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c0lo writes:

Jim Nelson of Yorba foundation has a hair raising blog post on the reasons IRS denied a 501(c)(3) statute to Yorba:

501(c) is the section of the United States' tax code dealing with tax-exempt organizations. The third type (i.e. 501(c)(3)) are for organizations that are "organized and operated exclusively for one or more of the following purposes: religious, charitable, scientific, testing for public safety, literary, educational, fostering national or international amateur sports competition, or the prevention of cruelty to children or animals".

The Yorba Foundation applied for 501(c)(3) in December 2009. We applied as a charitable, scientific, and educational organization. Remember that we only needed to meet the criteria for one of those to receive 501(c)(3) status.

What follows are the most hair-raising statements in their denial letter and my interpretation and response (IRS' statements are in italics):

You have a substantial nonexempt purpose because you develop software published under open source compatible licenses that authorize use by any person for any purpose, including nonexempt purposes such as commercial, recreational, or personal purposes, including campaign intervention and lobbying.

There's a charitable organization here in San Francisco that plants trees throughout the city for the benefit of all. If one of their tree's shade falls on a cafe table and cools the cafe's patrons as they enjoy their espressos, does that mean the tree-planting organization is no longer a charity?

Mere publishing under open source licenses for all to use does not show that the poor and underprivileged actually use the Tools. ... You do not limit your distribution and do not know who uses the Tools much less if they use them for artistic purposes. ... you do not know who uses the Tools much less what kind of content they create with the Tools.

In other words, we (and, presumably, everyone else) cannot license our software with a GNU license and meet the IRS' requirements of a charitable organization.

The purpose of source code is so that people can modify the code and compile it into object code that controls a computer to perform tasks. Anything learned by people studying the source code is incidental.

Which is like saying the only point of an algorithm is its final answer, and so Einstein publishing E=mc2 offered nothing more to the world than a way to accurately measure the amount of energy in, say, a cube of sugar or a block of cheese. Any deeper learning is incidental.

The development and distribution of software is not a public work even if published under open source or creative commons compatible licenses because software is not a facility ordinarily provided to the community at public expense. ... In the face of such consistency of the key characteristics over four centuries we are constrained from extending the term public works to encompass intangibles such as software.

The "four centuries" of terminology being referenced here is that software is not a lake, dam, bridge, highway, etc. In other words, because 17th century English Common Law doesn't mention IMAP email clients or JPEG decoding, software is not a public work.

And the list of IRS aberrant motivations continue (do RTFA, this space is too short for all of them).