Questions Regarding Community Donation Program

Michael Hall mhall119 at ubuntu.com
Mon Jun 1 16:27:57 UTC 2015


Harald,

Sorry again for the delay, I have been trying to respond to all of the
inquiring around this and related topics in a timely manner, but some
have taken more time than others. Also apologize for misspelling your
name :)


On 05/29/2015 11:26 AM, Harald Sitter wrote:
> On Thu, May 28, 2015 at 10:19 PM, Michael Hall <mhall119 at ubuntu.com> wrote:
>> Hi Harold,
> 
> s/o/a/ ;)
> 
>> I will attempt to address each of your questions in as much detail as I
>> have available.
> 
> That was very quick. Thanks! I am snipping the questions that I do not
> have a follow-up for, to make things easier to read and follow.
> 
>> On 05/28/2015 12:18 PM, Harald Sitter wrote:
>>> 0. I think it would help a great deal if the community could get an
>>> outline of how exactly the donation process works. To that extent a
>>> lot of the question below seek to better understand how it works,
>>> where money goes and how it eventually ends up in an applicant's bank
>>> account. Could you perhaps document the process either on the funding
>>> page on ubuntu.com or somewhere else so the community as well as
>>> possible donors know exactly how the process works and how money ends
>>> up where it ends up?
>>>
>>
>> The basic process is discussed on
>> http://community.ubuntu.com/help-information/funding/, if that needs
>> additional clarification please let us know what and we can add it.
> 
> It probably could do with some clarification at least.
> That being said, I think writing "Canonical Community Team" instead of
> simply "Community Team" already would go a long way. Possibly also
> rephrasing the first paragraph's end to something like "...to donate
> money to Canonical for use by the Ubuntu community.".
> 

Thanks for the suggestions, I've changed the wording on that page to
clarify this better. Please look it over and let me know if you have any
other recommendations.

>>> 1. Were the funds described in [1] simply part of Canonical's revenue
>>> stream during the mentioned time period?
>>>
>>
>> No, those funds were distributed to the budgets of departments that
>> would be working on the item the donation was for. Some of it may have
>> been split between departments, for example between Ubuntu Engineering
>> (who write and package code) and CDO (who manages the servers).
> 
> That's indeed vastly more reasonable than what I understand happened.
> Where did the upstream-cooperation donations go to in that context?
> 

I don't know, and while I probably won't be able to find out specific
detail, I can probably find out what department within Canonical those
went to. If this is important, let me know and I'll start asking.

>>> 1.2. How is this working presently? Is Canonical managing the assets
>>> on behalf of the community or is it revenue that is graciously given
>>> to the community?
>>>
>>
>> I don't understand the distinction you're asking, can you clarify?
> 
> Somehow I was under the impression that the community was in a way
> involved other than collecting payments as it were. My understanding
> is that the answer is the latter as the donations are a
> target-oriented investment/revenue stream. Or that's what I'd call
> them anyway given my present understanding. Comparatively a version of
> former would have been a construct where some community authority
> asked Canonical to collect donations on behalf of the community.
> 

Then yes, my understanding is that this is considered Canonical revenue
from an accounting perspective, and the company then adjusts
departmental budgets based on the percentages given to each slider.

>>> 2. Who actually owns/holds/administers/accounts the funds until they
>>> are distributed?
>>>
>>
>> I don't know the answer to this. The Community Team gets told the
>> monthly donation amounts to the "Community" slider only, and we keep
>> track of that, applications for those funds, and disbursement of those
>> funds in our own spreadsheets. We have no visibility on any of the other
>> sliders.
> 
> I think the answer is Canonical across the board. All donations get
> made to Canonical and then handled internal. The community funds in
> turn then get allocated by the Canonical Community Team towards
> community activities, funds generated by other sliders are allocated
> within Canonical to suitable divisions.
> Correct me if I am wrong.
> 

That is correct.

>>> 2.1. Assuming it is Canonical, are the donations then actual taxable income?
>>
>> I don't know for sure, but given that we are not a tax-exempt
>> organization I would assume we have to pay taxes on it like any other
>> form of revenue.
>>
>>> 2.1.1. If they are taxable incoming are the numbers we see in the
>>> community funding report before or after tax? I guess what I am asking
>>> is whether Canonical is paying tax on these funds without actually
>>> forwarding these costs, i.e. in a way paying the tax out of
>>> Canonical's pocket.
>>
>> I don't know. If this is important for the community to know, I'll be
>> happy to try and find out.
> 
> Regarding 2.1. and 2.1.1. I am not sure that it is relevant, but it
> might very well be. The fact that the funds do not change in between
> reports certainly was an oddity that always stuck out as somewhat of a
> peculiar thing what with money usually generating interest and getting
> taxed there would be a "natural" fluctuation across reports which
> never was the case. In light of all donations being entirely handled
> by Canonical and the published reports essentially being an account of
> de-facto fund volume (for want of a better word). Knowing that I find
> it a bit less perplexing.
> 
> Whether the reported incoming donations (and by extension the entire
> fund volume) are before or after tax or not affected by tax to begin
> with might be relevant as taxation would be decreasing the effectively
> available assets. In particular since apparently the fund volume is
> increasing, it would eventually become net-income.
> 
> Income taxation would needlessly reduce the funds available to the
> community by losing a fraction to tax which in turn means we haven't
> made the best possible use of someone's donation (at least as far as
> the community is concerned, obviously this does not apply to 'sliders'
> that are very much targeting activities of a Canonical division). The
> Ubuntu community's activities most likely qualify as not-for-profit
> and as such I am reasonably certain most tax codes would afford ways
> to have these donations not affected by (for example) income tax at
> all.
> 
> So I at least would very much appreciate some clarity on this. I will
> also say that if Canonical is essentially paying a possible taxation
> overhead out of pocket, as it were, I think appreciation of that fact
> is in order and perhaps the community with help from the Canonical
> community team could try to attempt to time funding such that the
> community fund be causing as little taxation as possible?
> 

I'll try and get you an answer on this then.

>>> 3.1. In case the answer entails relying on numbers coming out of
>>> Canonical. Is there a process in place to verify the correctness of
>>> these numbers to ensure everyone is working with accurate numbers and
>>> no one made a mistake along the line? For example: can the UCC request
>>> a look at the actual books pertaining to the public community funding?
>>
>> No, Canonical is trusted to be honest and transparent in this. We have
>> already published one correction where we found that a mistake was made,
>> and will do so anytime in the future a mistake is discovered.
>>
>> If there is any question of Canonical's honesty in these reports, those
>> questions and any supporting evidence behind them should be brought to
>> the attention of the Community Council.
> 
> As pointed out in my final comment of the original mail, I do not
> think a trust argument should be a factor in financial matters. I do
> trust my bank to not screw me on my savings account, that doesn't mean
> I shouldn't check if the balance indeed is what it should be. Equally
> most governments (supposedly ;)) trust their citizens and corporations
> to file correct tax reports, they do still conduct audits though.
> 
> At present we appear to have no transparent auditing mechanism in
> place and that is unsetting. Not because I believe there to be a
> problem, but because I cannot prove either that there isn't or that
> there is. We do not know the actual accounted incoming donation
> numbers, we also do not know who has or has not requested funding, nor
> do we know who has or has not received funding. All we know is what is
> in the reports and those could be mistakenly or intentionally false
> and given that we have no reference numbers outside those in the
> reports there is no way for us to know whether they are false until
> someone within the Canonical community team or the Ubuntu community
> (in case of actual errors in disbursement reporting) identifies them
> as such.
> 
> Just like one can only make certain deductions from comparing balance
> sheets, the community can only make certain deductions from comparing
> the funding reports. In both cases one can observe trends, correctness
> however is nigh impossible to verify.
> 
> Could a proper auditing process WRT the community fund be subject of
> discussion at some point?
> 

Honestly I don't think it will be worth the overhead. The amount of
donations seems to have tapered off after that first quarter. We made an
effort to keep the management process behind the community donations as
light-weight as possible because of this. We provide a fairly detailed
report for the use of the Community slider donations, and so far there
doesn't seem to have been any interest on details of the other sliders
still in use.

>>> 4. Since recently a community member was incorrectly listed as having
>>> received community funding when in fact he only had been approved but
>>> not received any, could you please elaborate on how the reports are
>>> compiled such that an inaccuracy like this happened?
>>
>> [....]
>>
>> That was rather long, so I hope it answered you fully.
> 
> You explained it very well. Thanks.
> 
>>> 4.1. Are measures to make reporting more reliable already being
>>> discussed? In particular with regards to the fact that the incoming
>>> numbers for Q1-2 2013 were incorrect and funding being accounted for
>>> that has not actually taken place.
>>
>> The initial numbers from Q1-2 2013 were taken from a different source
>> than we have used for all subsequent reports. The new sources provide
>> this information is a way that is much clearer and simpler for us, which
>> should avoid us making the same mistake again.
> 
> Is a solution being implemented to the reporting mishap mentioned in
> 4.? I am not sure how much of it is tied to internal inter-department
> communication constraints but to me it sounds as though a funding
> request simply needs a final state "disbursed" which should then
> prevent this sort of thing from happening? This would then additional
> allow accurately reflecting this transitional stage in the reports as
> "Approved but not Disbursed" rather than considering the request done
> once it was approved.
> 

We've been counting money as "spent" when the PO has been raised and
approved. It's a bit like balancing a check book, you mark the money as
gone when the check is written, not when it's cashed. In the cases where
the money isn't actually distributed (or only partially distributed) we
should and will provide a detailed accounting of that in the following
report.

> i.e. requested > approved > (financial things happening outside
> community team hands) > disbursed
> 
>>> Finally I would like to point out that I strongly believe that trust
>>> should never be part of an equation that involves money. In particular
>>> with regards to funds that are considered donations collected on
>>> behalf of the community for the community. As a member of the
>>> community I feel that donations collected on my behalf need to be
>>> managed with the utmost care and at the end of the day every penny
>>> ought to be accounted for and be invested towards the end we promised
>>> it would be invested.
>>> That being said, I at least would feel much better if there was a
>>> transparent peer review in place. For instance by having donations go
>>> into a non-profit entity of which the UCC or the entire Ubuntu
>>> membership are members and can look into the books and verify the
>>> accuracy of accounting and management of the donations.
>>
>> The consensus among the Community Council is very much against being
>> responsible for this money. Our role is governance and oversight, not
>> financial accounting. We will investigate any questions of impropriety
>> in the use of these donations, but we won't take them over.
> 
> The UCC was but an example for an authority that could handle this.
> When comparing donation transparency of Ubuntu to say KDE I am left
> somewhat wanting in terms of transparency and accountability.
> As I was saying, trust does not factor into monetary considerations
> IMO and the current system, while very lightweight on community
> involvement, leaves me with an uneasy feeling as donations are being
> collected for the community via the official website and yet the
> community has only trust to go on as far as correct use the money
> goes.
> 
> Thanks again for your answers so far. They are very helpful.
> 
> HS
> 



Michael Hall
mhall119 at ubuntu.com



More information about the kubuntu-devel mailing list