It seems kind of strange to me that he's running it as a for-profit private company but is asking for the support of the community to fund it. There's got to be a better structure for this kind of enterprise, right? And the explanation for why nonprofit doesn't work (“The one thing i don’t like about non-profit is that you end up working for the source you got the money from. You dance to their tune to get their funding”) doesn't really make sense. If he's taking someone else's money then yeah there's going to be some amount of dancing, but that applies to funding for-profits as well. Unless, I guess, you can convince a community to give your for-profit company funding in exchange for nothing with no strings attached, which seems - again - strange...
> dance to their tune to get their funding”) doesn't really make sense
It makes perfect sense to me, having worked for a couple of non-profits. A regular business gets money by selling products to people. A nonprofit gets money by selling good feelings to rich people.
Often, one of those good feelings a rich person buys is a sense of control. They don't just give you money and say go; they give you money for a very specific purpose. Often, to get that money you have to apply for grants, meaning that you must conform to their desires up front, write a big project plan, and the follow that plan closely to receive the money. It's very much a waterfall approach to things, which can cause a lot of waste, and can be very distracting for people who want to focus on the non-profit mission. You also of course need a whole apparatus to find and flatter those rich people, which isn't free.
Basically non-profits sound like a better vehicle in theory than they are in practice for many purposes. And they don't guarantee fiscal probity from the community's perspective. A non-profit exec can still pay themselves millions of dollars [1].
For what it's worth, I am happy to help out community-oriented for-profit businesses. E.g., San Francisco's Borderlands Books, which is community-sponsored [1]. I give them $100/year just because I want them to keep existing, and bookstores in SF aren't really viable businesses anymore.
But couldn't they do the exact same things as they'll do now, only with the tax breaks of a non profit? If they're soliciting funding from the community in the same way, what difference does it make? A large contributor or customer could try to exert control either way, couldn't they?
I think there are two separate but tangled questions here: becoming a non-profit (as traditionally understood) and using a 501c3 as a legal entity (to keep doing exactly what they're doing). I was mainly talking about the former; it sounds like you're asking about the latter.
As far as I know, the only 501c3 tax break is to donors. So the question is whether that will get them sufficiently more money to make it worth the significant downsides, restrictions, and increases in administrative hassle. I expect for small donors, it doesn't make much difference. And regardless, I'd be willing to trust that they know what they're doing in this regard.
You seem to be describing a (for profit) relationship between a small to medium size IT vendor and a large blue chip, and the internal decision making process of a blue chip as well.
No, it's more like the relationship between a small store that adds value to a community in ways that don't appear in GAAP calculations, and a corporation that extracts value from communities in ways that ditto.
It's going to take a while for it to become clear if this new venture is the first or the second type.
You mean for how a 501c3 interacts with donors and foundations? Yeah, it seems to be very often like that. I've talked with people in the non-profit world who are trying to make 501c3s work more like startups, where what investors/donors are paying for is exploration and learning. But apparently that's vanishingly rare.
If you would like to give it a try, I encourage it. But if you're not going to raise money except in small donations, then I don't see any advantage in doing a 501c3, and there are a lot of disadvantages. There's also nothing stopping an LLC or a C corp from "selling products and services to individuals and or soliciting small donations from lots of people", and that's a much more straightforward and flexible entity.
Selling products and services would make them a hybrid (for-profit/non-profit) organization. The sales would be subject to sales tax. Without a 501(c)(3) status, they also wouldn't be eligible for many grants to secure larger fundings.
That's incorrect. You can sell products and charge sales tax as a non-profit.
Just look at the American Red Cross, they sell the blood that is donated to them.
You of course can't have a profit that is distributed at the end of the year. But you can keep "profits" in the organization for furthering the goals of the 501c3.
Yeah. I don’t understand why they can’t just run as a conference company. That seems like the obvious business model. Send the magazine for free to last years attendees, which gives you free advertising for next years conference.
If you have to “dance to the beat of someone’s drum” why not make it the people who are huge fans of the experience you produce?
The impression I took away from that article was they had 22 full-time employees all year round, to produce one weekend in New York; one weekend in San Mateo; a print magazine; and licensing the brand to affiliated events.
The two weekend events presumably only occupied a small fraction of them, except in the immediate ramp-up to the events.
I am the co-founder of an annual weekend even infinitesimally smaller than the NY Maker Faire. It takes our staff a huge amount of work just to pull it off every year. You can’t wing an event - all the parts need to come together like clockwork or you Fyre Festival. You are coordinating all of these vendors, third party participants, venues, etc... which is like herding cats.
22 sounds like a really lean staff to pull off such vast events.
They also published a magazine 6 times a year, many tutorial books (I have acquired a few over the years) and publishing lots of DIY project guides online.
I worked briefly with a team that did 16 events a year nationwide + put out a (print edition) weekly periodical, the team was only about 14. Most of the staff worked on the periodical. 22 seems really high.
Their CEO was the same guy who felt it was appropriate to get his company involved with a community dispute over if Naomi Wu was a "real" maker or secretly propped up by her boyfriend.
I don't get the impression he is a very good steward of the brand.
It's too bad, too. Maker Fair is one of the most important events in the penninusla. It's hugely important to educational efforts and a major focus for local makers who otherwise won't turn a profit outside of efforts like Bizarre Bazaar, which are quite expensive to attend.
There is a middle ground between Non-Profit and Traditional For Profit...
Public Benefit Corporations
I do agree however is " You dance to their tune to get their funding" do not make alot of sense, you do that if you are non-profit or for-profit... You have to dance to the tune of customers if your for-profit, or donors if your non-profit... His lack of ability to under stand that is likely one reason the company when bankrupt.... If you do not deliver a product consumer what to buy you go out of business....
