kubuntu-council team mailing list archive

[Harald Sitter <apachelogger@xxxxxxxxxx>]

On Thu, May 28, 2015 at 10:19 PM, Michael Hall <mhall119@xxxxxxxxxx> wrote:
> Hi Harold,

s/o/a/ ;)

> I will attempt to address each of your questions in as much detail as I
> have available.

That was very quick. Thanks! I am snipping the questions that I do not
have a follow-up for, to make things easier to read and follow.

> On 05/28/2015 12:18 PM, Harald Sitter wrote:
>> 0. I think it would help a great deal if the community could get an
>> outline of how exactly the donation process works. To that extent a
>> lot of the question below seek to better understand how it works,
>> where money goes and how it eventually ends up in an applicant's bank
>> account. Could you perhaps document the process either on the funding
>> page on ubuntu.com or somewhere else so the community as well as
>> possible donors know exactly how the process works and how money ends
>> up where it ends up?
>>
>
> The basic process is discussed on
> http://community.ubuntu.com/help-information/funding/, if that needs
> additional clarification please let us know what and we can add it.

It probably could do with some clarification at least.
That being said, I think writing "Canonical Community Team" instead of
simply "Community Team" already would go a long way. Possibly also
rephrasing the first paragraph's end to something like "...to donate
money to Canonical for use by the Ubuntu community.".

>> 1. Were the funds described in [1] simply part of Canonical's revenue
>> stream during the mentioned time period?
>>
>
> No, those funds were distributed to the budgets of departments that
> would be working on the item the donation was for. Some of it may have
> been split between departments, for example between Ubuntu Engineering
> (who write and package code) and CDO (who manages the servers).

That's indeed vastly more reasonable than what I understand happened.
Where did the upstream-cooperation donations go to in that context?

>> 1.2. How is this working presently? Is Canonical managing the assets
>> on behalf of the community or is it revenue that is graciously given
>> to the community?
>>
>
> I don't understand the distinction you're asking, can you clarify?

Somehow I was under the impression that the community was in a way
involved other than collecting payments as it were. My understanding
is that the answer is the latter as the donations are a
target-oriented investment/revenue stream. Or that's what I'd call
them anyway given my present understanding. Comparatively a version of
former would have been a construct where some community authority
asked Canonical to collect donations on behalf of the community.

>> 2. Who actually owns/holds/administers/accounts the funds until they
>> are distributed?
>>
>
> I don't know the answer to this. The Community Team gets told the
> monthly donation amounts to the "Community" slider only, and we keep
> track of that, applications for those funds, and disbursement of those
> funds in our own spreadsheets. We have no visibility on any of the other
> sliders.

I think the answer is Canonical across the board. All donations get
made to Canonical and then handled internal. The community funds in
turn then get allocated by the Canonical Community Team towards
community activities, funds generated by other sliders are allocated
within Canonical to suitable divisions.
Correct me if I am wrong.

>> 2.1. Assuming it is Canonical, are the donations then actual taxable income?
>
> I don't know for sure, but given that we are not a tax-exempt
> organization I would assume we have to pay taxes on it like any other
> form of revenue.
>
>> 2.1.1. If they are taxable incoming are the numbers we see in the
>> community funding report before or after tax? I guess what I am asking
>> is whether Canonical is paying tax on these funds without actually
>> forwarding these costs, i.e. in a way paying the tax out of
>> Canonical's pocket.
>
> I don't know. If this is important for the community to know, I'll be
> happy to try and find out.

Regarding 2.1. and 2.1.1. I am not sure that it is relevant, but it
might very well be. The fact that the funds do not change in between
reports certainly was an oddity that always stuck out as somewhat of a
peculiar thing what with money usually generating interest and getting
taxed there would be a "natural" fluctuation across reports which
never was the case. In light of all donations being entirely handled
by Canonical and the published reports essentially being an account of
de-facto fund volume (for want of a better word). Knowing that I find
it a bit less perplexing.

Whether the reported incoming donations (and by extension the entire
fund volume) are before or after tax or not affected by tax to begin
with might be relevant as taxation would be decreasing the effectively
available assets. In particular since apparently the fund volume is
increasing, it would eventually become net-income.

Income taxation would needlessly reduce the funds available to the
community by losing a fraction to tax which in turn means we haven't
made the best possible use of someone's donation (at least as far as
the community is concerned, obviously this does not apply to 'sliders'
that are very much targeting activities of a Canonical division). The
Ubuntu community's activities most likely qualify as not-for-profit
and as such I am reasonably certain most tax codes would afford ways
to have these donations not affected by (for example) income tax at
all.

So I at least would very much appreciate some clarity on this. I will
also say that if Canonical is essentially paying a possible taxation
overhead out of pocket, as it were, I think appreciation of that fact
is in order and perhaps the community with help from the Canonical
community team could try to attempt to time funding such that the
community fund be causing as little taxation as possible?

>> 3.1. In case the answer entails relying on numbers coming out of
>> Canonical. Is there a process in place to verify the correctness of
>> these numbers to ensure everyone is working with accurate numbers and
>> no one made a mistake along the line? For example: can the UCC request
>> a look at the actual books pertaining to the public community funding?
>
> No, Canonical is trusted to be honest and transparent in this. We have
> already published one correction where we found that a mistake was made,
> and will do so anytime in the future a mistake is discovered.
>
> If there is any question of Canonical's honesty in these reports, those
> questions and any supporting evidence behind them should be brought to
> the attention of the Community Council.

As pointed out in my final comment of the original mail, I do not
think a trust argument should be a factor in financial matters. I do
trust my bank to not screw me on my savings account, that doesn't mean
I shouldn't check if the balance indeed is what it should be. Equally
most governments (supposedly ;)) trust their citizens and corporations
to file correct tax reports, they do still conduct audits though.

At present we appear to have no transparent auditing mechanism in
place and that is unsetting. Not because I believe there to be a
problem, but because I cannot prove either that there isn't or that
there is. We do not know the actual accounted incoming donation
numbers, we also do not know who has or has not requested funding, nor
do we know who has or has not received funding. All we know is what is
in the reports and those could be mistakenly or intentionally false
and given that we have no reference numbers outside those in the
reports there is no way for us to know whether they are false until
someone within the Canonical community team or the Ubuntu community
(in case of actual errors in disbursement reporting) identifies them
as such.

Just like one can only make certain deductions from comparing balance
sheets, the community can only make certain deductions from comparing
the funding reports. In both cases one can observe trends, correctness
however is nigh impossible to verify.

Could a proper auditing process WRT the community fund be subject of
discussion at some point?

>> 4. Since recently a community member was incorrectly listed as having
>> received community funding when in fact he only had been approved but
>> not received any, could you please elaborate on how the reports are
>> compiled such that an inaccuracy like this happened?
>
> [....]
>
> That was rather long, so I hope it answered you fully.

You explained it very well. Thanks.

>> 4.1. Are measures to make reporting more reliable already being
>> discussed? In particular with regards to the fact that the incoming
>> numbers for Q1-2 2013 were incorrect and funding being accounted for
>> that has not actually taken place.
>
> The initial numbers from Q1-2 2013 were taken from a different source
> than we have used for all subsequent reports. The new sources provide
> this information is a way that is much clearer and simpler for us, which
> should avoid us making the same mistake again.

Is a solution being implemented to the reporting mishap mentioned in
4.? I am not sure how much of it is tied to internal inter-department
communication constraints but to me it sounds as though a funding
request simply needs a final state "disbursed" which should then
prevent this sort of thing from happening? This would then additional
allow accurately reflecting this transitional stage in the reports as
"Approved but not Disbursed" rather than considering the request done
once it was approved.

i.e. requested > approved > (financial things happening outside
community team hands) > disbursed

>> Finally I would like to point out that I strongly believe that trust
>> should never be part of an equation that involves money. In particular
>> with regards to funds that are considered donations collected on
>> behalf of the community for the community. As a member of the
>> community I feel that donations collected on my behalf need to be
>> managed with the utmost care and at the end of the day every penny
>> ought to be accounted for and be invested towards the end we promised
>> it would be invested.
>> That being said, I at least would feel much better if there was a
>> transparent peer review in place. For instance by having donations go
>> into a non-profit entity of which the UCC or the entire Ubuntu
>> membership are members and can look into the books and verify the
>> accuracy of accounting and management of the donations.
>
> The consensus among the Community Council is very much against being
> responsible for this money. Our role is governance and oversight, not
> financial accounting. We will investigate any questions of impropriety
> in the use of these donations, but we won't take them over.

The UCC was but an example for an authority that could handle this.
When comparing donation transparency of Ubuntu to say KDE I am left
somewhat wanting in terms of transparency and accountability.
As I was saying, trust does not factor into monetary considerations
IMO and the current system, while very lightweight on community
involvement, leaves me with an uneasy feeling as donations are being
collected for the community via the official website and yet the
community has only trust to go on as far as correct use the money
goes.

Thanks again for your answers so far. They are very helpful.

HS