

What Does it Really Mean to be Non-Profit? - robhawkes
http://ghost.onolan.org/what-it-means-to-be-non-profit/

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philipn
I suspect the author doesn't live in the US, as a few of his points don't
apply to US non-profit law.

In particular:

"A charity (except in special circumstances) cannot pay a salary to anyone.
Typically everyone who works for a charity is a volunteer."

In the US, when people talk about non-profits they're usually talking about
organizations with the 501(c)3 tax status
([http://en.wikipedia.org/wiki/501%28c%29_organization#501.28c...](http://en.wikipedia.org/wiki/501%28c%29_organization#501.28c.29.283.29)).
Those organizations are further classified as either public charities or
private foundations -- the former being what people typically mean by "non-
profit."

US non-profits almost always pay some people for some of their work. There are
restrictions on salary, insofar as you have to explain that salaries are
justified to the IRS (this really only applies if the salary is beyond normal
market rate).

"A charity must disclose all of its financials publicly, in great detail, and
be audited by several government bodies. "

The same is true in the US, though non-profits do not have an audit
requirement here. Large non-profits typically hire a CPA to do an audit each
year, though, as multi-million foundation grant-givers often require it.

"A charity may only do things which have charitable purpose for public
benefit, and nothing else."

This isn't strictly true in the US. A charity can engage in unrelated
business, but it's taxed on it and it can't account for a substantial amount
of revenue. For instance, most Museums have gift shop, and selling stuffed
animals isn't usually their charitable purpose, so the organization will
typically pay tax on that revenue.

"A charity receives large amounts of tax-relief from the government for
conforming to these rules."

True in the US -- non-profits don't pay income tax and donations are tax-
deductible.

~~~
robhawkes
Good clarification, I'm sure the author will see this. And your suspicion is
correct, he lives in Europe.

~~~
dagw
I wonder where in Europe he lives, since paying a salary to employees at
charities is quite common in most countries I can think of.

~~~
johnonolan
Ghost is based in the UK - where Charities can pay some people but, most
notably, not the trustees who run it. Apologies for not making that clearer!

------
bpierre
Despite the communication around the project [1], Ghost is still waiting to be
open sourced: [https://github.com/tryghost](https://github.com/tryghost)

[1] “Six months ago Ghost was barely an idea, today it's a thing. A living,
breathing, evolving thing. And it's public.”
[http://blog.tryghost.org/](http://blog.tryghost.org/)

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davidjgraph
I always smile when I hear "non-profit". Last year a US non-profit that dealt
with military research was looking to buy from us and asked for a discount
because they were a non-profit.

I looked on their website and their annual revenues were in the ballpark of
x1000 that of ours. Maybe it's a European view, but I find the idea of a
defence non-profit bizarre and the idea we should discount for them on this
basis even more so.

By being a non-profit, the main beneficiary is their customers (the DoD I'm
guessing) because the pricing doesn't need the usual margin of profit. I'd
just be reducing the cost for them, since costs are ultimately just passed on.

My point is, this a boundary case of stretching the ethics of "non-profit" way
too far. Yes, non-profit is great for open source, but I would be concerned
about using it as a vehicle when large companies are the ones benefiting
(which isn't the case with Ghost).

~~~
danielweber
They are exploiting a hack -- namely, that there are lots of stupid people out
there who think that "non-profit" somehow means "good."

When revenues exceed expenses, non-profits still distribute them. They just
distribute them to employees, meaning management, meaning themselves. It's
like a tightly-held for-profit company.

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thu
So, in the case of Ghost being non-profit, this is just some kind of statement
about how dedicated they are. Because I don't see what this brings to the
open-source project itself (for instance, anybody can fork it and do whatever
they want; the fact the original author is non-profit does not change
anything).

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qznc
"neither of us can pay ourselves enormous tax-free dividends"

Are dividends tax-free in the UK? They are income for the recipient, so income
tax applies in Germany.

