posted by
NCommander
on Monday June 16 2014, @02:09PM
from the expecting-torchs-and-pitchforks dept.
NOTE: For those who aren't interested in "meta" articles, just ignore this one. There's an update coming down the pipe to allow people to filter out content from the main page which will hopefully be live rather soon.
As some have may gathered, given our recent push to collect statistics on the site, we're working hard to identify and understand viable fundraising methods that we can use to keep SoylentNews up and running without alienating the community. We are looking at a number of options, including subscriptions for premium services, and it remains our goal to avoid running ads on the site, if at all possible. As it turns out, getting a firm grasp on realistic fundraising estimates has proven to be the determining factor in how we incorporate.
As I've stated previously, I had intended for us to start by forming a not-for-profit (NFP) with the possibility of 501(c)(3) tax-exempt status, and I had several conversations with various legal and tax authorities about this. The idea was that the NFP would serve as an umbrella organization, under which independent sites, including SoylentNews, could operate. What I didn't realize at the time was that setting up a structure like this from the beginning would be far more difficult and expensive than I anticipated. So, simply put, we've found it necessary to change plans.
As described in more detail below, NFPs have heavier burdens due to the strict rules imposed on them for the usage of revenue and resources. Furthermore, in talking with our prospective lawyer and accountant, it quickly became evident that we would have significant burdens and hurdles to clear if we proceeded with the original plan to set up the NFP immediately. When I met face to face with the staff, we began working out what the costs of NFP incorporation was going to look like, and it was getting close to $8,000 USD simply to get everything vetted by the lawyer and accountant because of retainers and other such overhead; this was just to get things established and did not deal with items such as ongoing financial reporting and other requirements.
I always wanted SoylentNews (SN) and its staff to have relative autonomy as a not-for-profit, with the site and its community paramount, and to slowly morph to a fully democratic model once we were relatively stable. To do so would require a defined relationship between SoylentNews and the NFP in each organization's bylaws, which opened all sorts of legal questions on how funding and such would be handled. It quickly became evident that the cost of setting up this kind of structure would be very high, and it was unclear if SoylentNews could re-coup those costs in a timely matter. We could easily end up in a situation where resources were exhausted and yet we needed more help to get things established. It would be an unworkable situation, and not one that would bode well for the future of the site.
Here's a direct example: in the United States, NFPs need to be licensed to perform fundraising in each individual state they're receiving money from. As I outlined in both the guiding statement and the manifesto, one of the ways of raising revenue is to offer subscriptions. The money for those subscriptions would be used to support site operations. Would that be considered fundraising?
Our lawyer hi-lighted this issue when we proposed our revenue models, and wasn't sure, he said he'd have to forward the question to a certified public account or to the state for an answer. This is only one example of "known unknowns" we came up with (mrcoolbp filled two legal sized pages with these when we sat face to face). Needless to say, the situation wasn't looking good, but we've come up with a plan, and I want the community to vet it before we proceed.In general, companies (not NFPs) have a legal responsibility to raise funds and revenue for their owners, a concept known as "shareholder primacy", first defined in Dodge v. Ford Motor Company, while not-for-profits only exist to further their mission (in exchange for the possibility of eventually getting tax-exempt status), and are subject to strict and complicated rules which are often not clear cut. SoylentNews and its staff itself exist to serve its community and its mission - in spirit, we're already a not-for-profit - but at this moment we simply don't have the resources to avoid hitting landmines in what has proven to be very murky waters.
This left us in a difficult catch-22. We could proceed with what resources we had, and risk everything blowing up in our face or try to find a simpler way to get things set up in the short term to allow us to begin fundraising to keep the site running. Of course, I realized that if we were to about-face and incorporate as a for-profit, it would be both a slap in the face of the community and would risk destroying the rapport we built up with the community and well as any trust or good-will we've built up since go-live. Fortunately, we think we've found a way to proceed that will maintain the spirit of what I want SoylentNews to be.
During our face to face, matt_ offered an alternative that I had not previously heard of: a benefit corporation (also known as a B Corp). For those of you scratching your heads wondering what it is, you're not alone. Benefit corporations are a new type of corporation that came to exist in 2010. Summed up, a benefit corporation is a for-profit corporation that exists for public benefit and can be seen as a middle ground between a traditional for-profit entity and a not-for-profit. Under a B corporation, the board of directors are bound to "pursuing the creation of general public benefit, and any named specific public benefits, is considered to be in the best interests of the corporation." In line with this, our certificate of incorporation would contain the following statement, or one like it: The specific public benefit purpose of the corporation is to engage in and promote free, open journalism through the production and publication, and community-sourced analysis and discussion of news and original and third-party-sourced works of fact and opinion. Under a B corporation, as long as we succeed in this mission, we will have, by definition, fulfilled our corporate responsibility.
I realize this is a fairly large departure from what our original plan was, but I think it would be folly to charge ahead with the original plan in light of what we know now with the resources we have available. As a B corporation, we will be able to operate as a traditional corporation in terms of both raising and spending revenue and would be treading in much safer legal waters. Furthermore, our incorporation costs will be in the hundreds, not thousands, of dollars. Finally, and most critically, setting the site up in this way does not prevent us from establishing the not-for-profit in the future once we are financially stable. As described below, this plan allows us to turn into (technically, be acquired by) the not-for-profit, if and when doing so becomes financially possible.
I do, however, want to make this clear, right here, right now. I'm not going to do something that's going to outrage the community. If you think we're in error, let us know. If we have to, we'll scrap the B corporation, and figure out a way to make things work as a pure not-for-profit. I'll be damned before I piss off the community and cause a "beta-like" folly which alienates everyone -- I'm pretty sure all the staff would agree with that sentiment. The wikipedia page and the Benefit Corporation Information Center have considerably more detail; I ask that folks take a look at these pages to understand the details at hand before coming to a conclusion one way or the other...
Now, with all that said, I still feel that eventual incorporation as a not-for-profit could still be beneficial for us. In the revised incorporation plan, after we incorporate as a B corporation, we intend to get the corporate charter and operating procedures of the site straightened out to the point that SoylentNews is a self-sufficient and fully operational independent entity. After that process is complete, I intend to use the resources of the B corporation to re-evaluate becoming a NFP corporation. If we (both the staff and the site) feel this is beneficial once we are able to fully answer our major outstanding "known unknowns", we will sell the B corporation to the newly-incorporated not-for-profit, and the site will continue as a benefit corporation owned by a not-for-profit corporation.
The eventual end result will be an independent SoylentNews that is able to operate freely as an independent entity with manifest destiny, and which will be owned by a not-for-profit that will protect the site and fight for the rights and protections that we all believe in. I hope to build SoylentNews into a shining example of what journalism and press should be, with a structure that enables us to fight to protect our rights, increase public education, and help restore integrity to the field of journalism.
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Well, I haven't looked into prices for big sites. I run three sites off a FreeBSD VPN for the annual price of the VPS - about a hundred bucks. And because they're mostly personal/vanity sites I have more than enough bandwidth and processor time for my purposes. But if you can get a TB for $5, then is this whole issue moot? If it is that cheap to run a site, why go through all this hassle and discussion in the first place? Sounds like a non-issue.
I'm not trying to be facetious. Just trying to say if bandwidth and hosting are really that cheap, then a site like Soylent shouldn't have trouble keeping funded, and all of this angst is for nothing.
-- Dad always thought laughter was the best medicine, which I guess is why several of us died of tuberculosis - Jack Handey
(Score: 0) by Anonymous Coward on Monday June 16 2014, @08:17PM
by Anonymous Coward
on Monday June 16 2014, @08:17PM (#56077)
This! If we're all in the spirit of openness here, I'd love to know just what the current and anticipated hosting costs are for the site. (If they've already been published, my apologies.)
From time to time I see forums complaining about their hosting / infrastructure costs, but I wonder. Some pretty huge sites operate off a couple of ordinary dedicated servers. A plain text site such as Soylent/Pipedot/Slashdot really shouldn't take much, even as it gets very popular?
As noted, let's say one got 16 little VPSes (at $5 to $10/month), each with a 1 TB bandwidth cap, along with some load balancing. That's roughly $100 per year TOTAL.
How much bandwidth will this site really need? (And I understand there are already caching servers in place for pages.)
Meanwhile, our good friends at Pipedot still have a MUCH more responsive site, and one that looks and runs better to boot. I think they're on one little VPS node.
I on the one hand love how seriously NCommander and Co. take the mission, but on the other hand think they continually overthink an empty plate of cheap and simple beans.
We currently have 9 production linodes plus a VPS from a different provider, our hosting costs are approximately $300 USD per month; at the moment, we have excess capability due to Linode offering the free upgrade from Linode 1024->2048 and 2048->4086); when we built the site up, we could go with larger node, or more nodes and I chose the later, not realizing we'd get the larger nodes for free just a month later. As of right now, four nodes drive production, two web, and two db to allow us to do work on the site without having to offline it, plus boron which runs slashd on its own. If hosting costs grow out of control, we can consolidate to less hardware (nitrogen and carbon could be merged off the top of my head).
Pipedot has six according to a post they did a few months ago, but we have additional services we host, and a node dedicated for off-site backup. I haven't noticed pipecode to be appreicatable faster since the last site upgrade which killed most of the dead JS and removed a lot of dead code out of the codebase. Their codebase is considerably smaller, and they're not stuck on an ancient Apache like we are (we do plan to port to mod_perl 2.x, but that's going to require hard dedicated effort to succeed).
And, yes, to an extent, I will admit we've overthinking this. None of the staff have ever created a NFP before, and we only became recently (as in last week) became aware of the B corporation alternative. For myself personally, this is the first time I've ever worked on building a community and site like this (almost all my contributions are backend work). We've actually almost ready to go to file for articles of incorporation, so I'm hoping (since community response has been positive) that we will be able ti file the paperwork this week, and have the operating certificate/EIN/bank stuff set by early next week.
Well, from a technical perspective (and implemented correctly) it should be. My guess is that the wish of our ops to have full-time employees vs a volunteer only site.
An As long as the team stays loyal to the community, though, I imagine putting a couple of referral links to amazon and other stores & services would do wonders. At least I'd go there only via these links to support the site, and I imagine many others would do so as well. That's not something you can usually put in a business plan or reliably count with, though. ; ) Such models grow organically.
Displaying a donation bar can work as well, by the way.
(Score: 3, Insightful) by zafiro17 on Monday June 16 2014, @07:58PM
Well, I haven't looked into prices for big sites. I run three sites off a FreeBSD VPN for the annual price of the VPS - about a hundred bucks. And because they're mostly personal/vanity sites I have more than enough bandwidth and processor time for my purposes. But if you can get a TB for $5, then is this whole issue moot? If it is that cheap to run a site, why go through all this hassle and discussion in the first place? Sounds like a non-issue.
I'm not trying to be facetious. Just trying to say if bandwidth and hosting are really that cheap, then a site like Soylent shouldn't have trouble keeping funded, and all of this angst is for nothing.
Dad always thought laughter was the best medicine, which I guess is why several of us died of tuberculosis - Jack Handey
(Score: 0) by Anonymous Coward on Monday June 16 2014, @08:17PM
This! If we're all in the spirit of openness here, I'd love to know just what the current and anticipated hosting costs are for the site. (If they've already been published, my apologies.)
From time to time I see forums complaining about their hosting / infrastructure costs, but I wonder. Some pretty huge sites operate off a couple of ordinary dedicated servers. A plain text site such as Soylent/Pipedot/Slashdot really shouldn't take much, even as it gets very popular?
As noted, let's say one got 16 little VPSes (at $5 to $10/month), each with a 1 TB bandwidth cap, along with some load balancing. That's roughly $100 per year TOTAL.
How much bandwidth will this site really need? (And I understand there are already caching servers in place for pages.)
Meanwhile, our good friends at Pipedot still have a MUCH more responsive site, and one that looks and runs better to boot. I think they're on one little VPS node.
I on the one hand love how seriously NCommander and Co. take the mission, but on the other hand think they continually overthink an empty plate of cheap and simple beans.
(Score: 4, Informative) by NCommander on Monday June 16 2014, @10:17PM
We currently have 9 production linodes plus a VPS from a different provider, our hosting costs are approximately $300 USD per month; at the moment, we have excess capability due to Linode offering the free upgrade from Linode 1024->2048 and 2048->4086); when we built the site up, we could go with larger node, or more nodes and I chose the later, not realizing we'd get the larger nodes for free just a month later. As of right now, four nodes drive production, two web, and two db to allow us to do work on the site without having to offline it, plus boron which runs slashd on its own. If hosting costs grow out of control, we can consolidate to less hardware (nitrogen and carbon could be merged off the top of my head).
Pipedot has six according to a post they did a few months ago, but we have additional services we host, and a node dedicated for off-site backup. I haven't noticed pipecode to be appreicatable faster since the last site upgrade which killed most of the dead JS and removed a lot of dead code out of the codebase. Their codebase is considerably smaller, and they're not stuck on an ancient Apache like we are (we do plan to port to mod_perl 2.x, but that's going to require hard dedicated effort to succeed).
And, yes, to an extent, I will admit we've overthinking this. None of the staff have ever created a NFP before, and we only became recently (as in last week) became aware of the B corporation alternative. For myself personally, this is the first time I've ever worked on building a community and site like this (almost all my contributions are backend work). We've actually almost ready to go to file for articles of incorporation, so I'm hoping (since community response has been positive) that we will be able ti file the paperwork this week, and have the operating certificate/EIN/bank stuff set by early next week.
Still always moving
(Score: 2) by Geotti on Monday June 16 2014, @09:05PM
Well, from a technical perspective (and implemented correctly) it should be. My guess is that the wish of our ops to have full-time employees vs a volunteer only site.
An As long as the team stays loyal to the community, though, I imagine putting a couple of referral links to amazon and other stores & services would do wonders. At least I'd go there only via these links to support the site, and I imagine many others would do so as well.
That's not something you can usually put in a business plan or reliably count with, though. ; ) Such models grow organically.
Displaying a donation bar can work as well, by the way.