The committee talked about the need to incorporate and came to
the immediate and unanimous recommendation in favor.  This
was after a short discussion on two main issues:

1. Liability - as it stands, the board members are open to
liability of any code that comes out of the FFW even if they
are not the authors of that code.

2. Business continuance - one of the traditional reasons to
incorporate is to ensure that the business survives even if
the owners do not.

One of the main decisions after incorporation would be whether
to seek tax exemption as a non-profit.  We spent some time
and did research off of three main sites:

1. www.nolo.com - site with self-help legal information
2. www.ncnb.org - a site dedicated to non-profit boards
3. www.irs.gov/bus_info/eo/ - the IRS site for non-profit regulations


We learned that the implication of being a non-profit is that
any money the company earns cannot be taken out.  Non-profit
does not mean we cannot have revenue, it just means that
the revenue and only be spent on expenses.  Bylaws might
be written so that there are no shareholders or owners,
only the board.  If there are shareholders or members,
the IRS rules specifically say that the shareholders
may not receive any of the organization's assets.  It
doesn't mean you cannot pay them expenses, but bylaws
need to be written to prevent conflict of interest in
that area.  The NCNB site had a booklet on writing bylaws
for non-profits which I have.

After writing bylaws compatible with a non-profit you then
file with both the IRS and with your state for an exemption
based on one of the tax code sections.  The process is said
to take about 6 months to get the exemption.  Possible
exemptions could be "charitable" which describes scientific
and educational organizations.  Another possibility is
as a "trade organization" which says "it must be shown
that the conditions of a particular trade or the interests
of the community will be advanced".  It does however say
that we may not engage in an activity ordinarily done
for profit.  That may mean the board cannot be coders.

Dave suggested looking at the Netscape transition to open source which revealed
they went non-profit and sought exemption based on "charitable
organization".  Their mandate is one of being a "clearing
house" for the code where they mediate disputes and give
direction to the Mozilla code.  It appears the mandate is
written that way because the charitable section of the IRS
code says the organization should not be "for the benefit
of private interests, such as the creator, shareholders of
the organization, other designated individuals, or persons
controlled directly or indirectly by such private interests".
I would be concerned that it might appear our board is
there to create software for ourselves, instead of for
the community.  (and a reason why we may not be able to
use the "trade organization" exemption")  We would have
to write by laws to that effect.

Another requirement found on the IRS site is that a yearly
audit has to be done to keep the exemption.  That means
certified statements of the books.

Non-profit would alleviate the filing of sales tax
forms, but if there were any employees payroll withholdings
would still need to be filed.  Going non-profit would
require more expense for accountants because of the audit
and would have more scrutiny by the government.  This seems
like more than the purposes of a small start up project
would require.  In particular Dave suggested that New Hampshire
does not have sales tax anyway, and might be a good state
for incorporation.

If the project does grow however, non-profit would allow
for tax-deductible donations, would give a positive idea
about the community basis for the organization, and
would alleviate some tax filings.  The committee recommends
the following:

Create by-laws that would be in keeping with a non-profit,
but do not file for the exemption at this time.  Filing
for the exemption can always be done later when there
are more benefits, and revenue to support auditing requirements.
In the mean time, pick a state without sales tax to simplify
the corporate filings.