Thank you, River, for being the actual lawyer here.
I guess much of my confusion stemmed from thinking a 501c3 was a specific corporate structure from the way the podcast described it, whereas you seem to say that it’s a tax status that you put on top of any existing corporate structure. In France, the tax advantages are just part of the Association structure.
Governance structure: I got the wrong impression from the podcast, where Andrew said that making a board and having board meetings was part of the steps to start a church. Probably, that was specific to the Californian corporate structure he was using, which I thought was a characteristic of 501c3.
Liability: Same for this. It makes sense that 501c3 being only a tax status has no bearing on liability.
Constitutional protection: Here I was thinking about the part of the podcast where Andrew said that one advantage of incorporating as a church was that you had to do far less reporting of your activities to the government than other 501c3.
Lobbying: Yeah, makes sense that one would just separate the two organizations. I agree that the main advantage in French law is that you keep the tax-deductible donations when lobbying, as long as the lobbying supports the general interest mission.
Board members: In France, it’s common for the president of the board and organization leader role to be the same person (the Président-directeur général). In most small Associations I’ve been part of, the president of the board was in fact the leader of the organization, so the restriction on getting paid was in fact restricting. If the default approach in the US is to separate them, then it makes sense that it’s not a “workaround”.
Interestingly, that means that Sam Altman being OpenAI’s CEO and on the OpenAI board is actually a surprising point of power concentration if American organizations are not like that by default.
Yea, I guess this is one of those things where American being composed of states maybe makes things weird. A corporation (or LLC or whatever) is a creation of state law. When you form a corporation, you file paperwork with the secretary of state of one of the states, not even necessarily one you are particularly closely connected to, and then your corporation is controlled by the corporate law of that particular state. Many businesses famously incorporate in the state of Delaware because its corporate law is very friendly to businesses. Whereas 501c3 is a tax status that the federal government confers on an organization that has the right kind of purpose.
I think what Andrew may have been referring to is a 990. A 990 is a form that non-church 501c3s have to file with the federal government every year. Churches don’t have to, but that exemption is statutory law, not constitutional law. I’ve never thought of the form 990 as “snooping”. It’s just reporting what the major programs are, what money is coming in and flowing around at a high level, who the directors and officers are, etc. The idea is that in exchange for these tax advantages, the public ought to have access to this information. But I guess if you have a stronger notion of privacy or something you might regard it as snooping.
I don’t want to give too strong an impression about CEOs being board chairs. There definitely are organizations that do that, and no real legal constraints on it. And I’m sure there are Americans who think it is just fine. There has been a bit written on the EA forum about how different people seem to have rather different conceptions of what a board is for. But on the boards where I served, we understood the board’s most important role as being the CEO’s boss, and we saw that as incompatible with having the CEO on the board, or even present for the portions of board meetings where we discussed the CEO’s performance. And yes, when I look at OpenAI and see Sam Altman on the board, that does not look great to me, though it would not be my first point of concern about OpenAI.
There is a concept in American nonprofit law that board members and staff members shouldn’t be paid too much, but there is no clearly defined threshold of what constitutes too much, and little enforcement in practice. It’s more a matter of looking at what similar nonprofits are doing, and not being too out of line with that. And in the case where the top staff person was on the board, that board status wouldn’t prevent paying them like a top staff person.
Thank you, River, for being the actual lawyer here.
I guess much of my confusion stemmed from thinking a 501c3 was a specific corporate structure from the way the podcast described it, whereas you seem to say that it’s a tax status that you put on top of any existing corporate structure. In France, the tax advantages are just part of the Association structure.
Governance structure: I got the wrong impression from the podcast, where Andrew said that making a board and having board meetings was part of the steps to start a church. Probably, that was specific to the Californian corporate structure he was using, which I thought was a characteristic of 501c3.
Liability: Same for this. It makes sense that 501c3 being only a tax status has no bearing on liability.
Constitutional protection: Here I was thinking about the part of the podcast where Andrew said that one advantage of incorporating as a church was that you had to do far less reporting of your activities to the government than other 501c3.
Lobbying: Yeah, makes sense that one would just separate the two organizations. I agree that the main advantage in French law is that you keep the tax-deductible donations when lobbying, as long as the lobbying supports the general interest mission.
Board members: In France, it’s common for the president of the board and organization leader role to be the same person (the Président-directeur général). In most small Associations I’ve been part of, the president of the board was in fact the leader of the organization, so the restriction on getting paid was in fact restricting. If the default approach in the US is to separate them, then it makes sense that it’s not a “workaround”.
Interestingly, that means that Sam Altman being OpenAI’s CEO and on the OpenAI board is actually a surprising point of power concentration if American organizations are not like that by default.
Yea, I guess this is one of those things where American being composed of states maybe makes things weird. A corporation (or LLC or whatever) is a creation of state law. When you form a corporation, you file paperwork with the secretary of state of one of the states, not even necessarily one you are particularly closely connected to, and then your corporation is controlled by the corporate law of that particular state. Many businesses famously incorporate in the state of Delaware because its corporate law is very friendly to businesses. Whereas 501c3 is a tax status that the federal government confers on an organization that has the right kind of purpose.
I think what Andrew may have been referring to is a 990. A 990 is a form that non-church 501c3s have to file with the federal government every year. Churches don’t have to, but that exemption is statutory law, not constitutional law. I’ve never thought of the form 990 as “snooping”. It’s just reporting what the major programs are, what money is coming in and flowing around at a high level, who the directors and officers are, etc. The idea is that in exchange for these tax advantages, the public ought to have access to this information. But I guess if you have a stronger notion of privacy or something you might regard it as snooping.
I don’t want to give too strong an impression about CEOs being board chairs. There definitely are organizations that do that, and no real legal constraints on it. And I’m sure there are Americans who think it is just fine. There has been a bit written on the EA forum about how different people seem to have rather different conceptions of what a board is for. But on the boards where I served, we understood the board’s most important role as being the CEO’s boss, and we saw that as incompatible with having the CEO on the board, or even present for the portions of board meetings where we discussed the CEO’s performance. And yes, when I look at OpenAI and see Sam Altman on the board, that does not look great to me, though it would not be my first point of concern about OpenAI.
There is a concept in American nonprofit law that board members and staff members shouldn’t be paid too much, but there is no clearly defined threshold of what constitutes too much, and little enforcement in practice. It’s more a matter of looking at what similar nonprofits are doing, and not being too out of line with that. And in the case where the top staff person was on the board, that board status wouldn’t prevent paying them like a top staff person.