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    OTF - structure and finance discussion

    These are discussion points and ideas, nothing is set in stone and I've put this out there for feedback and discussion. I'll do similar for other subjects around the future of OTF.

    Legal structure

    I've always taken the view that OTF is a collective and a community. Even as admin, I've always taken the view that my job was to keep OTF running and for the benefits of the users as a whole in the spirit of what the community wanted to represent. With the need to handle money almost directly, I am distinctly uncomfortable with being a focal point for the money committed by the users. Basically, I don't like the idea of being the sole point of responsibility / failure of OTF. To use a cliche, I'm here as a custodian of OTF not an owner and my "job" is to make sure that the community is functioning well until the point that the users decide that the responsibility should be passed on to someone else.

    While this was easily done when WSC paid for and effectively "owned" OTF, this wouldn't be the case when we strike out on our own. I think that we require some sort of legal structure. What I am thinking of is establishing OTF as a non-profit legal organisation of some kind. A quick search says that the best way is either as a co-operative or a Community Interest Company. Both of these look like legal entities where we can set up some kind of accountability, plus separate bank accounts and so on and so forth. If anyone has knowledge, experience or advice on setting up either of those two entities, or have a better legal model, I'm more than happy to hear from you.

    (I'm basically stealing the model of another forum which went through this about a decade ago and I'm talking to them to understand exactly what the responsibilities are.)

    I think that by doing this, we can set up some kind of model where no one person is solely responsible for keeping OTF going and yet the people in "charge" can be accountable to the userbase.

    One thing that it does raise, as I understand it, is that if we went down the "co-op" route, then someone donating via Patreon would most likely become a member of the co-operative and have the right to vote on the people running it and stand for positions within the organisation. If we went down the Community Interest Company then that isn't the case. As I say, I might be wrong on this but right now I have no preference either way - a little more of an admin overhead but not much.

    Finances

    In terms of money, the obvious way is to use Patreon to set up a recurring subscription. There will probably also be a way to donate directly as a one-off. I don't know what the required finances would be - at the moment I am working through options and need to understand the size of the site and traffic that it generates. OTF is a big forum and we don't purge old posts. I quite like that but it does mean we have some heavy lifting.

    I have some more thoughts about Patreon and donors but I need to get them in order before posting more suggestions.

    I do want to say that if you want me to take this forward it is on the following starting principles:

    If a co-op or CiC model is adopted, people who donate will have full access to the information about the actions, meetings and finances of OTF should they choose. (Non-donors would not.)
    A co-op or CiC model means that people other than myself may be required to fill positions that are legal requirements, e.g. Treasurer and be co-signatories on bank accounts, legal formation documents etc etc. That probably sounds scarier than it is, I just don't think that one person should be the fulcrum of everything. And these positions will be as unpaid volunteers.
    If OTF makes a "profit" after donations and costs, then it is kept back for either reinvestment to keep/improve service or simply stored for a rainy day. It will not be redistributed to the membership or the people running it.
    OTF remains completely free to all users, whether they donate or not
    OTF remains advertising free for all users

    One thing I do want to make clear is that we are not in danger of shutting our doors through lack of finances - I have received several offers of donations via PM and I'm willing to put my own money in as well to keep the lights on for a good while yet. We don't need any payments or financial commitments just yet.

    There's probably a whole lot more but the floor is open.

    #2
    Would the income or profit of a co-op or CiC be subject to taxation?

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      #3
      I'll have to check, but I think there is some status where because these are voluntary donations and not in exchange for goods or services then it doesn't count.

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        #4
        I donated one time and feel bad that I have not donated more often, but part of that is I have no clue about the costs. Perhaps there is a thread that explains that but I tend to go to the same sub-forums whenever I come around. I only saw this because I looked at the recent posts preview on the front page for the first time in 6 or 7 months. So, it might be good to know the actual costs (and that would include your time SP or someone else's time who manages the forum when updates need to occur, when some jerk tries to hack, etc.).

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          #5
          Thanks, Snake

          That is a terrific starting point for the discussion

          Assuming that we would want the collective to be a creature of English law (and I, for one, think that there are multiple reasons why it should be), there are other posters who are much more qualified to opine on the available options. That said, my sense is very much in line with Snake's.

          On finances, as I said on the other thread, my only issue with a Patreon is the cut that they take (currently 5 to 12 percent plus processing fees). Alternative arrangements that would provide most or all of Patreon's benefits at a lesser cost would obviously be worth looking at.

          I would hope that we wouldn't be short of volunteers to fill required posts, while at the same time hoping that any selection process would not be contentious. Some kind of rota is one possibility.

          On costs, the only data point that we have at the moment is that the current hosting costs are in the neighbourhood of GBP 275 each month. Snake has always refused any compensation and I don't know if there are other costs beyond hosting (does Kunena (the forum software) require a paid licence?) Presumably we can get more information on such questions as we move forward.

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            #6
            For info, we have a paid for perpetual licence for vBulletin 5. There are some additional mods which I paid for myself at vbMods.rocks (off the top of my head, about 30 quid total).

            The only costs are hosting and support with the hosting company. They handle patching of the servers, backups, restores and technical queries.

            I've put the stats in another thread but we have a server which is quad-core, 4Gb RAM and a modern SSD. (Size of the SSD isn't important.) We generate on average 66Gb of traffic a month.

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              #7
              The info on this page:

              https://www.taxadvisermagazine.com/a...axable%20trade.

              outlines the tax sutuation for CICs and other non-profits - basically if any surplus is to be retained for future continuation of the contract (i.e. server upgrades/repairs) or potentially refunded, it's not tax liable as it's still the customer's money. BBC v Johns trumps Ransom v Higgs in this case.

              I read the whole article before realising I know/knew the author, did some work with him years and years ago and he's sound, or was then.

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                #8
                I think NHH would know about this.

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                  #9
                  The best option would be a co-operative, which benefits from the Mutual Trading Advantage. In this, we only ever transact with members, so we don't receive any income from non-members. And if the co-op is ever wound up, the money is returned to all members. As there's a consensus for free at point of use, and no ads, this fits perfectly. Crucially, in order to benefit from this, we need to have the ability to give the money back to us on liquidation, so that rules out CICs, as they are all about the Asset Lock that is expressly provided to prevent that.

                  As a result, we're not trading in the HMRC-defined sense of the term, merely passing money around amongst ourselves in a closed loop (similar to a members' club).

                  So, there are 3 options for a Co-op in UK law. A Co-op Society, a Co-op Company, with the latter possibly a company limited by shares (CLS), or by guarantee (CLG).

                  It's generally horses for courses, but some key differences:

                  Co-op Society
                  Registered with the FCA, info held on Society Register
                  No publicly searchable directory of Directors; Directors are named on the annual return the society submits to the FCA, and those forms are downloadable, but there's no search facility like with companies house
                  Bog standard fee to create one is ?40 fee to FCA plus ?150 fee to Co-ops UK as registering agents
                  No fees payable on an annual basis for annual returns
                  Can issue share capital if need to raise substantial income as exempt from FCA regulations on public investment drives; can give tax relief on sums raised to people investing

                  Co-op Company
                  Registered with Companies House
                  Costs ?13 to create
                  Costs ?13 per year thereafter to file annual return
                  Info about Directors is on searchable database on Gov.uk (Directors can elect to have their addresses listed as the same as the business address)
                  Can raise investment but as a company, is restricted, as covered by FCA regs on public investment drives
                  If a CLS, can get investment tax reliefs (with caveat about difficulty in getting investment in first place)

                  Ordinarily, I'd say lets go with a society, as I think they're the best form for a co-op. However, there is an issue with banking. Basically, all the banks' systems plug into the Companies House data and being a company is helpful; if we wanted to use a challenger like Starling or Monzo (which I'd recommend, since they're digital first) then we'd need to be a company. If we ever wanted to become a co-op society, we could convert at a later date. It's also a cheaper option.

                  I'd be happy to lead on this - there's basically two choices I'd suggest here:

                  1) Bog standard co-op company template by co-ops UK, which we can amend to allow things like rewarding people who do extra work (mods, sysops etc) should we want to
                  2) More avant grade 'Fair Shares' Model, built to have sociocratic governance baked in, along with easy facility to 'reward' people who do work with greater shareholdings so if the thing ever went tits, that labour can be rewarded should funds be available

                  Comment


                    #10
                    Very informative post. Thanks.
                    Last edited by Sporting; 15-02-2021, 19:23.

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                      #11
                      Yeah, yeah, very nice NHH. I think we can all agree the important question is: can we call ourselves the New Day Co-op, or is that already taken?

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                        #12
                        In honour of that short-lived newspaper?

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                          #13
                          Great knowledge NHH, thanks.

                          Comment


                            #14
                            I was a director of a limited company that became a CIC and there are some interesting aspects to it. For example, you need to have more Directors on the board who are unpaid staff than paid staff, and anyone who pays a pound to become a member gets an invite to the AGM. The AGM is a legal requirement and has to be quorate so you have to get a decent number of people turning up or notifying of proxy votes. That can be stressful in itself.

                            Under a Co-op model would contributing financially towards the running cost make you a member of the OTF Co-op and then confer on you rights to attend meetings etc? I presume it would. That would be a reason for new people to start contributing financially - to be part of the decision-making process. But would it make it awkward to enforce community standards e.g. banning people? I suppose we just need to factor that in.

                            Comment


                              #15
                              Separately on the funding stream, I know a lot of websites who name their patrons and some have different levels of patronage, like bronze, silver and gold. I'm not saying that's a way to go but it might be something to consider.

                              Comment


                                #16
                                True, but the issue with different levels of donation is that it might be in the expectation that there are different levels of "reward". Not sure how we can do different levels of "nothing except the warm glow of a good deed well done". :-)

                                I think that there will the ability to do Patreon, Paypal/Stripe/whatever or bank transfer. Should cover all bases for regular donations or one-offs.

                                Comment


                                  #17
                                  PT - There's nothing in law that requires directors in a CIC to be majority-non executive. That seems like it was a requirement of the specific organisation you were a Director of, rather than mandatory as a result of being a CIC.

                                  The whole mutual trading thing could work, but it is only necessary if HMRC considers that what is going on is itself a trade. Given we'd be funding OTF via donations rather than subscriptions, it would be easier to say that we're not-trading at all, and therefore can be classed as dormant for tax purposes.

                                  Comment


                                    #18
                                    That's a really useful point there, NHH, about being dormant for tax purposes.

                                    I'm not sure where the idea of having unpaid directors outnumbering paid directors came from in the CIC I was in. The MD was very insistent on it though and it caused no end of headaches. I wouldn't be at all surprised to find that it was unnecessary and yet presented as a requirement. There were a few things over the years like that where certain things we "had" to do turned out not to be needed.

                                    Comment


                                      #19
                                      FWIW, it looks like the running costs per year are likely to be 600-1000 GBP a year, depending on the solution chosen. I'd love to aim for income to be ~25-40% above that to cover any surprises. I don't know if that affects anything.

                                      And don't hold me to those numbers yet, either!

                                      Comment


                                        #20
                                        Originally posted by Snake Plissken View Post
                                        FWIW, it looks like the running costs per year are likely to be 600-1000 GBP a year, depending on the solution chosen. I'd love to aim for income to be ~25-40% above that to cover any surprises. I don't know if that affects anything.

                                        And don't hold me to those numbers yet, either!
                                        Thanks Snake. Is that 100% a monthly payment or a break-down as such? Obviously we need cash for the annual cycle (or whatever) for the URL and whatnot.

                                        Comment


                                          #21
                                          Off the top of my head, hosting would be monthly, domain renewal a one-off payment every year (or possibly two, I have to check), licencing is covered already though that was done by WSC and Arrangements May Need To Be Made, admin costs would be yearly, all other costs would be one-offs.

                                          Comment


                                            #22
                                            I guess we need to sell merch.

                                            Comment


                                              #23
                                              Thanks Snake Plissken that's really good news at it coming in at a third of predicted costs.

                                              Comment


                                                #24
                                                So, when and how do we start paying for this, rather than/in addition to WSC?

                                                Comment


                                                  #25
                                                  Bump for johnr 's question.

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