited activity.  If your organization is
   uncertain as to the effect of its voter education activities, you should
   request a ruling from the Internal Revenue Service[...].

My reading is that this doesn't prevent us from opposing things like the CDA,
or having people argue about who they want for president on-line, but it would
prevent Cyberspace Communications from endorsing particular candidates.  I
think this is fine with us.  My plan is to check this box "yes" and say that
Cyberspace Communications sometimes takes official public stances on issues
directly relevant to our mission, such as those relating to privacy and
censorship on the internet.  I'd give our blacking out our web page in protest
of the CDA as an example, and say that this activity is less than 1% of our
total activity.

Next question is:

 (14) Does or will the organization intervene in any way in political
      campaigns, including the publication or distribution of statements?

I'd give a flat "no" on this one.  Not only do I think saying yes would
endanger our 501(c)3 application, I really think it would be an inappropriate
thing for Cyberspace Communications to do under any circumstances.

response 11 of 138:

Jul 2 05:05 UTC 1997

Part IV is financial data.  We are required to report financial data for the
current year, and the three preceding years.  Stuff we need includes:
  Gifts, grants, and contributions received.
  Membership fees received.
  Gross investment income
  Net income from organization's unrelated business activities not included
    in gross investment income
  Tax revenues levied for and either paid to or spent on behalf of the
    organization
  Value of services or facilities furnished by a government unit to the
    organization without charge (not including value of services or
    facilities generally furnished the public without charge)
  Other income (not including gain or loss from sale of capital assents)
  Total of the above
  Gross receipts from admissions, sales of merchandise or services, or
   furnishing of facilities in any activity that is not an unrelated
   business within the meaning of section 513.
  Total
  Gain or loss from sale of capital assets
  Unusual grants
  Total Revenue

  Fundraising Expenses
  Contributions, gifts, grants, and similar amounts paid.
  Disbursements to or for benefit of members
  Compensation of officers, directors or trustees.
  Other Salaries or wages
  Interest
  Occupancy (rent, utilities, etc)
  Depreciation and depletion
  Other
  Total Expenses

  Excess of revenue over expenses.

They also want a current balance sheet, showing
  ASSETS:
   Cash
   Accounts receivable, net
   Inventories
   Bonds and notes receivable
   Corporate stocks
   Mortgage loans
   Depreciable and depletable assets
   Land
   Other assets
  LIABILITIES:
   Accounts payable
   Contributions, gifts, grants, etc, payable
   Mortgages and notes payable
   Other liabilities

Looks like fun, eh?  Luckily we have an awful lot of zeros in an awful lot
of those boxes.

response 13 of 138:

Jul 2 12:22 UTC 1997

Jan, is it true that "all users" can "surf the web" from Grex?

I applaud Jan for all the work his is adopting when taking
on this project.  Also, I agree 100% that what we say in
our application has to match what we are not what the IRS
would like to hear.  There is going to be a strong temptation
to bend things a bit to get it by.  I hope we can avoid
doing so.

response 17 of 138:

Jul 3 04:54 UTC 1997

HVCN should be able to get you a copy of it's (successful) application. 
I have to remember to bug Arnold to get this for you.

response 19 of 138:

Jul 4 18:33 UTC 1997

Answer "yes" to (13), and file 5758. This regularizes the procedures. You
cannot *avoid* doing things that might influence legislation, so you best
adopt the formal procedures under 5768 (I have just recently gotten
another organization to elect 5768). 

I have the HVCN material that Arnold provided, and will pack it up to send
to Jan. Nothing seemed to be happening on this for a long time, so it was
easy to procrastinate. 

By the way, the IRS has just issued new final rules on "perks". Dues to a
501(c)3 organization are tax deductible, but now all membership benefits
"that can be exercised frequently during the membership period" do not
have to be disclosed, if the dues are less than $75. This neatly covers
the telnet "perk". The details are, of course, long and complicated, but
the result is that there is no longer any argument over such frequenhtly
exercised "perks" being allowed or disallowed. (Examples given in the
regulations are such things as discounts on goods or services and parking
fee reductions, for members.)

response 21 of 138:

Jul 4 19:41 UTC 1997

I'll have to figure out what 5768 is.  I certainly agree with saying "yes"
to (13).

I look forward to receiving the HVCN material. You can mail it to me at 406
West Liberty, Ann Arbor, MI 48103, or get it to us some other way.

response 23 of 138:

Jul 6 23:46 UTC 1997

Wow, that's a lot of work, Jan.  Thanks for doing it.  Here are a few things:

#5:  In (3) "an necessary component" should be "a necessary component".
You need a perion at the end of (4).

#6:  I do occasionally approach individual users and ask them if they'd
consider becoming members of Grex.  Don't know if that counts as
fundraising efforts of Cyberspace Communications or not.

#7:  How about replacing "many modems" with "15 modems" (or whatever
the correct number is).

I guess I need to organize the financial records for the last 3 years.