As Leslie announced earlier today in here posting
with subject: upcoming: futher thoughts on where from here
> Accordingly, some people volunteered to write down some text
> for each, drawing on and extending Carl's documents. The
> outcome of that writing exercise will be circulated here
> later today -- i.e., a note describing a possible implementation
> of Scenario C in more detail, and a separate note describing
> the derived scenario (dubbed "Scenario O").
>
> One thing that is important to note about these notes
> is that there is a lot of commonality in their structure,
> and a number of places where the text could have been
> copied from one to the other. For example, both have
> some form of oversight board or committee. The details as
> written, however, *do* differ between the notes. This
> is because the contexts are slightly different for the
> 2 scenarios, and because the differences amount to details
> we can debate and fix if we pick one of these to move
> forward with. I.e., "who is a voting member of the oversight
> group" should not be a deciding factor in whether you
> think the revised Scenario C is better than Scenario O, or
> vice versa.
>
> The IAB and IESG have not discussed these extensively, but have
> helped to try and get better and clarified documentation of each
> of those Scenarios. The IESG and IAB are now reviewing them
> in detail. We are also following your discussions/comments
> very carefully, and based on that they will evaluate to try
> and come to a recommendation. So we are eagerly awaiting your
> thoughts and inputs on whether either of these seems to be
> a viable path or what further work needs to be done.
>
>
> Leslie.
>
So here is the current description of Scenario C in the form of a note.
Bert
Not an Internet-Draft B. Wijnen
Lucent Technologies
H. Alvestrand
Cisco Systems
P. Resnick
QUALCOMM Incorporated
September 20, 2004
AdminRest Scenario C: An IETF Administrative Support Foundation as an
Independent Nonprofit Corporation
Abstract
This document defines a proposal for an IETF Administrative Support
Foundation (IASF) as an independent not-for-profit corporation as a
means for providing focused support for IETF community activities.
It proposes the creation of an IASF Board of Trustees (BoT) that is
mainly selected by and accountable to the IETF community and would
provide oversight for the IETF Administrative Support Foundation.
The IASF will also establish and maintain a strong relationship with
the Internet Society (ISOC) and the current relationships between
IETF and ISOC will basically be left unchanged.
In order to allow the community to properly evaluate this scenario,
some draft Articles of Incorporation and draft Bylaws for the IASF
are included. Some draft BCP wording for the IASF, IETF and ISOC
relationships is also included.
Wijnen, et al. [Page 1]
AdminRest Scenario C AdminRest Scenario C September 2004
Table of Contents
1. Overview of Scenario C . . . . . . . . . . . . . . . . . . . . 4
2. Work Plan for the IETF Administrative Support Foundation . . . 6
2.1 Workplan goals . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Incorporation process . . . . . . . . . . . . . . . . . . 6
2.3 Contract establishment . . . . . . . . . . . . . . . . . . 7
2.4 Performance evaluation . . . . . . . . . . . . . . . . . . 8
2.5 Budgeting for 2006 . . . . . . . . . . . . . . . . . . . . 8
2.6 Reporting . . . . . . . . . . . . . . . . . . . . . . . . 9
3. Details of the IETF Administrative Support Foundation . . . . 9
3.1 Organizational Form and Legal Domicile . . . . . . . . . . 9
3.2 Draft Core Principles . . . . . . . . . . . . . . . . . . 9
3.2.1 Principles of Establishment and Governance . . . . . . 10
3.2.2 Principles of Operation of the IETF Administrative
Support Foundation . . . . . . . . . . . . . . . . . . 11
4. Draft MoU between ISOC, IETF and IETF Administrative
Support Foundation . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Form and Scope of the Agreement . . . . . . . . . . . . . 11
4.2 Cooperation mechanism . . . . . . . . . . . . . . . . . . 12
4.3 Promises Not to Do Things . . . . . . . . . . . . . . . . 13
4.4 Initial contribution . . . . . . . . . . . . . . . . . . . 13
4.5 Termination, law and so on . . . . . . . . . . . . . . . . 14
5. Notes and Explanations . . . . . . . . . . . . . . . . . . . . 14
5.1 Type of legal instrument . . . . . . . . . . . . . . . . . 14
5.2 Power Balance . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Budget figures . . . . . . . . . . . . . . . . . . . . . . 14
6. Draft Incorporating Documents for the IETF Administrative
Support Foundation . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Draft Articles of Incorporation . . . . . . . . . . . . . 15
6.2 Draft Bylaws of the IETF Administrative Support
Foundation . . . . . . . . . . . . . . . . . . . . . . . . 15
6.2.1 Article I: Organization . . . . . . . . . . . . . . . 16
6.2.2 Article II: Purpose . . . . . . . . . . . . . . . . . 16
6.2.3 Article III: Members . . . . . . . . . . . . . . . . . 16
6.2.4 Article IV: Offices . . . . . . . . . . . . . . . . . 16
6.2.5 Article V: Board of Trustees . . . . . . . . . . . . . 16
6.2.6 Article VI: Officers . . . . . . . . . . . . . . . . . 20
6.2.7 Article VII: Amendments . . . . . . . . . . . . . . . 22
6.2.8 Article VIII: Dissolution . . . . . . . . . . . . . . 22
6.2.9 Article IX: Miscellaneous Provisions . . . . . . . . . 23
7. Acknowledgment of Contributions and Reviews . . . . . . . . . 23
8. IANA Considerations . . . . . . . . . . . . . . . . . . . . . 24
9. Security Considerations . . . . . . . . . . . . . . . . . . . 24
10. References . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.1 Normative References . . . . . . . . . . . . . . . . . . . . 24
10.2 Informative References . . . . . . . . . . . . . . . . . . . 24
Authors' Addresses . . . . . . . . . . . . . . . . . . . . . . 25
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AdminRest Scenario C AdminRest Scenario C September 2004
A. Justification, Reasoning and Motivations . . . . . . . . . . . 26
A.1 Changes to the name of the administrative entity . . . . . 26
A.2 Domicile . . . . . . . . . . . . . . . . . . . . . . . . . 26
A.3 Changes to the composition of the BoT . . . . . . . . . . 26
B. Domicile of the IETF Administrative Support Foundation . . . . 27
C. Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . 28
C.1 US Domicile risks . . . . . . . . . . . . . . . . . . . . 28
C.2 Non-profit status risk . . . . . . . . . . . . . . . . . . 29
C.3 Execution risks . . . . . . . . . . . . . . . . . . . . . 29
C.4 Insolvency risk . . . . . . . . . . . . . . . . . . . . . 30
C.5 Legal risks . . . . . . . . . . . . . . . . . . . . . . . 30
Wijnen, et al. [Page 3]
AdminRest Scenario C AdminRest Scenario C September 2004
1. Overview of Scenario C
This document follows from two previous documents. [RFC3716] defined
the overall parameters and criteria for an administrative
restructuring. [I-D.malamud-consultant-report] provided an analysis
of the implications of several of the suggested strategies. This
document picks one strategy and develops it further.
In order to provide the most focused and effective administrative
support to the IETF community, this updated scenario C proposes a new
and well-defined legal entity to support the IETF administrative
functions. The name of that new entity is "The IETF Administrative
Support Foundation" (IASF).
First, it is important to understand that the IETF has been organized
as an Activity of the Internet Society (ISOC) and as such represents
the "Standards and Protocols" pillar of ISOC. Under this proposal,
the IETF would continue to be an integral part of the Standards and
Protocols pillar of ISOC. ISOC currently provides these important
functions to the IETF:
1. Standards Process Functions.
ISOC plays a fundamental role in the IETF Standards Process,
including appointment of the Nominating Committee (Nomcom) chair,
confirmation of IAB members, confirmation of documents that
describe the standards processes, and acting as the last resort
in the appeals process. These Standards Process Functions are
defined in [RFC2026], [RFC2028], [RFC2031], and [RFC3677].
2. IETF Fund Raising Functions.
ISOC provides the fund raising function as one source for
financial support the IETF.
3. Administration Functions.
ISOC provides administrative and financial functions, managing
the contract with the RFC Editor, providing insurance for
selected IETF participants, and administering a discretionary
fund for use by the IAB and the IETF Chairs.
The administrative restructuring of the IETF proposed in this
document keeps that basic relationship between IETF and ISOC.
Specifically, the recommendation does not propose any changes to the
"Standards Process Functions" or to the "IETF Fund Raising
Functions".
Under the "Administration Functions", ISOC both funds and administers
some (as stated above) parts of the IETF Administrative Support
Functions. Some of the funds (like for the RFC-Editor) go directly
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AdminRest Scenario C AdminRest Scenario C September 2004
to the contractor who executes the administrative function. The
streamlining of the administrative support for the IETF ultimately
intends to put the complete Administrative Support Functions under
the newly recommended IASF. This means that we recommend that
ultimately, ISOC funds for the IETF will be transferred to the IASF,
which will then administer all the contracts and payments according
to an approved yearly budget. The details of that process will be
documented in a Memorandum of Understanding (MoU) between ISOC, IETF
and IASF.
This updated AdminRest Scenario C aims to provide the following:
o A continued close relationship between IETF and ISOC.
o A well defined legal entity within which the IETF can define the
administrative activity in terms of IETF community needs.
o A Board of Trustees with operational oversight that is accountable
to the IETF community.
o Continued separation between the IETF standards activity and any
fund-raising for standards work.
o A close and well defined relationship between IASF and ISOC,
documented in a BCP (or MoU).
o Appropriate ISOC oversight of its standards activities funds via a
yearly budget approval and open reporting of funds spent.
In scenario C, it is intended that the IETF Administrative Support
Foundation will be a tax-exempt not-for-profit corporation as defined
by Articles of Incorporation and a set of Bylaws. These will
describe the scope and purpose of the IASF and they also define the
structure and responsibility of the Board of Trustees (BoT), a body
that is mainly selected by the IETF and which is responsible for
overseeing the IASF. A draft of the Articles of Incorporation and
Bylaws is included in the next sections of this document.
Scenario C allows us (IETF) to establish IETF control over our
administrative support functions in terms of determining that they
meet the community's needs, and adjusting them from time to time
using IETF processes. This is to address the pressing administrative
issues outlined in [RFC3716].
Scenario C also encourages us (the IETF) to regularly evaluate that
we do want to continue the relationships with ISOC and the contracts
with our services providers (contractors). It is based on the
premise that we prefer to actively maintain relationships with other
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AdminRest Scenario C AdminRest Scenario C September 2004
organizations and service providers instead of being bound to such
relationships based on poorly defined and poorly documented
historical facts. A draft BCP for the relationship between ISOC,
IETF and IASF is included as a separate section in this document.
Scenario C does however bring the burden of creating a new legal
entity (IASF) and such an undertaking is also not without risks. It
will need careful planning and execution. Migration from the current
structure to this new structure is probably also somewhat more costly
and time and labour consuming. The sections below try to show how
that would be achieved and outlines what further steps are needed to
provide more detail if this scenario is chosen.
2. Work Plan for the IETF Administrative Support Foundation
This section gives the work plan for the IETF Administrative Support
Foundation (IASF) for the remainder of 2004 and the year 2005.
2.1 Workplan goals
The work plan below is intended to satisfy three goals:
o Satisfy the IETF's need for support functions in 2005
o Operate with a positive account balance throughout 2005
o Start building up a fund inside the IASF to serve as a buffer
against budgetary emergencies in later years (such as meetings
with a severe cost overrun, or force-majeure cancellations).
The fund target is 6 months of operating revenue, and the target for
building up the fund is 3 years. The budgeted set-aside for the fund
should thus be approximately 17% of operating revenue.
2.2 Incorporation process
There are 3 things that need to be in place before that corporation
can be considered viable at all:
o IETF consensus on the plan
o ISOC agreement on a reasonable support contract
o Assurance that the corporation will have tax-exempt status
Once this document has been discussed in the IETF, and the IESG and
IAB gauges that rough consensus seems reached, the IETF leadership
will take the following actions:
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AdminRest Scenario C AdminRest Scenario C September 2004
o Publish a Last Call on this document (to determine plan
consensus).
o Choose a negotiating team to negotiate the ISOC contract.
o Choose an executive search team to find the IASF Administrative
Director (IAD).
o Consult with legal counsel to determine how best to achieve
tax-exempt status; this will affect the bylaws and articles of
incorporation.
When the Last Call is over, the IESG will consider whether there is
still consensus, and if there is, approve this document for
publication. Once that happens, it will take the following steps:
o As soon as negotiations conclude, publish a Last Call on the ISOC
contract.
o As soon as drafting of legal documents is completed, publish a
Last Call on the Bylaws and Articles of Incorporation, and ask the
Nomcom to start the process of selecting Nomcom-selected board
representatives.
These Last Calls are "speak now" Last Calls - if someone wishes to
challenge the IETF consensus to go ahead with these actions, knowing
what the formal documents will look like, this is their last chance.
When these Last Calls are over, the IETF chair, the IAB chair and the
ISOC President will jointly file the articles of incorporation, and
the IESG, IAB and ISOC will fill their board seats.
Note: This document does not say when a Request for Information (RFI)
for IETF support services such as meeting planning is sent out.
Advice is sought on the earliest point where this can be done.
2.3 Contract establishment
The most important activity for late 2004/early 2005 is to finalize
contracts for the support of the IETF. This includes:
o Funding
o Technical infrastructure
o Meeting management
o Clerk's office
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AdminRest Scenario C AdminRest Scenario C September 2004
o RFC Editor
o IANA
There appears to be consensus in the IETF community that these
functions, whether they are offered for free, remunerated or arranged
for other consideration, should be under contract.
The contract for funding is expected to be with ISOC, and should be
finalized before IASF is established.
The contract for technical infrastructure is expected to be an RFP,
published in November of 2004, with responses being evaluated in
December 2004, and services rendered from a mutually agreed date
early in 2005.
The contract for meeting management will be influenced by the need to
have stable agreements for the 2005 meetings at an early date. This
indicates that IASF will honor a pre-IASF agreement to have these
meeting contracts signed by Foretec (if that can be achieved).
It is not clear how the contract for the clerk's office is to be
managed at the time of this writing.
The contract for the RFC Editor is expected to be with ISI, and is
expected to be a continuation of the current contract with ISOC,
which runs until the end of 2005.
The contract with IANA will replace or augment the current MoU
between the IETF and ICANN. In its simplest form, it would simply be
a reconfirmation of the duties of ICANN under the MoU.
2.4 Performance evaluation
The second task of the IASF is to make sure the IETF gets the support
it needs. The IASF will work together with the IETF community to
make an effort to identify whether or not the IETF's needs are being
met, and to coordinate improvements with the contractors. This is an
ongoing activity.
2.5 Budgeting for 2006
In June 2005, the IASF will start the yearly budgeting process with
ISOC, as specified in the ISOC contract, leading to a work plan and
budget for 2006.
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AdminRest Scenario C AdminRest Scenario C September 2004
2.6 Reporting
The IASF will present monthly updates on its economic status. These
will be delivered to ISOC as part of the ISOC contract, and also be
made publicly available so that the IETF community can inspect them.
3. Details of the IETF Administrative Support Foundation
This section contains details about the proposal to change how the
day-to-day IETF administrative support functions are provided. This
recommendation is based on the initial description of "Scenario C"
in the "Administrative Support Analysis"
[I-D.malamud-consultant-report] provided by Carl Malamud. It is
further based on discussion in the IESG and IAB and on feedback on
Carl's document as received on the IETF mailing list. Further
justifications, reasoning and motivations are given in Appendix A.
Risk Analysis is done in Appendix C.
This document recommends to create a well defined and legal entity
called "The IETF Administrative Support Foundation" (IASF). The name
intends to clearly express that this new legal entity has only one
single function, namely to provide the administrative support of the
IETF Standardization and Protocol Development activities. This
entity will ultimately manage and administer all the administrative
functions that are needed to support the IETF - the Standardization
and Protocol Development activity of ISOC.
3.1 Organizational Form and Legal Domicile
The consultant report [I-D.malamud-consultant-report] contains a
writeup on various choices in terms of how and where to incorporate.
This recommendation has made the choice to incorporate in the US in
the state of Virginia. Some detail can be found in Appendix B.
In this scenario, administrative support functions for the IETF are
legally housed in a focused, incorporated institution (although the
Administrative Director might be physically housed within the
Internet Society).
This scenario defines a number of concrete linkages with the Internet
Society, which supplement the current close interconnection of the
IETF community with ISOC. The relationship is to be documented in a
MoU (initial text is in Section 4).
3.2 Draft Core Principles
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3.2.1 Principles of Establishment and Governance
The following principles are to be respected for the establishment
and governance of the IETF Administrative Support Foundation (IASF)
and are the basis for the Draft Articles of Incorporation as in
Section 6.1 and the Draft Bylaws as in Section 6.2:
1. The IASF shall be governed by a Board of Trustees (BoT), who
shall be responsible for the fiscal, legal, and administrative
infrastructure that supports the activities of the IETF.
2. The governance of the IETF, the standards process, and all other
aspects of how we make our standards are defined in the
procedural Best Current Practice (BCP) RFC series, which will be
explicitly referenced in the organization documents of the IASF.
3. The IASF shall be transparent and responsible to the IETF.
4. The BoT shall appoint a Secretary and a Treasurer, who need not
be members of the BoT. The IETF Administrative Director (IAD) of
the IASF shall provide staff support to the BoT.
5. The BoT shall be composed to strike a balance between "outside"
and "inside" directors. The IESG and IAB will each select a
representative to serve as a voting member of the BoT.
Mechanisms such as the Nominating Committee (Nomcom) and the
appointment of certain seats by the ISOC fulfill the outside
director obligations.
6. IAB, IESG and ISOC will have liaisons to the BoT in order to have
a good basis for interaction.
The BoT will have strong governance over a limited scope of
activities (e.g., the fiscal, legal, and administrative
infrastructure that are the charter of the IASF) but will have no
authority over the IETF standards process. In this board
composition, the ISOC and Nomcom appointments ensure that outside
directors with no perceived conflicts of interest are on the board.
All nominating bodies should make strong fiscal, legal, and
administrative acumen essential selection criteria for this position.
IAB and IESG representatives will serve for one year. For other
appointments, a term proposed for the nominated positions is three
years with staggered appointments. However, the nominating body
might have the power to change their appointee during their term.
All members of the BoT selected by the IETF are subject to the same
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AdminRest Scenario C AdminRest Scenario C September 2004
recall procedures in effect for the IETF leadership such as members
of the IAB and IESG.
3.2.2 Principles of Operation of the IETF Administrative Support
Foundation
The following are general principles for the operation of the IASF:
1. The IASF shall employ an IETF Administrative Director (IAD) of
the IASF, who shall be hired by the BoT with the advice and
consent of the IESG and IAB.
2. All support services shall be contracted in an open and
transparent manner.
3. The IAD shall submit a proposed annual budget to the BoT at least
90 days before the beginning of the fiscal year. Such budget
shall be developed with the advice and consent of the IAB and
IESG.
4. The IAD shall serve on the BoT as a non-voting, ex-officio
member.
5. The BoT shall select a professional audit firm and shall
commission an audit immediately upon the close of each fiscal
year.
6. The IASF will conduct financial reporting in a fully transparent
fashion. Audits shall be conducted promptly and published. Tax
returns shall be published. Detailed financial statements will
be published on a regular basis, including timely reports on the
financial results of IETF meetings.
4. Draft MoU between ISOC, IETF and IETF Administrative Support
Foundation
4.1 Form and Scope of the Agreement
This section presents some principles to be incorporated in a draft
MoU/Contract between the Internet Society (ISOC) and the IETF
Administrative Support Foundation (IASF), detailing the work each is
expected to perform, the responsibilities each has, and the means by
which these functions are accomplished. This MoU/Contract shall be
published as an RFC.
The MoU/Contract will specify the responsibilities of the Internet
Society, including:
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AdminRest Scenario C AdminRest Scenario C September 2004
o Reaffirmation of the Standards Process Function that ISOC performs
for the IETF.
o Continuation of the Fund Raising Function that ISOC conducts, in
which a single, unified campaign is used to solicit corporate,
individual, and other organizational donations for funding of the
3 Pillars.
o Disbursement of funds to the IASF according to the agreed-upon
budgets and processes as specified in this agreement.
o Verification that IASF spends these funds to support the work of
the IETF, within the scope described in the IASF bylaws.
Responsibilities of IASF:
o Determine, in cooperation with the IETF, the support functions
that are needed for the IETF, and can be achieved within available
funds.
o Enter into contracts for these support functions.
o Supervise these contracts and ensure that they are being performed
in the best interest of the IETF, within a reasonable budget and
with agreed-upon performance.
4.2 Cooperation mechanism
IASF and ISOC agree that they will perform a budgeting procedure each
year, comprising the following steps:
o IASF puts together a budget proposal to ISOC, and presents it in
June. This will specify the functions that need to be performed,
the cost of each, the expected revenue from IETF meeting
participation, and how much is being requested for ISOC to
contribute.
o By the end of August, ISOC will give a budget number to IASF that
says how much ISOC is willing to contribute to support the
functions described in the IASF budget.
o Before November 1, ISOC and IASF will agree on a budget, an ISOC
contribution, and a disbursement schedule.
o If either party sees that there is reason to change the budget,
they can start a negotiation to do so at any time. On mutual
agreement to a change, payments are modified accordingly.
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AdminRest Scenario C AdminRest Scenario C September 2004
o ISOC may withhold funds if IASF fails to account for its
expenditures, if it determines that IASF has departed
significantly from its budgeted expenditures without agreement
with ISOC to do so, or if ISOC determines that IASF is spending
funds in violation of its bylaws.
4.3 Promises Not to Do Things
This section lays out things that would constitute interference in
each others' business, or things that are Just Plain Wrong. In legal
terms, these are called "covenants."
ISOC will not place requirements on how IASF does business, except on
reporting. It will, for instance, not attempt to influence IASF
choice of contractors or choice of meeting sponsors. This
restriction is meant to enforce the separation between fund raising
and the actual operation of the standards process.
IASF will not ask companies for money. IASF may ask for sponsors for
IETF events, per tradition, and may accept zero-cost provider
contracts or in-kind donations, but ISOC is the organization charged
with fundraising.
Neither ISOC nor IASF will attempt to influence technical decisions
of the IETF standards process.
4.4 Initial contribution
The Internet Society has already allocated $700,000 in transition
funds. As part of the formation process, this section sets out a way
that a 2005 allocation of funds and an initial contribution for
startup can be decided upon. NOTE: This section is a GUESS! Its
purpose is to give some sense of where we're at.
If this plan is pursued, one of the first activities is to put
together a detailed 2005 budget, including an analysis of cash flow
and balance sheets to make sure that the organization is properly
funded and will be solvent throughout the year. This planning
process should project out 3 years and show how the organization will
be able to accumulate the appropriate cash reserve to make sure
operations can continue in a stable manner.
An initial estimate is for an on-going annual contribution of USD
900.000 to IASF in 2005. In addition, ISOC will contribute an
additional USD 600.000 as an initial fund to start up IASF, payable
after the Board of Trustees is seated and this contract is signed and
approved by the IETF.
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AdminRest Scenario C AdminRest Scenario C September 2004
ISOC commits to this ongoing level of contribution (USD 75.000 per
month) for the lifetime of this contract, unless modified by mutual
agreement.
4.5 Termination, law and so on
This agreement may be terminated by either party for any reason on 12
months' notice.
The parties may reach mutual agreement on a shorter termination
period.
All conflicts under this agreement are to be adjudicated under the
laws of the United States and the State of Virginia, however the
parties may also agree to arbitration, mediation or any other
conflict resolution mechanisms.
5. Notes and Explanations
This is where we put down why things are the way they are.
5.1 Type of legal instrument
This document is styled as a contract - an agreement between two
parties, enforceable under law. An alternate formulation would be a
Memorandum of Understanding - but we want it to be clear to everyone
that the parties stand behind their responsibilities under this
document. At the moment, the authors see no compelling arguments for
not making it a contract. In either case, the document is published
as an RFC.
5.2 Power Balance
As written, it is designed to make it easy to do the right thing as
long as the parties agree what that is, to make it clear that ISOC
will continue to pay money as long as IASF does the Right Thing (and
reports what it's doing), and that ISOC can stop the show quickly if
it's clear that IASF is not doing the Right Thing.
5.3 Budget figures
The main purpose of the numbers is to make it clear that there WILL
be numbers in this contract, and that it WILL represent a solid
commitment by ISOC. The numbers are "subject to change without
notice" while this contract is negotiated.
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6. Draft Incorporating Documents for the IETF Administrative Support
Foundation
6.1 Draft Articles of Incorporation
This section contains standard, pro-forma Articles of Incorporation.
Note well that tax lawyers often make significant alterations to
standard Articles as they consider a 501(c)(3) application. They are
included here merely as a sample for illustrative purposes only.
'Commonwealth of Virginia -- State Corporation Commission'| 'Articles
of Incorporation -- Virginia Nonstock Corporation'| Form SCC819, 07/
03 [1]
------
The undersigned, pursuant to Chapter 10 of Title 13.1 of the Code of
Virginia, [Virginia] state(s) as follows:
1. The name of the corporation is The IETF Administrative Support
Foundation.
2. The corporation shall have no members.
3. The purpose of the corporation is to manage and administer all
the administrative functions for the IETF - the Standardization
and Protocol Development activity of the Internet Society.
4. The Trustees of the corporation shall be elected or appointed as
specified in Article IV (Section 6.2.5) of the Bylaws.
5. Name and agent:
A. The name of the corporation's initial registered agent is:
XXX
B. The initial registered agent is a domestic or foreign stock
or nonstock corporation, limited liability company, or
registered limited liability partnership authorized to
transact business in Virginia.
6. The initial Trustees are: XXX
7. The incorporators are: XXX
6.2 Draft Bylaws of the IETF Administrative Support Foundation
As with the Draft Articles, the Draft Bylaws included here are a
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pro-forma, standard version. Substantial alteration may be required
as legal counsel reviews the specific nature of an incorporation.
6.2.1 Article I: Organization
The name of the Corporation shall be The IETF Administrative Support
Foundation (which is hereinafter also referred to as the "IASF").
6.2.2 Article II: Purpose
*Section 1: Purpose.* The IASF shall be operated exclusively for
nonprofit educational, charitable, and scientific purposes,
including, without limitation, the purposes stated in the IASF's
Articles of Incorporation.
*Section 2: Restrictions.* No part of the net earnings of the IASF
shall inure to the benefit of, or be distributable to, private
persons, except that the IASF shall be authorized and empowered to
pay reasonable compensation for services rendered, and to make
payments and distributions in furtherance of the purposes set forth
in Article II, Section 1 hereof. Any other provision of these Bylaws
to the contrary notwithstanding, the IASF shall not carry on any
activities not permitted to be carried on by a corporation exempt
from Federal Income Tax under Section 501(a) and Section 501(c)(3) of
the Code. These Bylaws shall not be altered or amended in derogation
of the provisions of this Section.
6.2.3 Article III: Members
The IASF shall have no members and no stockholders.
6.2.4 Article IV: Offices
The office of the IASF shall be as determined from time to time by
the Board of Trustees (BoT) within or outside of the State of
Virginia.
6.2.5 Article V: Board of Trustees
*Section 1: Authority and Responsibilities.* The power, authority,
property, and affairs of the IASF shall at all times be exclusively
exercised, controlled, and conducted by or under the authority of the
Board of Trustees (BoT) subject to any limitations set forth in the
Articles of Incorporation and in accordance with the Virginia
Nonstock Corporation Act as it now exists or hereafter may be
amended.
*Section 2: Board of Trustees Composition.* The Board of Trustees
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shall consist of seven (7) Trustees.
One (1) Trustee will be selected by the IAB.
One (1) Trustee will be selected by the IESG.
Two (2) Trustees will be selected by the Internet Society.
Three (3) Trustees will be selected by the IETF community.
The IAB chair and IETF chair will functions as liaisons from the IAB
and IESG respectively to the Board of Trustees. The chair and
president of the Internet Society will function as liaisons from the
ISOC to the Board of Trustees.
*Section 3: Terms.* The term of office of IESG and IAB Selected
Trustees shall be one (1) year or until their successors have been
selected and assume office. The term of office of otherwise Selected
Trustees shall be three (3) years or until their successors have been
selected and assume office. Selected Trustees may be selected to
serve multiple terms.
*Section 4: Selection of the Board of Trustee*
1. *Selection of IESG and IAB Selected Trustees.* The IESG and IAB
shall each select one representative Trustee, who is not at the
same time an IESG or IAB member.
2. *Selection of otherwise Selected Trustees.* Three (3) IETF
Selected Trustees shall be selected by the IETF nominations
process (as defined in [RFC3777] or its successor) and confirmed
by the IESG. Two ISOC Selected Trustees shall be selected by the
Internet Society using means of their own choosing.
3. *Resignation.* A Selected Trustee may resign by delivering his
resignation in writing to the IASF at its principal office or to
the Secretary of the IASF. Such resignation shall be effective
upon its receipt or upon such date (if any) as is stated in such
resignation, unless otherwise determined by the Board.
4. *Removal.* A Selected Trustee selected by the IETF nominations
process may be removed from office at any time using the
procedures specified in [RFC3777] or its successor. A Selected
Trustee selected by the Internet Society may be removed by the
Internet Society using means of their own choosing.
5. *Vacancies.* Any vacancy in the Board of Trustees shall be filled
using the procedures set forth above on the composition of the
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Board of Trustees. The Trustees shall have and may exercise all
of their powers notwithstanding the existence of one or more
vacancies in their number.
*Section 5: Quorum.* A majority (i.e. fifty (50) percent plus one
(1)) of the Trustees shall constitute a quorum for the transaction of
business. Unless otherwise stated in these Bylaws, decisions of the
Board of Trustees shall be made by the concurrence of a majority of
members of the Board of Trustees present and voting. If at any
meeting there is no quorum present, the Board must not transact
business.
*Section 6: Compensation and Reimbursement.* No member of the Board
of Trustees may receive compensation for his or her services as a
Trustee. A Trustee shall, at their request, be reimbursed for
actual, necessary and reasonable travel and subsistence expenses
incurred by them in performance of their duties.
*Section 7: Meetings.* The Board of Trustees shall meet at least
twice annually.
1. *Written notice, waiver, action.* Wherever the text below speaks
of "written" it is also permitted to use e-mail.
2. *Annual Meeting.* The Board of Trustees shall hold a public
Annual Meeting at a time and place associated with the first IETF
meeting each year. This Annual meeting shall be open to all IETF
attendees except that the parts of the meeting dealing with
personnel issues may be held in executive session.
3. *Meeting Types, Methods, and Notice.* Meetings of the Board may
be held from time to time at such intervals and at such places as
may be fixed by the Board. Meetings of the Board may be held
only in person or via teleconference. Notice of all regular
meetings of the Board shall be delivered to each Trustee by
e-mail or by postal mail and announced on the IETF-Announce list
at least ten (10) calendar days before the meeting. Special
meetings of the Board may be called for any purpose at any time
by the Chairman of the Board or by any three (3) Trustees.
Notice of any special meeting shall state the purpose of the
meeting. A Trustee may waive notice of a meeting of the Board of
Trustees by submitting a signed, written waiver of notice, either
before or after the meeting. A Trustee's attendance at or
participation in a meeting waives any required notice of the
meeting unless at the start of such meeting or promptly upon
arrival the Trustee objects to holding the meeting or transacting
business at the meeting, and does not thereafter vote for or
assent to action taken at the meeting.
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4. *Actions Taken By the Board of Trustees Without Meeting.* Any
action required or permitted to be taken at any meeting of the
Board of Trustees may be taken without a meeting if all Trustees
consent in writing to such action. Such action shall be
evidenced by written consents approving the lack of a meeting,
signed by each Trustee.
*Section 8: Board Committees.* The Trustees may elect or appoint one
or more committees (including but not limited to an Executive
Committee) and may delegate to any such committee or committees any
or all of their powers, provided that any committee to which the
powers of the Trustees are delegated shall consist solely of
Trustees. Committees shall conduct their affairs in the same manner
as is provided in these By Laws for the Trustees. The members of any
committee shall remain in office at the pleasure of the Board of
Trustees.
*Section 9: Trustee Member Conflict of Interest.*
1. As set forth in Section 9(3) below, a Trustee of the IETF
Administrative Support Foundation (IASF) who has a personal
interest in a transaction, as defined below, may not participate
in any discussion of that transaction by the Trustees of The IASF
and may not vote to determine whether to authorize, approve, or
ratify that transaction except as specifically described below.
For purposes of these Bylaws, a "personal interest" is defined as
any act that will provide, directly or indirectly, a financial
benefit or a disparate benefit individually to the Trustee, or to
a company he or she is employed by, has a significant financial
interest in, or represents in any fashion. However, policies
under consideration by the IASF are likely to have an impact on
the business of every Trustee. It is expected that most policy
decisions will have a direct or indirect impact on the Trustee's
company, but such a non-individualized interest does not
constitute a "personal interest" as used in these Bylaws. A
"transaction" with The IASF for purposes of these Bylaws is a
contract or consultancy in which the Trustee has a direct or
indirect financial benefit, or a policy under consideration that
will have a disparate and unusual impact on a business with which
the Trustee is directly or indirectly associated.
2. The mere existence of a personal interest by a Trustee of The
IASF in a transaction with the IASF shall not invalidate the
IASF's ability to enter that transaction so long as the following
conditions are met: (i) the material facts of the personal nature
of the transaction with The IASF and the Trustee's interest in
the transaction with the IASF are fully disclosed to the Board of
Trustees of the IASF, either by the Trustee having a direct or
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AdminRest Scenario C AdminRest Scenario C September 2004
indirect personal interest in the transaction with the IASF, or
are brought to the attention of the Board by a third party; or
(ii) the BoT of the IASF, by a vote of the Trustees (without a
conflict of interest) of the IASF vote to authorize, approve, or
ratify a transaction with the IASF; or (iii) the transaction with
the IASF in which the direct or indirect personal interest of a
IASF Trustee was disclosed to the BoT of The IASF and was
determined by the BoT of the IASF entitled to vote on the matter
is determined by the BoT voting to be in the IASF's interests,
notwithstanding the personal interest of the non-voting Trustee.
3. In determining whether a conflict of interest exists, the BoT of
the IASF has the prerogative, upon review of all facts and
circumstances, to make its own determination of whether a
conflict of interest exists and how it is appropriate to proceed.
A Trustee who perceives the possibility of a conflict of interest
for him or herself, or for another Board member, may raise this
issue at any point prior to a vote on any issue. Any Trustee who
perceives a possible conflict of interest may present
justification with respect to whether or not a conflict of
interest exists, but the entire Board, with the exception of the
Trustee having the potential conflict of interest, shall make the
final determination to proceed in such a matter. If the BoT
finds there is a conflict of interest, the Trustee with the
conflict may be excluded by the Chair of the Board from that
portion of any meeting where a substantive discussion or decision
to engage or not in such a transaction is made, except that he or
she may provide any information that will assist the Trustees in
such a matter before leaving such a meeting.
*Section 10. Approval of Meeting Minutes.* Minutes of the BoT of the
IASF must be approved by a procedure adopted by the board and
published on the IASF web site.
6.2.6 Article VI: Officers
*Section 1: Number.* The officers of the IASF shall consist of a
Chairman of the Board, a Treasurer and a Secretary, and such other
inferior officers as the BoT may determine.
*Section 2: Election Term of Office and Qualifications.* All officers
shall be elected annually by the vote of a majority of the Board of
Trustees present and voting (excluding abstentions) at the Annual
Meeting. The Treasurer and Secretary need not be members of the
Board. The Chair of the IETF nor the chair of the IAB shall be the
Chairman of the Board of the IASF.
*Section 3: Resignation.* An officer may resign by delivering his
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written resignation to the IASF at its principal office or to the
Chair or Secretary. Such resignation shall be effective upon receipt
or upon such date (if any) as is stated in such resignation, unless
otherwise determined by the Board.
*Section 4: Removal.* The BoT may remove any officer with or without
cause by a vote of a majority of the entire number of Trustees then
in office, at a meeting of the BoT called for that purpose. An
officer may be removed for cause only if notice of such action shall
have been given to all of the Trustees prior to the meeting at which
such action is to be taken and if the officer so to be removed shall
have been given reasonable notice and opportunity to be heard by the
BoT.
*Section 5: Vacancies.* In case any elected officer position of the
IASF becomes vacant, the majority of the Trustees in office, although
less than a quorum, may elect an officer to fill such vacancy at the
next meeting of the BoT, and the officer so elected shall hold office
and serve until the next Annual Meeting.
*Section 6: Chairman of the Board.* The Chairman of the Board shall,
when present, preside at all meetings of the BoT of the IASF. If the
Chairman is not available to preside over a meeting, the majority of
the Trustees present shall select another Trustee to preside at that
meeting only.
*Section 7: Treasurer.* The Treasurer shall have the custody of all
funds, property, and securities of the IASF, subject to such
regulations as may be imposed by the Board of Trustees. He or she
may be required to give bond for the faithful performance of his or
her duties, in such sum and with such sureties as the BoT may require
or as required by law, whichever is greater. When necessary or
proper, he or she may endorse on behalf of the IASF for collection,
checks, notes and other obligations, and shall deposit same to the
credit of the IASF at such bank or banks or depository as the BoT may
designate. He or she shall make or cause to be made such payments as
may be necessary or proper to be made on behalf of the IASF. He or
she shall enter or cause to be entered regularly on the books of the
IASF to be kept by him or her for that purpose, full and accurate
account of all monies and obligations received and paid or incurred
by him or her for or on account of the IASF, and shall exhibit such
books at all reasonable times to any Trustee on application at the
offices of the IASF incident to the Office of Treasurer, subject to
the control of the BoT. Certain duties of the Treasurer as may be
specified by the BoT may be delegated by the Treasurer.
*Section 8: Secretary.* The Secretary shall have charge of such
books, records, documents, and papers as the BoT may determine, and
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shall have custody of the corporate seal. The Secretary shall keep,
or cause to be kept the minutes of all meetings of the BoT. The
Secretary may sign, with the Chairman, in the name and on behalf of
the IASF, any contracts or agreements, and he or she may affix the
corporate seal of the IASF. He or she, in general, performs all the
duties incident to the Office of Secretary, subject to the
supervision and control of the Board of Trustees, and shall do and
perform such other duties as may be assigned to him or her by the BoT
or the Chairman of the BoT. Certain duties of the Secretary as may
be specified by the BoT may be delegated by the Secretary.
*Section 9: Other Powers and Duties.* Each officer shall have in
addition to the duties and powers specifically set forth in these By
Laws, such duties and powers as are customarily incident to his
office, and such duties and powers as the Trustees may from time to
time designate.
6.2.7 Article VII: Amendments
*Section 1: By Laws.* These By Laws may be amended by an affirmative
vote of a majority of the Trustees then in office (excluding
abstentions) at a regular meeting of the board or a meeting of the
board called for that purpose as long as the proposed changes are
made available to all trustees and posted to the IETF Announce list
at least 30 days before any such meeting.
*Section 2: Articles of Incorporation.* The Articles of Incorporation
of the IASF may be amended by an affirmative vote of two-thirds of
the BoT then in office at a regular meeting of the board or a meeting
of the board called for that purpose as long as the proposed changes
are made available to all trustees and posted to the IETF Announce
list at least 30 days before any such meeting.
6.2.8 Article VIII: Dissolution
Upon the dissolution of the IASF, the IASF, after paying or making
provisions for the payment of all of the liabilities of the IASF,
dispose of all of the assets of the IASF exclusively for the exempt
purposes of the IASF in such manner or to such organization or
organizations operated exclusively for social welfare or charitable
purposes. Any such assets not so disposed of shall be disposed of by
a court of competent jurisdiction of the county in which the
principal office of the organization is then located, exclusively for
such purposes. In the event of a sale or dissolution of the
corporation, the surplus funds of the corporation shall not inure to
the benefit of, or be distributable to, its Trustees, officers, or
other private persons.
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6.2.9 Article IX: Miscellaneous Provisions
*Section 1: Fiscal Year.* The fiscal year of the IASF shall be from
January 1 to December 31 of each year.
*Section 2: Execution of Instruments.* All checks, deeds, leases,
transfers, contracts, bonds, notes and other obligations authorized
to be executed by an officer of the IASF in its behalf shall be
signed by the Chairman of the Board or the Treasurer, or as the
Trustees otherwise determine. A certificate by the Secretary as to
any action taken by the BoT shall as to all persons who rely thereon
in good faith be conclusive evidence of such action.
*Section 3: Severability.* Any determination that any provision of
these By-Laws is for any reason inapplicable, illegal or ineffective
shall not affect or invalidate any other provision of these By-Laws.
*Section 4: Articles of Incorporation.* All references in these By
Laws to the Articles of Incorporation shall be deemed to refer to the
Articles of Incorporation of the IASF, as amended and in effect from
time to time.
*Section 5: Gender.* Whenever used herein, the singular number shall
include the plural, the plural shall include the singular, and the
use of any gender shall include all genders.
*Section 6: Successor Provisions.* All references herein: (1) to the
Internal Revenue Code shall be deemed to refer to the Internal
Revenue Code of 1986, as now in force or hereafter amended; (2) to
the Code of the State of Virginia, or any Chapter thereof, shall be
deemed to refer to such Code or Chapter as now in force or hereafter
amended; (3) the particular sections of the Internal Revenue Code or
such Code shall be deemed to refer to similar or successor provisions
hereafter adopted; and (4) to the Request for Comment Series shall be
deemed to refer to the Request for Comment Series as they are now in
force or hereafter amended.
7. Acknowledgment of Contributions and Reviews
A lot of text was taken from the report from Carl Malamud. Further
review was done by various IESG and IAB members. Carl Malamud also
reviewed this document and helped with making the text better English
and easier to read.
This document was created with "xml2rfc"<http://xml.resource.org/>
using the format specified in [RFC2629].
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8. IANA Considerations
This documents requires no action from IANA.
9. Security Considerations
This document describes a scenario for the structure of the IETF's
administrative support activities. It introduces no security
considerations for the Internet.
Safety considerations for the integrity of the standards process are
outlined in Appendix C.
10. References
10.1 Normative References
[RFC2026] Bradner, S., "The Internet Standards Process -- Revision
3", BCP 9, RFC 2026, October 1996.
[RFC2028] Hovey, R. and S. Bradner, "The Organizations Involved in
the IETF Standards Process", BCP 11, RFC 2028, October
1996.
[RFC2031] Huizer, E., "IETF-ISOC relationship", RFC 2031, October
1996.
[RFC3677] Daigle, L. and Internet Architecture Board, "IETF ISOC
Board of Trustee Appointment Procedures", BCP 77, RFC
3677, December 2003.
[RFC3716] Advisory, IAB., "The IETF in the Large: Administration and
Execution", RFC 3716, March 2004.
[RFC3777] Galvin, J., "IAB and IESG Selection, Confirmation, and
Recall Process: Operation of the Nominating and Recall
Committees", BCP 10, RFC 3777, June 2004.
[Virginia]
State of Virginia, "Title 13.1: Corporations, Limited
Liability Companies, Business Trusts", Undated,
<http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+TOC1301000>
.
10.2 Informative References
[I-D.ietf-xmpp-core]
Saint-Andre, P., "Extensible Messaging and Presence
Wijnen, et al. [Page 24]
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Protocol (XMPP): Core", draft-ietf-xmpp-core-24 (work in
progress), May 2004.
[I-D.malamud-consultant-report]
Malamud, C., "IETF Administrative Support Functions",
draft-malamud-consultant-report-01 (work in progress),
September 2004.
[RFC2629] Rose, M., "Writing I-Ds and RFCs using XML", RFC 2629,
June 1999.
URIs
[1] <http://www.state.va.us/cgi-bin/
scc-clerkdl.pl?scc819&Articles_of_Incorporation_-_Nonstock_Corporation>
Authors' Addresses
Bert Wijnen
Lucent Technologies
Schagen 33
3461 GL Linschoten
Netherlands
Phone: +31-348-407-775
EMail: bwijnen@xxxxxxxxxx
Harald Tveit Alvestrand
Cisco Systems
Weidemanns vei 27
Trondheim 7043
Norway
EMail: harald@xxxxxxxxxxxxx
Peter W. Resnick
QUALCOMM Incorporated
5775 Morehouse Drive
San Diego, CA 92121-1714
US
EMail: presnick@xxxxxxxxxxxx
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Appendix A. Justification, Reasoning and Motivations
Quite a bit of the proposals from the consultant report have been
incorporated in this recommendation. However, a number of changes
have been made. In this section we try to explain which changes were
made and why.
A.1 Changes to the name of the administrative entity
In order to make it very clear that the new and legal administrative
entity is separate from the ISOC IETF activity that deals with
standardization and protocol development, this recommendation uses
"The IETF Administrative Support Foundation" as the name for the
corporation to be created.
A.2 Domicile
Various questions have been raised if the choice of Domicile should
be further investigated. In order to make progress this document
recommends to make a definite choice now and go for a US based
not-for-profit corporation in the state of Virginia. Further
investigation would most probably delay the whole process by at least
half a year.
A.3 Changes to the composition of the BoT
The consultant report had a proposal for Position-based Trustees,
which would automatically make the IAB chair and the IETF chair
voting members of the Board of Trustees (BoT) of the IETF
Administrative Support Foundation. There was discussion on the IETF
mailing list that those people are not selected because of their
business acumen but rather for their technical leadership. We do not
want to change those criteria. Another concern was that this might
generate a conflict of interest as well. So this recommendation has
made the IAB and IETF chairs liaisons to the BoT.
Instead of making IAB and IESG chairs voting Trustees, this
recommendation specifies that IAB and IESG can each select an outside
(i.e. not a member of IAB or IESG) person as a voting Trustee.
The selection of three (3) IETF selected Trustees has not changed in
this recommendation. However, there is a concern that the current
composition of the Nomcom is not tailored to selecting people for
this position. So over time a different process may need to be
defined for selecting those Trustees.
In order to balance the ISOC and IETF people present at the BoT
meetings, this recommendation also specifies that the chair and
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president of ISOC also function as liaisons to the BoT of the IETF
Administrative Support Foundation.
Appendix B. Domicile of the IETF Administrative Support Foundation
A U.S. non-profit, non-member corporation is being recommended.
This recommendation is based on simple considerations of expediency
and pragmatism: a transition will be simplest and least risky (in the
short term). The reasoning is as follows:
o Administrative support for the IETF is currently enmeshed in a
series of relationships with other institutions, most of which are
also U.S.-chartered non-profit organizations. Any change in the
institutional status of administrative support functions will
require familiarity with U.S. nonprofit law. Incorporation in
another country would require familiarity with those laws as well.
Thus, the incorporation expenses would be higher and the process
would take longer.
o U.S. law has a strong concept of "nexus," which is a
determination of when a foreign organization has enough
relationship to U.S. law to fall under the jurisdiction of a U.S.
court. Because of a long history of operating in the U.S.,
numerous meetings in the U.S., and the large number of U.S.
residents who are participants and leaders, we feel it is likely
that U.S. courts would find nexus in relation to our US-based
activities, even if the IETF administrative support organization
was incorporated in another country. In other words,
incorporating in a country besides the U.S. does not necessarily
free the support organization from any perceived vagaries of U.S.
law.
o Incorporating in a country other than the US may have tax
implications if the Internet Society is providing funding support.
o It is very likely that the IETF Administrative Support Foundation
would be deemed to clearly fall under the "scientific" and
"educational" grounds for classification as a tax-exempt charity
under section 501(c)(3) of the IRS code, so a tax-exempt
application should be quite straight-forward.
o The incorporation laws of the U.S. states being considered do not
require that any members of the Board of Trustees be of a certain
nationality or state residency (e.g., there are no "local
director" requirements). The U.S. Dept. of Commerce
foreign-controlled organization reporting requirements apply only
to "business enterprises", and do not apply to non-profit entities
such as an IETF administrative support organization.
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Since this document recommends incorporating in the U.S., Virginia is
the logical pick as the state of domicile to allow the IETF
administrative support organization to make use of ISOC headquarters
to house its single employee (though the employee might be able to be
housed at the Internet Society even if the incorporation were
elsewhere, for example the ISOC Geneva office).
Appendix C. Risk Analysis
This scenario (as do all scenarios) has some risks. This section
tries to enumerate the sort of risks that we recognize and summarizes
why we think we can accept the risk or what kind of action we think
we can take if the risk indeed materializes into a problem.
C.1 US Domicile risks
As explained in [I-D.malamud-consultant-report], incorporating in the
US carries two specific risks: the perception of the IETF being a
US-based organization and the potential for (or perception of)
governmental interference.
The IETF is an international organization. However, even now, the
fact that the IETF standards processes are run in English and that
many of its current support organizations are US-based leaves an
impression that the IETF is too US-centric. Incorporating the new
administrative entity in the US may add to that perception.
Also, the IETF history is based in US federal government research and
funding. Though IETF is long separated from those beginnings, even
in the past few years there have been interactions between the US
government and the IETF that have concerned people. Incorporating
the administrative entity in the US may invite more US governmental
interference in the standards activity of the IETF, or at the very
least may leave the perception that the US government might get
involved.
Both of these are serious problems, but we think there is
justification for and at least one mitigation to these risks. Of
course, the primary reason to consider US incorporation is expedience
(See section 4.4.1.1 of [I-D.malamud-consultant-report]). We agree
that the expedience makes US incorporation worth the risk. But
incorporating in multiple domiciles would significantly mitigate the
risk. Assuming we go down the path of US incorporation, we would
like legal counsel to advise on the possibility of incorporating in
other domiciles (specifically Switzerland and The Netherlands) at a
later date after US incorporation has been completed. If this is (as
we suspect) indeed possible, we think this would be the best way to
go forward.
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C.2 Non-profit status risk
One of the risks pointed out to incorporation was the potential that
we would not get non-profit status, and that we must therefore
preserve some money in escrow for tax liability purposes. Estimates
for the time it will take to get such status can be several months or
even longer in some cases.
It is important to point out that the tax liability is based on
profits, not on gross revenues. If the IASF is only taking in enough
money to cover expenses, there would be very little tax liability.
However, if more revenue is brought in than is spent, for example to
build up an endowment or operating reserve, that "profit" is
potentially taxable if non-profit status is not granted.
To mitigate this risk, the corporation could be created and
non-profit status applied for first, and operation of the corporation
would only begin after non-profit status was obtained. The IETF
would use an interim plan for continued operations until that time.
This way, no money would need to be in escrow during the process of
applying for non-profit status. However, that seems an excessively
cautious path to take given what appears to be the fairly clear
non-profit nature of the IETF.
Commencing operations while the non-profit application is being
considered, but being careful about balancing revenue with expenses
and keeping an appropriate escrow account seems like a prudent task.
Further, any fund raising campaigns that result in shifts to the
balance sheet of the IASF should be conducted cautiously until
non-profit status is granted.
C.3 Execution risks
It is important that the execution goes well. Risks that we are
aware of include:
o we can't hire a good IAD
o we fail to project cash flow properly and go insolvent
o we can't cut a deal with Foretec and have no 2005 meetings
o we get bad lawyers and they take too long and charge too much
o isoc runs out of money and doesn't tell us early enough
In order to mitigate these problems we have a proposed work plan
included in this document. It is important that we get review of
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this work plan by as many eyes as we can get, to make sure we have
considered all the possible steps that need to be taken.
C.4 Insolvency risk
Improper management controls and procedures or other imprudent fiscal
or administrative practices could expose the IETF to a risk of
insolvency. Careful selection of trustees, a process of budget
approval, and a methodical system of fiscal controls are necessary to
minimize this risk.
C.5 Legal risks
Improper formulation of the legal framework underlying the IETF may
expose the institution and individuals in leadership positions to
potential legal risks. Any such risk under this plan appears to be
equivalent to the risk faced by the community under the current legal
framework. This risk is further mitigated by a thorough review by
legal counsel, and by use of insurance coverage.
The legal exposure is best minimized by a careful adherence to our
procedures and processes, as defined by the Best Current Practice
Series. A carefully stated process, such as the BCP documents that
govern the selection of leadership positions and define the standards
process are the best insurance against legal exposure, provided care
is taken to stick to the process standards that have been set.
Adherence to a public rule book and a fully open process are the most
effective mechanisms the IETF community can use.
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