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Dalia Topelson Ritvo, Kira Hessekiel & Christopher Bavitz, Challenges & Opportunities Concerning Corporate Formation, Nonprofit Status, & Governance for Open Source Projects (Berkman Klein Ctr. Research Publ’n No. 2017-3, Mar. 2017).


Abstract: This report addresses a number of key considerations that those managing open source software development initiatives should take into account when thinking about structure, organization, and governance. The genesis of this project involved an investigation into anecdotal reports that companies and other institutions developing open source software were facing difficulties obtaining tax exempt nonprofit status under Section 501(c)(3) of Title 26 of the United States Code. Based on conversations with a number of constituents in the open source software development community, the authors have prepared this report to address specific questions about nonprofit status alongside questions about corporate formation and governance models more generally. Nothing in this report should be viewed as a substitute for specific legal advice on the narrow questions facing particular organizations under particular sets of factual circumstances. But, the authors are hopeful the document provides a general overview of the complex issues that open source initiatives face when balancing a need for structure and continuity with the innovative and experimental spirit at the heart of many open source development projects. The report has two primary parts: • First, it addresses some formal organizational considerations that open source software initiatives should weigh, evaluating the benefits of taking on a formal structure and the options for doing so. The report provides information about different types of corporate organization that open source projects may wish to consider. And, it delves into Internal Revenue Service policy and practice and US tax law concerning questions about the tax exemptions referenced above. • In its second half, the authors pull back to consider more broadly questions of organizational structure, offering ideas about governance models that open source organizations may wish to explore, separate from formal corporate structure, as they seek to achieve their missions. Different considerations may inform the choice of formal, legal organizational structures (on the one hand) and governance models (on the other hand). By addressing both, the authors hope that this report will be useful to the broadest possible range of managers of and contributors to open source development initiatives.