Re: economic efficiency of free software

On Sat, Feb 07, 2004 at 07:37:54PM +0900, Stephen J. Turnbull wrote:
> >>>>> "Forrest" == Forrest J Cavalier, <Forrest> writes:
> 
>     Forrest> How could the entity running this be non-profit?
> 
> The point of non-profit status is so that you don't pay tax when you
> have a temporary surplus of revenue over expenditure---all non-profits
> that aren't in big trouble are going to behave like that (ie, running
> surpluses much of the time).
> 
> Anyway, the money it takes in is not going to be "income".  It has
> taken custody of someone else's assets, not received income from them.
> 
>     Forrest>   Taking in money and holding on to it with payouts in
>     Forrest> the indefinite future is going to trip over some banking
>     Forrest> laws I think.
> 
> I don't think so.  A bank is in the business of taking in money, and
> _using it for its own purposes_ (such as lending to businesses or
> homeowners), on the strength of a promise to pay back under certain
> conditions (which might be "on demand") plus interest.
> 
> This is more like an advance on expenses, like a lawyer's retainer.
> 
> The tax and banking implications for internal transfers are a bigger
> deal.  Yes, I think that a transfer to a member would have to be
> considered reportable income.  Also, internal transfers means you're
> implementing a payments scheme.  I don't know whather that would cause
> you to fall under banking laws (does PayPal?  VISA?  I dunno offhand).
> 
> IANAL, but that gives you some idea of what I think you should worry
> about first.  :-)

I just want to toss in a little more fuel.
  1. Indirect barter is common for businesses. That is essentially
     like a bank with no usary fees and no interest. Couldn't such
     a aystem be used to make loans to developers? The effect is that
     the debt (and the possible cost of a default) is shared by all the
     members.
  2. Are banking laws a problem or is it just U.S. banking laws?
-- 
Phil Hughes, [email protected]  Phone/FAX: 506-483-1265 
Aptdo. 89-4060, Alajuela, Costa Rica