IRS says free software projects can't be nonprofits

In a disturbing precedent, the Yorba Foundation, which makes apps for GNU/Linux, has had its nonprofit status application rejected by the IRS because some of projects may benefit for-profit entities.

The decision comes after the IRS was told to start examining 501(c)3 applications more closely, in the wake of a scandal over alleged discrimination against conservative groups seeking nonprofit status.

It's common for free software projects to organize as nonprofits, creating a legal structure through which code and monetary contributions can be managed and secured. This basis for the IRS's decision — that there may be non-charitable uses for Yorba's projects — would apply to literally every single free software project extant.

If this is the new normal for the IRS, it's the end of the most successful model for running the free software projects that the entire Internet depends upon, from operating systems to router firmware to browsers to servers of every description.

The new 501(c)(3) and the future of free software in the United States [Jim Nelson/Yorba]

(via Techdirt)

(Image: IRS Logo, USG/Wikimedia Commons, Public Domain)