Proposed Major By-Laws Amendment, September-October 2006

The amendment passed on November 1, 2006. See the voting results.

There were numerous changes in the organization in 2006 which necessitated a re-think of the non-profit status. The decision is obvious that we now have to pursue a 501(c)3 after all.

How to Send Feedback

All official feedback will be archived. Official feedback may be submitted by either of these methods: Even if you don't have time to review the document, it's useful input to hear that you support the 501(c)3 application. By becoming a 501(c)3 corporation, the corporation will have an obligation to be a benefit to the community, but your donations would be tax-deductible.

Discussion and Voting Schedule

The discussion and voting period to discuss, review, vote and enact the proposed by-laws amendment is shown below. All times are Pacific local time - daylight or standard time are indicated.
Schedule Start time End time Notes
By-Laws amendment: mandatory 15-day discussion/review period Friday, October 13, 00:00 PDT Saturday, October 28, 00:00 PDT  
By-Laws amendment: 72-hour voting period Saturday, October 28, 00:59 PDT Monday, October 30, 23:59 PST end of daylight time on Oct 29 at 2AM
Nominations of initial sbay.org members for new By-Laws Friday, October 13, 00:00 PDT Thursday, November 2, 23:59 PST concurrent with By-Laws discussion/review/voting period, plus a few days
Vote in sbay.org members under new By-Laws Friday, November 3, 00:00 PST Friday, November 3, 23:59 PST  
sbay.org 2007 Officers and Board of Directors election Sunday, November 5, 00:00 PST Tuesday, November 7, 23:59 PST  
Additional notes:

Changes which made the switch to 501(c)3 necessary

These are the changes which occurred in the organization in 2005 and 2006 which made the re-think of the structure necessary. The most pressing issue has been that a 501(c)7 hobby club is required to charge dues for membership and to maintain 60% of its revenue from membership-related sources. With contributions for the Linux Picnic, that was on the borderline. But now with Stratofox and SVWUX also likely to bring in donations, there is simply no way to pursue a 501(c)7 any more - we can't bring in enough members or change them enough in dues to meet this requirement. We shouldn't even try.

The Proposed Amendment to the By-Laws

The officers and directors have a draft rewrite of the By-Laws for the 501(c)3 organization. This is open for comments and will be put to a vote of the members when complete. The rewrite by the officers is from 7/14/2006 and updated 9/2/2006, with additional time after that for writing up summaries to help members understand the amendment. Further updates from the members' discussion are expected.

October 12, 2006 Candidate Final Amendment

The October 12 candidate final amendment text includes cleanup-type changes by Ian Kluft and Heather Stern. At this point input from reviewers have come back positive. See also the text in plain English instead of legalese by Heather Stern.

Changes since the September 2 draft

These changes were included since the September 2 draft.

September 2, 2006 Draft Amendment

The July 14 pre-draft and September 2 draft amendment were by Ian Kluft, Heather Stern and TR Fullhart with input from John Delaney and Chris Verges.

Changes since the July 14 Pre-draft

These changes were included in the September 2 draft since the July 14 pre-draft.

Explanation of the changes in the amendment

General concepts
By-Laws are general infrastructure only
If you read the By-Laws, you'll notice it's just a framework for the organization to operate. For example, it sets how to make a policy, but leaves day-to-day details to policies themselves. It sets how SIGs have to organize themselves, but leaves it to a SIGs charter to say exactly how it's organized. These By-Laws are required, as the name implies, by law. The State of California and the IRS have requirements that we have to include in some places in order to show we intend to comply with various laws, and to qualify for state and federal tax-exempt status.
Membership in the Corporation - elimination of dues
The changes to the By-Laws transform the idea from a 501(c)7 hobby club with dues-paying membership to a 501(c)3 charitable organization. We never before had dues - that was something we were trying for years to figure out how to do right, how to fit the organization to that mold. It was just to fit the IRS rules for a 501(c)7 hobby club. Since dues aren't appropriate for a 501(c)3 charitable organization, that actually fits us better, how the organization has always been.
Membership in the Corporation - a "Meritocracy"
Under the new system, new members are voted in by existing members based on accomplishments. The idea of a "meritocracy" is to give influence to those who make accomplishments. Like many things in this By-Laws amendment, this concept is borrowed from the Apache Software Foundation.
Membership in the Corporation - intended only for core organizers
Also borrowed from the Apache Software Foundation, the idea is that the projects which are part of the corporation have wider coverage of membership than the corporation itself. The people who would be members of the corporation as an umbrella organization would be the ones actually interested helping with the functions of the umbrella organization. It's possible to be a member of one or more of the SIGs without needing to be a member of the corporation. Membership in the corporation is required in order to hold an officer or elected position of the corporation or any SIG, and can be arranged specifically for that. Other than that, it becomes unnecessary and doesn't get in the way of the SIGs which sbay.org acts as an umbrella for.
Current voting privileges
To avoid clogging the wheels of the organization when a 2/3 vote is required to get something done. Members can voluntarily declare themselves current or not for voting. A declaration of current voting status expires after 12 months. It doesn't prevent any member from voting. But if they don't have time, they have the option to stay out of the way too.
Keep the bonds between the corporate umbrella and the SIGs legally strong.
The By-Laws must ensure that legal protections apply to all levels in the corporation including its SIGs. The primary examples are the California corporations law, the Volunteer Protection Act of 1997 and any insurance which the corporation acquires in the future. That's the reason why SIG officers and elected officials must be members of the corporation, SIG coordinators have non-voting seats on the Board of Directors and SIG charters must have language and rules specifically tying themselves into the corporation. The bonds to the corporation need to be obvious in order to make these features of the corporation effective and therefore worthwhile for the SIGs.
Definitions (new section)
The definitions of simple and absolute majority vote and the abbreviations SIG and SIGs were added to the beginning.
Article 1. Offices
no changes
Article 2. Purpose
This had to be rewritten.
  • The purpose of the organization is something which must be in proper form for an organization requesting 501(c)3 status from the IRS. The purpose needs to cover our current activities and allow for new ones along a similar theme. This change is intended to clearly describe our activities, give us adequate latitude for the future, and meet the IRS requirements.
  • The IRS has some "magic words" they assign very broad meaning to but expect to see for 501(c)3. They require a 501(c)3 to be orgnized for one or more of these: "charitable", "religious", "educational", "scientific", "literary", and a few other specific cases supported by regulations. We can add other things to the purpose but we need one of these magic words - the applicable one is "scientific". We're not a school so "educational" isn't applicable.
Article 3. Directors
  • Section 7 addresses locations of Board of Directors meetings. We thought the previous wording (which originally came from a Nolo Press template) wasn't sufficiently clear and might be interpreted as only allowing the Board to meet in places covered by prior Board resolutions. We're not a big enough organization to be encumbered by such a restriction. Our Board of Directors are volunteers too. So to make this more flexible, this specifically allows the members of the board to select a location while selecting a time to meet.
  • Section 8 was missing before (a deletion) and was left missing since there was nothing to insert in its place.
  • Section 9 was rewritten to require a minimum of 2 meetings, but not set an arbitrary date. There's a minor change removing the redundant "at the same time" from the requirement for any electronic means of communication with each other.
  • Section 10 changes the procedure for notice of Board of Directors meetings. The old procedure requires one week notice. The new procedure requires 24 hours notice to the board and to members who have subscribed to such notices. Also, this allows the board to meet with no lead time but still requiring a notice if 2/3 of the directors agreed on the time. We should be able to react to most urgent matters that way, and it allows meeting on IRC.
  • Section 13 has changes to the conduct of Board of Directors meetings.
    • The old and new By-Laws both specify a Chairperson of the Board role to chair the board. The new text makes it clear that the Chairperson is to be chosen from among the members of the Board. (That isn't the case with every organization. But we think in our organization it should be one of the elected members.) The changed text also sets a consequence for failure to select a chairperson - the meeting simply must be adjourned. This rule leaves it open for the Board to select one member at a time to act as the chairperson just for one meeting to let more get experience with the role, as long as the Board can agree on that.
    • The text also makes minor changes to the text about selection of the Secretary of the Board of Directors, which remains the Secretary of the corporation or, in his/her absence anyone appointed by the Chairperson.
    • Text added to this allows any member of the corporation to attend any board meeting.
Article 4. Officers
Section 8 adds membership records to the official list of record-keeping responsibilities to the Secretary.
Article 5. Elections
Section 3 is modified to add the new concept of members with current voting privileges, which is defined in Article 10.
Article 6. Decision-making procedures
no changes
Article 7. IRC 501(C)3 tax exemption provisions
  • Everywhere in this article, including the title, 501(c)7 is replaced with 501(c)3.
  • Section 4 "Gross receipts from nonmembership sources" was deleted because it only applies to 501(c)7 hobby clubs, not 501(c)3 charitable organizations. Section 5 was renumbered to 4 to fill the gap.
Article 8. Amendment of By-Laws
Section 2 is modified to add the new concept of members with current voting privileges, which is defined in Article 10.
Article 9. Construction and terms
no changes
Article 10. Members
  • Section 1 was changed to simplify the membership structure from two classes to one.
  • Section 2 clarifies that members must be a "natural person" (i.e. a real person, not a legal entity like a corporation.) It expands the requirement from "efforts" to "efforts and/or resources" that potential new members must be willing to contribute toward the purposes of the corporation.
  • Section 3 was rewritten to implement the meritocracy model of membership. This system is similar to the Apache Software Foundation's membership structure in that members are voted in by the existing membership. Membership in the corporation is intended to be for those who have an interest in participating in organizing the whole structure.
    • New member candidates may be refered by any one of these
      • three members
      • any SIG
      • the Board of Directors
    • New member candidates may be voted in for membership in the corporation by the existing members whose voting privileges are current.
  • Section 4 "Contributing Memberships" was deleted. It was replaced by a new section "Voting Status". Voting status is simply intended to allow members who are too busy to participate to declare themselves inactive or expire active status after 12 months in order to get out of the way of things like 2/3 votes. Entry and exit from active voting status is entirely a voluntary procedure by each member in good standing. A declaration of active status is good for 12 months.
  • Section 5 "Participating Memberships" was deleted. It was replaced with "Members in Good Standing". A member must be in good standing to vote or hold an elected or officer position in the corporation or any SIG. This is intended to allow a less severe sanction on members who commit misconduct that does not warrant expulsion. This gives the Board of Directors the authority to, in effect, suspend a member for cause with a simple majority or without cause by the higher mark of a 2/3 absolute majority. It sets limits on a member's suspension to a maximum duration of 1 year or a condition that must be met. Also, members who don't maintain current contact information can fall out of good standing until submitting current info.
  • Section 10 was modified to remove references to dues.
Article 11. Meetings of Members
  • New text added to Section 1 "Scheduling of regular meetings" specifies acceptable locations of member meetings, clarifying that they can be held electronically too.
  • Section 6 "Voting rights" was modified to remove a requirement for voice votes at members meetings, since it isn't applicable when electronic meetings are allowed.
  • New text added to Section 7 "Action by written or electronic ballot" allows failure to vote to be treated as an implicit abstention except when an absolute vote is required.
Article 12. Special Interest Groups
Article 12 was completely rewritten after it had been the focus of misunderstandings and bitter fighting in SVLUG's departure from sbay.org.
  • Section 1 "SIG Support Project" establishes a project to assist SIGs as needed with the corporation's procedures.
  • Section 2 "SIG Support Officer" creates a position to lead the SIG support project and serve as an ombudsman for the SIGs. The SIG Supoprt Officer is elected by the Board, not just a presidential-appionted post.
  • Section 3 "SIG Formation" now requires a new SIG to submit a charter as part of the application process. The rules allow a charter to be returned for revision without rejecting it. The decision to accept, reject or return for revision belongs to the Board of Directors. Section 5 "SIG Incubation Period" uses another concept from the Apache Software Foundation in that a newly-entering project must go through an "Incubation Period" where it performs and completes the processes necessary to become part of the organization. This sets conditions a SIG in its incubation period must meet in order to advance to permanent SIG status. These conditions come from the By-Laws, any incubation agreement made upon entering, and general incubation policy set by the Board of Directors. It also sets the mark that the Incubation Period is the last chance that the corporation and SIG have to change their minds and part ways - in effect accepting what happenned with SVLUG as something which can happen by Human nature, and is specifically allowed be done under peaceful but controlled circumstances during the Incubation Period.
  • Section 6 "SIG Charters" has a list of requred contents of the organizing documents, or charters, of each SIG. In general, it requires each SIGs charter to
    • state its purpose
    • specifically say that it's organized as a SIG of sbay.org
    • define various specifics about its operating procedures
    • require its officers to be members in good standing of the corporation
    • define election procedures for all elected positions (if any)
    • allow for removal of officer and volunteer positions by the corporation's Board of Directors
    • require adherence to e-mail list policies
    • allow for SIG policies to be removed by the corporation's Board of Directors
    • require the SIG to adhere to Article 6 of the corporation's By-Laws and give the SIG coordinator responsibility to ensure they're followed
    • set procedures for amending the SIG's charter, including requiring approval by the corporation's Board of Directors.
  • Section 7 "Separation of a SIG from the corporation" is a direct result of the SVLUG incidents of January, February and March 2006. After completion of an incubation period, the SIG is nearly an inseparable part of the corporation. But with Human nature being what it is, it's possible for people to want to part paths. But once part of the corporation, the SIG is not allowed to set the rules on how this is done. These rules set up a mandatory cooling off period. If things aren't resolved after that, it's up to the Board of Directors to review the situaiton. Only if permitted by the Board, the SIG may hold a vote of its members whether to separate from the corporation. If the SIG chooses to split away, the By-Laws have to be clear to avoid running afoul of IRS 501(c)3 rules that property cannot be given to individuals. So a separating SIG can lose all its property if it can't find another 501(c)3 charity to accept them. There is simply no other legal way to distribute the corporation's property, which is what the SIG's property is if it completed its incubation period.
  • Section 8 "Dissolution of a SIG" allows the Board of Directors to dissolve a SIG by a 2/3 absolute majority vote.
  • Section 9 "SIG Action as a Group" makes it clear that, except when a procedure is specified by the corporate By-Laws or by any applicable law, each SIG is allowed to make its own policies on how it makes decisions and acts as a group. Or if there is no policy then it can always just use a vote of the SIG membership to make a group decision. For example, this answers a question we were asked about how a SIG can nominate members of the corporation. The first answer is that if it has a policy approved under its own charter, then it uses that procedure. Otherwise a vote of its members will work too.

Procedure for adoption

At the time these changes from 501(c)7 hobby club to 501(c)3 charitable organization became evidently needed, we were in the process of establishing the dues-paying membership system. A handful of people had paid dues for 2006 when that process came to a halt. Legally, they're the only ones who can vote - but we realize that wouldn't be fair to only listen to them. So there are many participants who would intended to join who didn't get the chance.

Input from all participants about the amendment will be accepted during the mandatory 15-day discussion/review period. Discussion and collection of suggestions will be used to change the draft amendment if needed.

During that time, we'll hold an opinion poll of the mail lists of sbay.org, Stratofox, the Linux Picnic and SVWUX. Please indicate whether the proposal has your support, or what it needs to gain your support. If you don't have time to review it, it is meaningful to say, "I support the change to a 501(c)3".

Then with the poll results presented to the Board and the dues-paid members, the amendment will be officially voted on by the rules in the current By-Laws.

Upon approval, we can file these By-Laws with the state and IRS for 501(c)3 status. Yes, they want the By-Laws. Yes, we have to vote on them first. Yes, we have to hold earnest discussion before we vote. Yes, we had to take some time preparing this info to help you understand it. It all takes time.

If you support the 501(c)3 organization effort for the Linux Picnic, Stratofox, SVWUX and/or for sbay.org as a whole, then you need to support one way or another getting this By-Laws amendment done.

We'll convert the current dues-paid members to the first members under the newly-amended By-Laws. Those members will then vote in more members, who will probably initially arrive in a mass nomination by the Board and the SIGs.

 
The South Bay Community Network, Inc.
a 501(c)3 tax-exempt California non-profit corporation 		Thu 2-Nov-2006 <webmaster@sbay.org>