Organization Proposal

Overview

In early 2024, XSF Board member Nicola Fabiano proposed that we consider strengthening the XSF's presence in Europe. This could take several forms:

• Move the XSF entirely to Europe
  • emus: Sorry, did we decide this? I would argue to keep both. The more location we have, the more access and representation we have. I believe this is very important. Going back is way harder, that try to do the efforts to keep it. Many big companies are based in US. It also has positive representation to non-US instances if we have one there, too.
• Create a subsidiary in Europe
• Make no organizational changes (this is always an option!)
  • But should we?

These options are explained in more detail below.

Rationale

The basic idea is that:

1. most of the XSF's activities (e.g., FOSDEM, Summit, sprints) take place in Europe, and most developers in the XMPP community are located in Europe.
2. Furthermore, it might be easier to obtain grants from European organizations if the XSF had a stronger European presence.
3. Finally, we might be able to have more influence over European policy (e.g., DMA and the EU Chat Control proposals) if our organization were domiciled in Europe.

Options

Move

In order to move the XSF from the U.S. to a European country, we would probably need to form a separate organization in Europe and then shut down the XSF.

- emus: Where are the arguments to move it? I think there is value to keep both.

Subsidiary

Creating a subsidiary might be more complicated in the end, because we would need people on both continents to manage official matters such as banking, taxes, accounting, legal, and various government interactions. It's unclear if the benefits outweigh the costs.

Do Nothing

Perhaps we can be more actively involved with European initiatives (e.g., EU policy-making) without actually moving the XSF or creating a subsidiary or "local office". This should be explored, too.

Factors to Consider

Here are some things we should think about...

Personnel

• Who will do the work in Europe?

 * emus offers help. I would like to create a team around this.
 * Who could help to keep it up in US?

• Who cannot do the work (e.g., can only citizens of the domicile country be board members)?
• What about succession planning?

Assets

This might include:

• The membership roster
• The foundation's name
• Copyright in XEPs
• Domain name(s)
• Money in the bank
• Anything else that can be considered valuable

The U.S. Internal Revenue Service might not like it if these assets are transferred directly from a U.S. organization to a non-U.S. organization. It's possible that there are ways to avoid any problems, for example by granting or selling assets to the new organization.

Open Issues

Questions on rationale

The page currently defines three rationales. Before investing resources into a move, it would be good to have a high degree of certainty around any benefits of the move.

The first (most activities & people being in Europe) does not define relevance: what problem is solved by moving the organisation physically closer? Does that mean that a move will introduce similar problems for those that are in the US, while we're not fixing these issues for those that are neither in the US or EU?

The second ("it might be easier to obtain grants") and third ("we might be able to have more influence over European policy") are worded very cautiously (the word 'might' is used). Are we at all certain about this? Are there examples of grants or obstacles to assert influence that we're currently experiencing? As a counter-example: EU funding (through Next Generation Internet / NLnet) has already found its way to a significant amount (about 20, at the time of writing) of XMPP-related projects.

• And what about US funding?

Informational talk with Eclipse Foundation employees

Notes from Peter

• Call with Mike Milinkovich, Executive Director of the Eclipse Foundation
• XSF people: Peter, Eddie, Nicola
• Eclipse has been a U.S. 501(c)(6) for 20+ years
  • note: (c)(6) like Eclipse is an association to benefit the industry by contrast, (c)(3) like XSF is a charity to benefit society
• original teams were in Ottawa and Zurich
  • Zurich people were very active in promoting the technology and building a community
• also had contractors in Europe and slowly became European without noticing it
  • 2019 completed a strategy analysis to "do more in Europe"
  • 2/3 of supporters and developers were in Europe
  • also realized that "Europe was going to need an open-source foundation" considered having a satellite non-profit in Europe
  • but that wasn't European enough - "faux European" and decided to legally move domicile to Europe
  • What legal form would we take in Europe?
• Belgian International Non-Profit Association (AISBL)
  • designed to be international
  • might need to have 5 people in Belgium to start
  • might require physical presence in Belgium
  • need to go through approval process first
  • this increases clarity
  • but the process is somewhat opaque
  • certain filings need to be done in French
  • no residency requirement for officers and directors
  • main version of bylaws need to be in French or Dutch
  • every other document (policies, minutes, etc.) can be in English
• Eclipse has a Regus office, just place to store physical documents if needed
  • under U.S. tax law you can declare a foreign entity
  • created Belgian non-profit
  • got determination letter from IRS that Belgian org is non-for-profit
  • then could transfer assets from the U.S. entity to the Belgian entity
  • U.S. non-profit still exists, but planning to shut down the U.S. entity and don't want to keep more than two not-for-profit organizations
  • this has been a big success for Eclipse and definitely increased growth, developers, funding, companies
  • however, you need to have two entities for a few years to complete the process
• realize that it's going to cost money to do this (lawyers, accountants, etc.) and make sure you have a budget
• this cost Eclipse over 100,000 euros (this does not apply for XSF we believe)
• perhaps get stakeholders to donate specifically for this project
• lawyers are expensive (to draft bylaws etc.)
• maybe find a similar organization and copy their bylaws as a starting point
  • craft a proposal and gain resolution of the board to do this
  • this demonstrates that it was an explicit decision
  • get advice from a U.S. lawyer re-shutting down the U.S. org
  • over-communicate with the community, what you're doing and why you're doing it

Notes from Eddie

• Background and situation at XSF ("Jabber people" since 2000 and longer)
• Original Eclipse project from Odowa (?) coming from an IBM start-up and continuing promotion and plug-in community
  • Under JMBH we hired people in Europe
  • Eclipse: How can we do more? "Europe needs an Open-source foundation"
  • Eclipse was already Europe's biggest Open-source organization
  • Eclipse was very much run from the EU
• (Info: Linux Foundation is managed from US)
• "C6" ~~ German "Verein"
  • https://www.irs.gov/charities-non-profits/other-non-profits/types-of-organizations-exempt-under-section-501c6
  • https://en.wikipedia.org/wiki/Registered_association_(Germany)
• "C3" ~~ German "Stiftung"
  • https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-501c3-organizations
  • https://en.wikipedia.org/wiki/Stiftung
• Slide deck "European NPO Entity"
• Belgium is a "neutral country", Germany is "German"
  • Belgium: Bylaws => French/Dutch, anything else can be English
• Eclipse in Germany --> non-profit gGmbH (6 weeks)
• Follow-up on the status the approval
• Corporate records only need to be accessible from Belgium, but not located.
• US: Request for determination letter
  • To transfer the assets of a US non-profit, you can only transfer to a US non-profit
• Expect that you cannot just move all stuff, and you will need likely for two years of overlap
• Two parallel: Each instance will have a legal instance of Board of Directors
• Canada is also a interesting and comparatively simple way of creating a non-profit organization
• Belgium organization cannot get German public funding
• Personal and corporate donations are legitimate
  • Germany: You can make money for only paying "yourself" and you can save very long for big purchases
  • No beneficial owners
  • You can even make profit and treat this part as specific revenue stream and pay taxes
• XSF will need legal counsel.
• Can we copy the bylaws of an existing organization?