[Fsfe-ie] Organising IFSO

Glenn Strong Glenn.Strong at cs.tcd.ie
Sun Nov 2 14:26:11 CET 2003

Hi everyone,

I have been looking into a couple of things we want to do to move IFSO
forward as a formal entity. There are two main areas: forming an
official IFSO, and registering the ifso.ie domain. 

Two apologies and a disclaimer: (i) it took me a while to get this
mail out, but I wanted to explore all the options before writing it
up. (ii) This mail is quite lengthy (see excuse for (i)). I've put the
stuff in order of relevance - you can probably stop after the first
section. Though it should go without saying, I'll remind everyone that
I am - thankfully for everyone, not least the legal profession - not a

Moving on:

Creating IFSO formally.

  There are three ways we can go about forming an official IFSO:
  (i) As a club or association
 (ii) As an unincorporated body (most likely a partnership)
(iii) As some form of limited company

  At the moment the first of those seems to me to be the most
  appropriate form to move IFSO forward right now. The other two
  involve setting up a company as the legal embodiment of IFSO, which
  causes more red tape. There is of course no obstacle to forming a
  company later on if it would be advantageous.

  There are two reasons not to take options (ii) and (iii) right now -
  they require more expense (considerably more in the case of (iii),
  possibly up to 3 or 4 hundred Euro), and there is more law dictating
  how the organisation should be run.

  The advantages to (ii) and (iii) are that it would give IFSO more
  flexibility to hire staff, run premises and other typically
  businessy things - none of which seem to be immediate requirements
  of the business of IFSO. Should they become issues at some point
  then I think it would be appropriate to create a company to manage
  them, but probably not until then. Since clubs cannot own property
  it is necessary to have Trustees hold all property on the clubs behalf.

  It seems to me that a club arrangement could run the operations of
  IFSO for the next year or two at least, if things keep up the way
  they are now, and the paperwork is basically trivial.

  The steps to form a club are as follows:
  1 Prepare and circulate a draft set of rules.
  2 Have an inaugural meeting
  3 Appoint committee. Chairman, secretary, treasurer
    and say four or five others.
  4 Task the committee with drafting a set of rules
    which can be submitted to an EGM. Better if the
    inaugural meeting has a draft set of rules, which it
    can adopt (see point 1)!
  5 If the meeting agrees a set of rules they can go on
    to pass the resolution the bank require to have an
    account opened.

  Since the next IFSO meeting is planned for November 13th we could do
  all this on that day. That would allow us to make an official launch
  of some sort in January (nice timing for the 20 years of the GNU
  Project anniversary).

  I have a boilerplate set of club rules, which I have customised for
  IFSO - I'll circulate them on the list as a separate mail. These are
  not that different to the rules of a company so we probably want to
  thrash them out anyway. No doubt there will be changes required,
  which can be suggested on the list. If everyone is agreeable then
  when we meet on the 13th we can appoint the personnel required and
  agree the rules with any final amendments (this should be done by
  voting, I think).

  There is then a little paperwork to open a bank account (usually in
  the joint names of, say, the Chairman and the Treasurer who would
  have to co-sign cheques). Again, this can be done on the 13th - I
  can bring the forms and signature sample sheets required. Part of
  the significance of opening a bank account is that is generates
  paperwork that is acceptable to most of the Irish domain
  registrars. So here's some notes about that:
Registering domains in Ireland.
  The rules seem straightforward enough. In order to register ifso.ie
  we will need to show entitlement to the name. If we are setting up a
  legal body of some sort anyway (even a club) then it seems that will
  do the trick. We complete the paperwork at a one of the domain
  resellers and provide them with the proof they require (a bank
  statement or letter from the bank seems to be sufficient for most of
  them). I seem to recall someone from blacknightsolutions (Michele
  Neylon - are you still around?) on the list offering to help out
  with this.

  Most of the organisations that resell registration will also sell
  hosting, and do the lot as a package. Selecting one of the resellers
  not entirely at random: blacknightsolutions.ie will register for E55
  per annum (E45 if they get to do the hosting - their cheapest is
  E80pa, I think). No doubt many people on the list can direct us as
  to the best way to do this.

Addendum on charitable status.

  There was a little discussion about this at previous IFSO meetings,
  so I looked into it. Here is my take on the situation:

  Charitable status is desirable so that donations will be
  tax-deductible. Charitable status is basically driven by the revenue
  commissioners in Ireland, who issue a certificate of tax
  exemption. In order to qualify the organisation has to have a set of
  rules that restrict it's activities to those things that are
  considered "charitable" in common law. The revenue commissioners
  apparently use their judgement in interpreting whether any given set
  of rules qualify. The areas charities may operate in are: (i) Relief
  of Poverty, (ii) Advancement of Education, (iii) Advancement of
  Religion and (iv) Other purposes beneficial to the community. The
  rules of the organisation must restrict it's operation to these areas.

  Area (iv) appears to be the catch-all that might cover ifso (though
  you may be able to argue (ii)). The wording of a constitution for
  ifso would be important for this.

  One problem with IFSO gaining charitable status is that there are
  severe restrictions in Ireland on charities engaging in political
  activity. This would apparently be a particular problem if we wanted
  to obtain government funding of any sort.

  The Commissioners of Charitable Donations and Bequests[1] can help
  with the legal apparatus of setting up a charity (including the
  necessary paperwork to become incorporated).

Addendum on companies.

  In case anybody is /really/ unhappy with the idea of a club, here is
  some information on forming companies. It's written from the point
  of view of setting up an IFSO-like organisation. Since it
  (presumably) won't be a profit making enterprise trying to raise
  money this isn't too hard (no need for a business plan!). You just
  wander down to Companies House[2] and do some paperwork. Costs on
  the order of E60 + incidentals (we would probably want a registered
  business name which is another E30 or so, for instance).

  There are two basic forms of company that we can create:
  Incorporated and Unincorporated. 

  As I understand it most charities in Ireland begin as an
  unincorporated association (basically, a sole trader or a
  partnership). Legally it looks like a very easy thing to set up,
  requiring only basic information (memorandum and articles of
  association and some forms). This is the sort of legal entity
  created by most large clubs, for instance. This kind of company can
  avoid huge ribbons of red tape. To create a partnership we would
  register 2-20 partners with the companies registration office[2] and
  cough up about E60 (no doubt there are several other charges that
  would come to light) to get the paperwork processed (then probably
  another E30 or so to get a registered business name).

  Such a body is very limited. It cannot own anything, for instance,
  so trustees have to be nominated to hold property on it's behalf
  (for instance, a domain) - the trustees are usually not the
  committee, I believe. The committee are all personally liable for
  debts and so on that the association incurs.

  Then there's Corporate bodies. Most charities graduate after a while
  to being companies, limited by guarantee. Setting these up is a
  little more work since they have to be run according to a corporate
  model, requiring formalised membership lists, voting requirements,
  meetings, a management and accounting structure, etc. It is possible
  to convert an unincorporated association into a corporate one (in
  fact, it's a standard thing as companies grow). This doesn't have to
  be overly cumbersome (preparing the yearly accounts would probably
  be the biggest job) but it is more work and more expense. The
  primary advantages are that the principals are no longer personally
  liable for the debts of the organisation, and the corporation can
  own property (so trustees are not required). Charities and clubs
  move to this model as their operation grows and it becomes
  cumbersome (or financially risky) for then to remain unincorporated.

  If anybody wants to discuss the wisdom of forming a company to run
  IFSO I have plenty more information on the subject that I can contribute.
[1] http://www.pobail.ie/en/CommunityandVoluntary/CharitableDonationsandBequestsforIreland/
[2] http://www.cro.ie/

Glenn Strong

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