Re: PROPOSAL UPDATED: Incorporate the Veres One Non-Profit Foundation

Has ever Norway been considered?

On Thu, Aug 16, 2018 at 9:37 PM Adam Lake <alake@digitalbazaar.com> wrote:

> Hi Christopher,
>
> Firstly, I appreciate you speaking up about this. Always going with what
> seems like the flow won't make for a healthy community so it's important
> for members to speak their minds even in the face of a bunch of +1's.
>
> Also, apologies for making an assumption in the premise that Veres One
> should be a nonprofit.
>
> I did look into the option of incorporating as a Benefit Corp as well as
> an L3C, months ago. The typical type of Benefit Corp is a shareholder
> organization which did not seem like a good fit for Veres One. I honestly
> did not know about Benefit LLCs (thank for the link
> <https://worldpositive.com/a-startup-cheat-sheet-for-the-baffling-world-of-company-structures-3e8bfefd2178>,
> this is something I am very interested in), which are only in three states
> rather than the 30 states that support shareholder Benefit Corps. I spoke
> with the organization that developed the L3C model but they are only legal
> entities in three states, if I recall correctly, and it felt sort of new
> and risky without much precedent.
>
> A problem with both Benefit LLCs and L3Cs is that they are US corporate
> designations. The United States is not generally viewed as a neutral
> arbiter. There is also historical baggage associated with the US regarding
> governance of technical infrastructure for the Internet (e.g. ICANN). Maybe
> a Benefit LLC has it's merits but it's anchored to the US. Maybe Canada
> will have it's own version of a Benefit LLC in Fall 2019.
>
> I get the concern around the regulatory burden of being a nonprofit but I
> don't understand the concern around transparency. What makes a nonprofit
> inherently less transparent than a Benefit Corp? How would the Veres One
> governance model as a Benefit Corp have more transparency than as
> Nonprofit?
>
> The additional costs to incorporate as a nonprofit compared an LLC are
> expected to be around 5K and and extra 2k/year for operation of a low
> revenue nonprofit. Digital Bazaar is covering these fees.
>
> As far as changes to governance, enabling adaptability, isn't it always an
> option for a non-profit to transition to a Benefit Corp, or some other type
> of entity, at a later date?
>
> The only negatives associated being a nonprofit that I can clearly
> identity is the extra cost and regulatory restriction. Some of this
> regulatory restriction can be viewed as a positive as it may help keep
> Veres One focused on its mission. I can also see how the the nonprofit
> designation could constrain adaptability.
>
> Another factor is delaying incorporation further, a negative but probably
> should not have much weight in the decision.
>
> I want what will help Veres One deliver on it's mission and be successful..
> If incorporating as a Benefit LLC is the best approach I hope that is what
> we converge on. For me, the potential benefits of incorporating as a
> Benefit Corp over a Nonprofit don't seem to outweigh the negatives.
>
> Kind Regards,
>
> Adam
> On 8/16/2018 2:36 PM, Christopher Allen wrote:
>
> On Thu, Aug 16, 2018 at 11:17 AM Adam Lake <alake@digitalbazaar.com>
> wrote:
>
>> *Christopher Allen*: 0, Abstain
>>
> To be clear, I am abstaining as I don’t believe the best option is either
> a non-profit or foundation. There are other ways to demonstrate fiduciary
> responsibility and benefit to the community. The tax issues can also be
> addressed other ways.
>
> My personal experience with both non-profits and foundations is that they
> are often not worth the trouble unless there are significant individual
> patrons that wish to write off donations in their country of taxation,
> which I don’t believe is applicable to us — corporations can also write off
> expenses. The regulatory requirements for these entities are also
> burdensome and limit types of governance and changes to governance models
> which I believe are evolving right now.
>
> I abstained as feels to me that the decision as already been made that you
> must form a non-profit or foundation, without sufficiently exploring
> options for a benefit corp with strong transparent governance, and dealing
> with tax issues other ways. but “perfection is the enemy of the good” and
> if the team largely wants to go the “traditional” way I don’t want to block.
>
> — Christopher Allen
>
>
> --
> Adam Lake
> Director, Business Development
> Digital Bazaar
> Veres.io540-285-0083 <(540)%20285-0083>
>
> --


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Co-Founder & CTO, Diwala
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