[ALAC] ICANN as a 501(c)(3) Organisation

Mon May 1 15:59:31 UTC 2017

Hi, Andrei,

Thank you for your comments.

First of all, I fully agree with you that, as you pointed out, ICANN indeed "runs" domains.  

However, ICANN being a multi-stakeholder entity, exactly who within ICANN "runs" those domains?  I am afraid they are the registries and registrars, represented by a part of GNSO.  For ccTLDs, those at ccNSO do.  However, ALAC obviously does not. Neither do most other AC/SOs, at least not for their own commercial interests.

Thus, why does the world needs ICANN?  Why is ICANN designed as non-profit instead of a commercial entity to "run" domains?  According to my understanding, that is because the public needs somebody responsible and to be in charge of the DNS system.  That is, to be responsible for the public interests, primarily the interests of end-users/consumers.

Thus, as we can see, about all of what ICANN does, is to prescribe regulations in order to keep those commercial entities, mostly registries and registrars, under a leash.  However, as ICANN is international without a legislation behind, these regulations are presented as contracts enforced by a judicial system, currently the State of California.

The clear definition of ICANN was not as important before it became independent last year.  That is becuase, although not ideal for ICANN's global responsbility, there is a US publicly elected legislation behind who is ultimately in charge.  However, after its independence, the definition of ICANN's responsibility becomes vital.

Lately, we have seen some people at GNSO discussing using surplus revenue from the new gTLD program to promote "awareness" of the program.  To be exact, that is to use ICANN's money as registries'/registrars' marketing budget.  Isn't it?  Why don't they form their own association and hire their own marketing agency?  The only explanation is, they are seeing ICANN as their own trade association and marketing agency.

Believe me, I can fully understand that keeping some definitions fuzzy is necessary under certain environments.  That is because most people cannot afford the dear "price" to clarify them.  However, now we are talking about ICANN and the Internet, where I do not see such a "price" to be paid.  This is another reason I strongly suggest we make it clear, especially for ALAC representing the billions of end-users, those who need ICANN to protect their interests as a regulator.  

Afterall, a "de facto regulator of the cyber space", this is why ICANN was created.

Only my personal opinion and to be further discussed.  Thank you again.

Kaili

  ----- Original Message ----- 
  From: Andrei Kolesnikov 
  To: Kan Kaili 
  Cc: JJS ; ALAC working list 
  Sent: Monday, May 01, 2017 3:20 PM
  Subject: Re: [ALAC] ICANN as a 501(c)(3) Organisation

  it is amazing how much time and efforts human beings can spend in finding the stable platform to prove the things they do. Resulting in million dollars spent on legal, meetings, travel etc. :)

  ICANN exists, it runs domains. Business practices established many years ago and world accepted it. I think this is a good explanation what ICANN is.

  Yours, --andrei

  2017-05-01 9:06 GMT+03:00 Kan Kaili <kankaili at gmail.com>:

    Hi,

    Thank you for your response and comment.

    Indeed, now ICANN is fully independent of the US DOC, clearly defining ICANN's functions becomes even more important than before.  Otherwise, it may well become a trade association.  This is shown from GNSO's discussion of using surplus from the new gTLD program to "promote awareness" of new G.  That is, marketing for registries/registrars.

    In addition, now the overall environment is quite different from a decade ago.  At least, I believe the US Government would not be against the idea of "regulator".

    Thus, I wonder if the At-Large community should again begin to advocate ICANN as a "de facto regulator of the cyber world".

    Thank you again.

    Kaili

      ----- Original Message ----- 
      From: JJS 
      To: KAN Kaili 
      Cc: Olivier CREPIN-LEBLOND ; ALAC working list 
      Sent: Monday, May 01, 2017 1:19 PM
      Subject: Re: [ALAC] ICANN as a 501(c)(3) Organisation

      Kaili is quite right in pointing out the fundamental importance of ICANN being truthfully described.

      A decade ago, and less, this came up in Board discussions every now and then, the majority swatting down anything suggestive of "regulation". The closest we got to accurately naming ICANN's function was "quasi regulation", but this expression was then redacted from reports. Among the arguments put forward by opponents to such a designation, the fear of aggravating Washington was uppermost. Who were we to dare question a tenet of Reagonomics and Thatcherism, i.e. "Only self-regulation can lead to prosperity"? And never mind if the 2008 financial meltdown proved that self-regulation had failed, common wisdom would not accept the evidence.

      This debate is not neutral, especially at a time when we see a perilous convergence between some democracies and the régimes they used to (rightly) criticize. When democracies resort to doctoring facts and smothering free debate, the public interest is in peril.

      This may be the right time to put forward, once again, the term "quasi regulatory" to describe ICANN's main function. As in the time of Copernic, calling out reality may not be without risk, but remains essential for human development.

      Jean-Jacques.

      Le 1 mai 2017, à 03:29, Kan Kaili <kankaili at gmail.com> a écrit: 
        Hi,

        As ICANN CEO visited China last week, I raised a question during the meeting:  Exactly what is ICANN?

        According to what ICANN does, it is a de facto REGULATOR serving the public interest by regulating the DNS industry.  

        However, he flatly denied that, saying ICANN is a "stock exchange".

        As I see it, this is a fundamental undefined question of ICANN.  Even during the openning speech in Copenhagen, Steve Croker said "whatever ICANN is ..."  

        However, this question leads to the position and weight of ALAC, and the consumers'/end-users' interests, within ICANN, including the number of seats on the Board, budget allocation, etc.

        Thus, I hope this question at least could be clarified within the At-Large community, before we can make it clear in ICANN.

        Thank you.

        Kaili

          ----- Original Message ----- 
          From: Olivier MJ Crepin-Leblond 
          To: ALAC Working List 
          Sent: Tuesday, April 25, 2017 2:10 PM
          Subject: [ALAC] ICANN as a 501(c)(3) Organisation

          Dear Alan,

          as a follow-up to my explanation on the ALAC mailing list about ICANN being a 501(c)(3) organisation, the relevant Article of Incorporation paragraph is:
          (Ref: https://www.icann.org/resources/pages/governance/articles-en )

          Article 2.I.II:
          This Corporation is a nonprofit public benefit corporation and is not organized for the private gain of any person. It is organized under the Nonprofit Public Benefit Corporation Law for charitable and public purposes. The Corporation is organized, and will be operated, exclusively for charitable, educational, and scientific purposes within the meaning of § 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), or the corresponding provision of any future United States tax code. Any reference in these Articles to the Code shall include the corresponding provisions of any future United States tax code. In furtherance of the foregoing purposes, and in recognition of the fact that the Internet is an international network of networks, owned by no single nation, individual or organization, the Corporation shall, except as limited by Article IV hereof, pursue the charitable and public purposes of lessening the burdens of government and promoting the global public interest in the operational stability of the Internet by carrying out the mission set forth in the bylaws of the Corporation (“Bylaws”). Such global public interest may be determined from time to time.  Any determination of such global public interest shall be made by the multistakeholder community through an inclusive bottom-up multistakeholder community process.

          Article 2.IV:
          Notwithstanding any other provision of these Articles: 
          a. The Corporation shall not carry on any other activities not permitted to be carried on (i) by a corporation exempt from United States income tax under § 501(c)(3) of the Code or (ii) by a corporation, contributions to which are deductible under § 170(c)(2) of the Code.
          b. No substantial part of the activities of the Corporation shall be the carrying on of propaganda, or otherwise attempting to influence legislation, and the Corporation shall be empowered to make the election under § 501 (h) of the Code. 
          So what does the § 501(c)(3) tax code say? http://bit.ly/1Va1vVt

          To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual.

          Exempt purposes:

          https://www.irs.gov/charities-non-profits/charitable-organizations/exempt-purposes-internal-revenue-code-section-501c3

          The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.  The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

          So "lessening the burdens of government" is clearly the key reason for ICANN to operate as 501(c)(3), but as you can see there are other possible purposes. (As a side track, it is particularly important to note the "global public interest" part of the mission which is still undefined and unresolved.)

          With the new gTLD program generating a large income, ICANN needs to be very careful and show sustained support for "lessening the burdens of government" - thus support all sorts of Internet-related activities outside of ICANN. Not doing so, it could be accused of "excess benefit transactions" https://www.irs.gov/charities-non-profits/charitable-organizations/intermediate-sanctions-excess-benefit-transactions and be sanctioned. ICANN needs to walk a very fine line on this. I am not a US tax attorney and have very little knowledge of the matter, but it is my understanding that if ICANN was to stop supporting initiatives in the wider Internet ecosystem space, activities related to ICANN but not *strictly* relating to Names and Numbers, it would risk losing its 501(c)(3) status.

          This loss of 501(c)(3) status is completely independent of the point of view that some are holding that ICANN is spending too much money outside ICANN core activities. 

          It is also worth noting that adhering to the conditions for retaining 501(c)(3) status will be a key issue for the allocation of Auction funds.

          I really think that we should fully play this card when it comes down to use of funds in ICANN. The At-Large Community is part of this "promoting the global public interest" and we need to remind everyone about this regularly.

          Kindest regards,

          Olivier

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  -- 

  Andrey Kolesnikov

  RIPN.NET

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