Re: [Iasa20] Memo exploring options for IASA 2.0 models

[Ted Hardie <[e-mail]>]

So, I can personally read it either way, which is why I asked for
clarification; it sounds like that means getting the lawyers to specify.  I
note that the text on the "Disregarded Entity" option says this: "Can have
members that are not ISOC members, although for tax purposes their dues
will be revenue to ISOC and ISOC will need to substantiate their
contributions." which seems to contemplate a form of membership that the
IETF has never had (we have contributions and participants, not dues and
members).

On Wed, Feb 14, 2018 at 8:49 PM, Richard Barnes <[e-mail]> wrote:

> I actually have the opposite suspicion, members != participants.  For
> those not familiar with the terminology, "participants" in the IETF sense
> is basically "whoever joins a mailing list or comes to a meeting", or
> similarly "whoever is subject to the Note Well / relevant IPR RFCs"
> [0][1].  The IETF has very open participation.
>
> By contrast, given that this memo was written by lawyers, I expect that
> they meant "members" in the legal sense, who are the parties that legally
> control the entity (e.g., the shareholders in a for-profit corporation)
> [2][3].  So saying that "ISOC must be the sole member" just means that ISOC
> legally retains control of the entity, as one would expect with a
> subsidiary entity.  That control is manifested, for example, in their right
> to replace all or a majority of the board.
>

While I certainly can read the memo this way, that seems to me to mean that
"Can have members that are not ISOC members" is not actually a property we
care about, for the reasons Alissa pointed to in the minutes.  The
structures the hums support are those under the ISOC umbrella. I would
expect us, should we choose this option (or the other options where this is
feasible) to disallow members other than ISOC.  While ISOC's ability to
appoint the majority of the board would always let us avoid capture by a
different entity, there seems no good reason at hand to have other members
and a good bit of risk that it could slowly change the IETF into a
membership organization.

Just my own point of view, of course.


>
> Note, however, that even if ISOC retains ultimate legal control, there are
> still differences among options (II), (III), and (IV) (using the memo's
> numbering).  In options (II) and (III), ISOC's control is attenuated
> compared to option (IV), since basically the only right they have is to
> appoint the board; they couldn't, say, direct specific contracting or
> personnel decisions.
>
>
I was honestly, expecting the pros and cons for these different structures
to be laid out a bit more in terms of the IETF's situation, so I may well
be missing something.  From my reading, though,  I see no advantage to
option (III); it seems mostly just to put ISOC into the role of validating
the contributions.  If there were specific advantages of that one that were
obvious to the design team, I'd appreciate your thoughts.

thanks,

Ted


> --Richard
>
> [0] https://www6.ietf.org/tao.html
> [1] https://www.ietf.org/about/participate/
> [2] http://info.legalzoom.com/definition-llc-member-4425.html
> [3] https://www.legalzoom.com/knowledge/nonprofit/topic/non-
> profit-membership
>
> On Wed, Feb 14, 2018 at 11:09 PM, Joseph Lorenzo Hall <[e-mail]> wrote:
>
>> I'm not sure, we should clarify. I believe the type 1 SO here is the same
>> as that for PIR, so I suspect it's what we would call participants.
>>
>> On Wed, Feb 14, 2018 at 19:34 Ted Hardie <[e-mail]> wrote:
>>
>>> Hi Joe,
>>>
>>> Thanks for forwarding this.  I do have one clarifying question.  In the
>>> section on the Type 1 supporting organization, it says "Can have members
>>> that are not ISOC members." but also says "ISOC must serve as the sole
>>> member of the corporation with the right to appoint at least a
>>> majority of the directors."  ISOC is the sole member of PIR, and I had
>>> made the assumption that it would be the sole member of a new Type 1
>>> supporting organization, should that be the path selected.  This, however,
>>> seems to contemplate members beyond ISOC, and I'm unsure who or what those
>>> could be in our context.   Or does the first usage simply mean what we
>>> would call participants in the IETF context, saying that the participants
>>> in the supporting organization do not also need to be considered "members"
>>> of ISOC?
>>>
>>> thanks,
>>>
>>> Ted
>>>
>>>
>>>
>>> On Wed, Feb 14, 2018 at 3:29 PM, Joseph Lorenzo Hall <[e-mail]>
>>> wrote:
>>>
>>>> Greetings,
>>>>
>>>> I am writing on behalf of the IASA 2.0 Design Team to update you on
>>>> progress since Singapore.
>>>>
>>>> The Design Team and Alissa, Sean Turner, and Richard Barnes (ISOC Board
>>>> members) asked ISOC's tax law counsel at the law firm Morgan Lewis to
>>>> examine the options we are considering in a new IASA 2.0 structure, in
>>>> terms of governance, finances, and administrative complexity.
>>>>
>>>> The response memo is attached, covering the spectrum of options from the
>>>> status quo to increasingly independent models. The memo covers four
>>>> options:
>>>>
>>>> 1. Substantial independence: an independent 501(c)(3) org;
>>>> 2. Significant independence: a 501(c)(3) Type 1 Supporting Org;
>>>> 3. Weak independence: an LLC that is a "disregarded entity"; and,
>>>> 4. Status quo: continuing as an activity of ISOC.
>>>>
>>>> Note that the design team has some additional questions that we hope to
>>>> clarify including the implications of the public support test, board
>>>> composition and control, and potential costs (sunk/ongoing) of a
>>>> transition to each model. We'd like to hear from all of you as to your
>>>> thoughts, either in terms of clarification or if this analysis affects
>>>> which model you prefer.
>>>>
>>>> If questions emerge around particular themes we can work with ISOC on
>>>> clarifications.
>>>>
>>>> thank you,
>>>>
>>>> Joe (writing on behalf of the DT)
>>>>
>>>> --
>>>> Joseph Lorenzo Hall
>>>> Chief Technologist, Center for Democracy & Technology [
>>>> https://www.cdt.org]
>>>> 1401 K ST NW STE 200, Washington DC 20005
>>>> <https://maps.google.com/?q=1401+K+ST+NW+STE+200,+Washington+DC+20005&entry=gmail&source=g>
>>>> -3497
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>>>>
>>>>
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>>>>
>>>> --
>> Joseph Lorenzo Hall
>> Chief Technologist, Center for Democracy & Technology [
>> https://www.cdt.org]
>> 1401 K ST NW STE 200, Washington DC 20005
>> <https://maps.google.com/?q=1401+K+ST+NW+STE+200,+Washington+DC+20005&entry=gmail&source=g>
>> -3497
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>> https://josephhall.org/gpg-key
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