There is a strong case to be made for formal organization of local
LUGs. I will not make that case here. If, however, you are interested
in formally organizing your local LUG, then this section will
introduce you to some of the relevant issues.
Note: this section should not be construed as competent legal
counsel. These issues require the expertise of competent legal
counsel; you should, before acting on any of the statements made in
this section, consult an attorney.
There are at least two different legal statuses that a local LUG in
the United States may attain:
incorporation as a non-profit entity
Although the relevant statutes differ from state to state, most states
allow user groups to incorporate as non-profit entitites. The benefits
of incorporation for a local LUG may include limitations of liability
of LUG members and volunteers, as well as limitation or even exemption
from state corporate franchise taxes.
While you should consult competent legal counsel before incorporating
your LUG as a non-profit entity, you can probably reduce your legal
fees if you are acquainted with the relevant issues before consulting
with an attorney. I recommend the Non-Lawyers Non-Profit
Corporation Kit (ISBN 0-937434-35-3).
As for the second status, tax-exemption, this is not a legal status so
much as a judgment by the Internal Revenue Service. It is important
for you to know that incorporation as a non-profit entity does
not insure that the IRS will rule that your LUG is to be
tax-exempt. It is possible to have a non-profit corporation that is
not also tax-exempt.
The IRS has a relatively simple document that explains the criteria
and process for tax-exemption. It is Publication 557:Tax-Exempt Status for Your Organization. It is available as
an Adobe Acrobat file from the IRS's Web site. I strongly recommend
that you read this document before filing for incorporation
as a non-profit entity. While becoming a non-profit corporation cannot
insure that your LUG will be declared tax-exempt by the IRS, there are
ways to incorporate that will prevent the IRS from declaring
your LUG to be tax-exempt. Tax-Exempt Status for Your
Organization clearly sets out the necessary conditions for your
LUG to be declared tax-exempt.
Finally, there are resources available on the Internet for non-profit
and tax-exempt organizations. Some of the material is probably
relevant to your local LUG.
for the following comments about the Canadian situation.
The Canadian tax environment strongly parallels the US environment, in
that the ``charitable organization'' status confers similar tax
advantages for donors over mere ``not for profit'' status, while
requiring that similar sorts of added paperwork be filed by the
``charity'' with the tax authorities in order to attain and maintain
certified charity status.
Chris Browne has the
following to say about the kinds of inter-LUG political dynamics that
often crop up.
People have different feelings about free software.
Linux users are a diverse bunch. As soon as you try to put a lot of
them together, there are some problem issues that can come
up.There are those that are nearly political radicals that believe
that all software, always, should be ``free.'' Because Caldera charges
quite a lot of money for their distribution, and doesn't give all
profits over to (pick favorite advocacy organization), they
must be ``evil.'' Ditto for Red Hat or S.u.S.E. Keep in mind that all
three of these companies have made and continue to make significant
contributions to free software.
Others may figure that they can find some way to highly exploit the
``freeness'' of the Linux platform for their fun and profit. Be aware
that many users of the BSD UNIX variants consider that their licenses that do permit companies to build
``privatized'' custom versions of their OSes are preferable to the
``enforced permanent freeness'' of the GPL as applied to Linux. Do not
presume that all people promoting this sort of view are necessarily
If these people are put together in one place, disagreements can
Leaders should be clear on the following facts:
There are a lot of opinions about the GPL and how it is supposed
to work. It is easy to misunderstand both the GPL and alternative
Linux benefits from contributions from many places, and can
support some freeloaders, particularly if this encourages more
people to get involved, thus pulling in further contributors.
Many significant contributions have been made to Linux by
commercial enterprises. Examining the sources to the Linux kernel,
and notable subsystems such as XFree86 and GCC show a surprising
number of commercial contributors.
Commercial does not always imply ``better,'' but it also does not
always imply ``horrible.''
The main principle can be extended well beyond this; computer ``holy
wars'' have long been waged over the virtues of one system over
another, whether that be (in modern day) between Linux, other UNIX
variants, and Microsoft OSes, or between the ``IBM PC'' and the various
Motorola 68000-based systems, or between the many 8 bit systems of the
1970s. Or of KDE versus GNOME.
A wise LUG leader will seek to smooth over such differences, rather
than inciting them. LUG leaders must have thick skins.
There will be disagreements at some point as diverse
views collide with one another, and leaders must be able to cope with
this, resolving disagreements rather than contributing to the problem.
Nonprofit organizations and money don't mix terribly well.
It is important to be quite careful in dealing with finances in a
nonprofit organization of any sort. In businesses, where profitable
flows of monies are the goal, people are not typically too worried
about ``nagging details'' such as possible misspending of immaterial
sums of money.
The same cannot be said about nonprofit organizations. Some people
are involved for reasons of principle, and can easily give minor
problems inordinate attention. And the potential for wide
participation at business meetings correspondingly expands the
potential for inordinate attention to be drawn to things.
As a result, it is probably preferable for there to not be
a membership fee for a LUG, as that provides a specific thing for
which people can reasonably demand accountability. Fees that are not
collected cannot, by virtue of the fact that they don't exist, be
If there is a lot of money and/or other such resources
floating around, it is important for the user group to be accountable
to its members for it.
In a vital, growing group, there should be more than one person
involved. In troubled nonprofit organizations, financial information
is often tightly held by someone who will not willingly relinquish
control of funds. Ideally, there should be some rotation of
duties in a LUG including that of control of the finances.
Regular useful financial reports should be made available to those
that wish them. A LUG that maintains an official ``charitable status''
for tax purposes will have to file at least annual financial reports
with the local tax authorities, which would represent a minimum
financial disclosure for the purposes of the members.
With the growth of Linux-based financial software, it should be
readily possible to create reports on a regular basis. With the
growth of the Internet, it should even be possible to publish these on
the World Wide Web.