<div dir="auto">A vehement +1!<div dir="auto"><br></div><div dir="auto">And no, you don't have to be a tax attorney to understand the plain letter of the law and it's intent. </div><div dir="auto"><br></div><div dir="auto">BTW, it is the same argument the Ry constituency will use to justify support from ICANN for ginning up the domain name market. Never mind - as my friend Evan has long reminded us - their position is founded on belief every Internet user is a delayed name owner. Me: Dumb bastards just don't know it yet. </div><div dir="auto"><br></div><div dir="auto">[Went thru the wringer with this 501 (c) business when my high school alumni association formed a chapter in the U.S.]</div><div dir="auto"><br></div><div dir="auto">CAS </div></div><div class="gmail_extra"><br><div class="gmail_quote">On Apr 25, 2017 1:10 AM, "Olivier MJ Crepin-Leblond" <<a href="mailto:ocl@gih.com">ocl@gih.com</a>> wrote:<br type="attribution"><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
<div text="#000000" bgcolor="#FFFFFF">
Dear Alan,<br>
<br>
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:<br>
(Ref: <a class="m_4464830999726122522moz-txt-link-freetext" href="https://www.icann.org/resources/pages/governance/articles-en" target="_blank">https://www.icann.org/<wbr>resources/pages/governance/<wbr>articles-en</a> )<br>
<br>
<i><font color="#3366ff">Article 2.I.II:<br>
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 “<strong>Code</strong>”),
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 <u>Article
IV</u> hereof, pursue the charitable and public purposes of <b>lessening
the burdens of government and promoting the global public
interest </b>in the operational stability of the Internet by
carrying out the mission set forth in the bylaws of the
Corporation (“<strong>Bylaws</strong>”). 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.<br>
<br>
Article 2.IV:<br>
Notwithstanding any other provision of these Articles: <br>
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.<br>
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.</font></i>
<p>So what does the § 501(c)(3) tax code say? <a class="m_4464830999726122522moz-txt-link-freetext" href="http://bit.ly/1Va1vVt" target="_blank">http://bit.ly/1Va1vVt</a></p>
<p>To be tax-exempt under section 501(c)(3) of the Internal Revenue
Code, an organization must be <a href="https://www.irs.gov/charities-non-profits/charitable-organizations/organizational-test-internal-revenue-code-section-501c3" target="_blank">organized</a>
and <a href="https://www.irs.gov/charities-non-profits/charitable-organizations/operational-test-internal-revenue-code-section-501c3" target="_blank">operated</a>
exclusively for <a href="https://www.irs.gov/charities-non-profits/charitable-organizations/exempt-purposes-internal-revenue-code-section-501c3" target="_blank">exempt
purposes</a> set forth in section 501(c)(3), and none of its
earnings may <a href="https://www.irs.gov/charities-non-profits/charitable-organizations/inurement-private-benefit-charitable-organizations" target="_blank">inure</a>
to any private shareholder or individual.</p>
<p><br>
</p>
<p>Exempt purposes:</p>
<p><a class="m_4464830999726122522moz-txt-link-freetext" href="https://www.irs.gov/charities-non-profits/charitable-organizations/exempt-purposes-internal-revenue-code-section-501c3" target="_blank">https://www.irs.gov/charities-<wbr>non-profits/charitable-<wbr>organizations/exempt-purposes-<wbr>internal-revenue-code-section-<wbr>501c3</a></p>
<p><i><font color="#3366ff">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 <em>charitable</em>
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;
<b>lessening the burdens of government</b>; lessening
neighborhood tensions; eliminating prejudice and
discrimination; defending human and civil rights secured by
law; and combating community deterioration and juvenile
delinquency.</font></i></p>
<p><font color="#3366ff"><font color="#000000">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.)</font></font></p>
<p><font color="#3366ff"><font color="#000000">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"
<a class="m_4464830999726122522moz-txt-link-freetext" href="https://www.irs.gov/charities-non-profits/charitable-organizations/intermediate-sanctions-excess-benefit-transactions" target="_blank">https://www.irs.gov/charities-<wbr>non-profits/charitable-<wbr>organizations/intermediate-<wbr>sanctions-excess-benefit-<wbr>transactions</a>
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.<br>
</font></font></p>
<p><font color="#3366ff"><font color="#000000">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. <br>
</font></font></p>
<p><font color="#3366ff"><font color="#000000">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.<br>
</font></font></p>
<p><font color="#3366ff"><font color="#000000">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.</font></font></p>
<p><font color="#3366ff"><font color="#000000"><br>
</font></font></p>
<p><font color="#3366ff"><font color="#000000">Kindest regards,</font></font></p>
<p><font color="#3366ff"><font color="#000000"><br>
</font></font></p>
<p><font color="#3366ff"><font color="#000000">Olivier<br>
</font></font></p>
<p><font color="#3366ff"><font color="#000000"></font><br>
</font></p>
</div>
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