Time to talk costs

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Time to talk costs Scott Converse 7/5/13 12:40 PM
OK.. rubber meets the road folks.

The Mall is ready to lease us the 3000SF space.  The insurance guys are willing to insure us.

The costs:

$500 Mo. 'rent'
$500 deposit
$700 (approx) annual insurance cost (must be paid for the full year).

So, $1700.00 to get this space going.

That's about equal to what we saw people say they'd be willing to put in as founding members.  So, that's goodness.

The downside:  It's also about equal to the cost of applying for a 501(c)3 ($1800).

So, we can do one, or the other, but not both.  That, or we can commit to putting up more founding member money.

Most hackerspace require a minimum amount to be a founding member (usually $300, some more, some less..but that's the average).  I was hoping we'd get 10 people to throw down that much.  We're not really close to that.

So, should we go ahead with the space, the 501(c)3 or ask for more money?

We'll have a bank account later today.  If we want to go ahead with the space, we'll need checks starting next Tuesday.

Scott
Re: Time to talk costs Scott Converse 7/5/13 2:06 PM
We have a checking account:

TinkerMill.  

No inc, llc or anything else.. just TinkerMill.

s
Re: Time to talk costs Cody Daig 7/5/13 2:23 PM
So there is a deposit on the mall space?
Re: Time to talk costs Alan Bennett 7/5/13 3:07 PM
Hmm.  I don't think I see the whole picture.  Can we post a budget for 6-12 months so we can clearly see how much we are off? In this message, it's not clear (to me) what size of a sum we are looking for from members (or founders).  $300/mo? $300 annual? $300-1 time,   (Maybe it's clearly written somewhere and I just need to read the manual)?  Of course, travel and other arrangements has interfered and I haven't made a single meeting, but I'm very interested in seeing this effort be successful.  

Alan


On Friday, July 5, 2013 1:40:41 PM UTC-6, Scott Converse wrote:
Re: Time to talk costs Jeff Cragg 7/5/13 3:27 PM
Here is a quick visualization of the cash flow as I understand it:


j.


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Re: Time to talk costs Cody Daig 7/5/13 5:16 PM
I would like to see us in the space. Because then we can collect membership dues and then get the non-profit status covered.
Re: Time to talk costs Lars C 7/6/13 9:21 AM
If the request is to put more up front, then I have to bring up a few points:

There doesn't appear, or I haven't seen, a plan for how this organization is going to be developed into a sustainable hacker space.  The money being put up front by founders is an investment plain and simple.  Where is that investment going?  Its more than just a finding a physical space its about developing a business plan of how to form then grow a successful hacker space.  While the focus now is on the physical location, I don't know that I'm comfortable fronting the money without knowing whats next.  My fear is that it would just be to a place of needing more money or a loss of my investment.

If we're donating this amount of money, how is it being controlled?  Who's managing it?  Who's overseeing the management?  Who's deciding how the money is spent?  What are the determining factors of being a broke hacker?  I mean I want to go to Belize this year, but I don't really think that me choosing to do so means I have to pay lower dues.  Similarly, do I really qualify as broke if I'm carrying around an Apple product?  How people choose to spend their money is no ones business, but I'm not interested in going broke while others reap the benefit.

I feel that jumping on a space before we have the money and before these things are thought through is putting the cart before the horse.  The group should be formed and functioning as something that provides a benefit to its members before taking such a step.  Getting a space to put nothing in, is a waste of money.  Getting non-profit status is the first step.  There needs to be a solid foundation that we can build on and over time it will grow in popularity, gain respect in the community and more opportunities will open up for a long term physical location, donations and grants.

That foundation begins with the 501(c)3 application. For example, with that application we can request donations from companies that can provide that benefit to founding members: (LULZBot 3d printer donation request)


Re: Time to talk costs Tim Mensch 7/6/13 9:44 AM
On 7/6/2013 10:21 AM, Lars C wrote:
> That foundation begins with the 501(c)3 application. For example, with
> that application we can request donations from companies that can
> provide that benefit to founding members: (LULZBot 3d printer donation
> request)
> http://www.lulzbot.com/?q=company/sponsorship-form

I'm only on the sidelines here, but I noticed this message.

It seems like the current plan calls for ~$1800 to form a 501(c)3? While
I'm here I want to throw out the fact that there are a bunch of places
online that promise $500-$1200 (including fees and heaping with IRS
queries). [1] Not sure if these have been looked into, since I haven't
followed all the messages. Apologies if I've missed the discussion here
and the $1800 solution was decided on in lieu of the Internet solutions.

Regardless, it takes time to get a 501(c)3. The site I linked below
claims "as little as 30 days", but I've heard stories of waiting six
months. It takes 15 minutes and $50, on the other hand, to file for an
LLC in Colorado. And it seems like some folks are not interested in
waiting on the IRS to get started. I'm pretty sure that SSD (Boulder
Hackerspace) started up a few months before 501(c)3 status was approved,
and I didn't hear about any problem with that.

Tim



[1] http://charitynetusa.com/501c3-price-comparison.html
Re: Time to talk costs Scott Converse 7/6/13 11:38 AM
OK.. let's see if I can get everything answered in one post.  :)

First, you should come to the weekly meetings. If you're not coming to the weekly meetings, you're not getting the whole picture.  It's where we discuss and through consensus come up with a 'yea..let's do that' or a 'no.. bad idea' decision.

There isn't a deposit on the mall space yet.  It's only good for a few months so we're paying 1 mo. 'rent' ($500) and 1 month 'deposit' ($500) at once.  So, $1000 to move in then $500 mo.  We're also paying for 1 year of insurance ($1M per instance, $2M aggregate general liability and $500K property damage).  Insurance is required by the lease (here, or anywhere else we go).  This is a one time (annual) fee of about $700.

Jeff's visualization was about right, except for the numbers.  

Here's what we've gone over and agreed to in the meetings numberwise:

Starving hacker/Student monthly:  $25

Regular member monthly: $50

Entire Family monthly: $75

As an aside, these are low monthly fees.  Boulder's hackerspace (Solid State Depot) is $65 mo. for regular members.  Pumpstationone is $70 mo. for a regular membership.  Denver's Denhac numbers are identical to ours (and they are considering raising them because 'they're so low').

The $300 I mentioned is what the average hackerspace founding group (i.e. 'Foundering Members")  of people put in to get things going.  One time.  It's to pay for the initial startup costs of renting a space, getting insurance, outfitting it a bit, etc.  The more you get the more you can do.  

In answer to Lars C (who asked some good questions):

1) The business plan is simple.  Put together a physical space where makers can create, collaborate, teach and share knowledge.  Charge membership fees to cover the basic costs of rent/utils/insurance.  Take donations (and loans) of equipment from members and local community entities and take donations of money (hence, the need for a 501(c)3, making said donations tax deductable).  

A couple of thousand hackerspaces started with this business plan.  Denhac (of which I'm on the board of) has this as it's business plan and it's been around 5 years and is going strong.  As discussed in the meetings, we all seemed fine with this approach.

Also, an investment of $300 is, well, not exactly a huge investment.  If you're not comfortable making it, no worries.  Don't throw in.

2) The way the money's being controlled is outlined in the By-Laws.  We formed a subcommittee which come up with these by-laws:


Everyone was invited to participate online and then, at an in person meeting, we finalized them.  So, these are the by-laws we'll be starting with.  The TL:DR version is:  the board controls the money.  The board appoints a Treasurer, who is responsible for controlling the money under the boards direction.  (Section 3, subsection iv.).

3) What are the determining factors of being a broke hacker:  This was a big discussion at Denhac as well (but it was 'what defines a 'student').  We decided to trust our members to be honest.  If you are a starving hacker (not much money) or a student (defined as: you say you're a student)... well, then you are.  Trust your members.  if they aren't a starving hacker (because, you know.. they just came back with a nice tan from Belize), everyone will figure it out soon enough and we'll have a talk with that member on the side.

4) "Jumping on a space" before we have the money and things are thought through isn't really what's going on.  We've talked it through pretty thoroughly actually but you have to come to the meetings to do that.  The majority voted to jump on the space.  Both via online poll (http://www.meetup.com/LongmontHackerSpace/polls/854252/) and in the last meeting (by a larger majority than the poll).

5) Having 501(c)3 status is what makes you real:  Not so.  Denhac ran for 4 years without 501(c)3 designation.  It was 'merely' a Colorado Non Profit corporation (just like TinkerMill is at the moment).  Anyone who's been there can see that it's a pretty well stocked hackerspace.  It only got the 501(c)3 designation in March of this year. And that was only because I wanted it to get a Low Power FM broadcast license at Denhac (the FCC gives preference to  501(c)3 orgs for LPFM licenses).   That said: it's a big advantage.  We should do it now.  But it is definitely not required in order to start a solid, well grounded, organization.  

The cost of a getting a 501(c)3 can vary, but Denhac paid about $1800.  And, we just did this-so that's a pretty fresh data point.  It took us 60 days from the time we submitted the application to the IRS to getting the letter of determination saying we were granted the federal non profit status.  The breakdown of that cost:  $850 fee to the IRS.  $500 fee to the CPA firm specializing in filling out 501(c)3 forms to ensure they were approved (and approved quickly, i.e. no questions, back and forth, etc.).  $450 to our own CPA to 'check' the other specialist CPA (in GA.) to make sure what they were doing wasn't going to get us in trouble (Denhac's Treasurer is thorough, and..maybe a little paranoid).  So, technically, you could do it for $1350 if you didn't want to verify (which might be safe now that we know the firm in GA is legit and it delivers).

Long response, I know.. but hopefully that answers most of the questions/concerns.

Scott

Re: Time to talk costs Jeff Cragg 7/6/13 7:32 PM
So, I played with the numbers a bit.  Purely WAGs (wild guesses).  Feel free to adjust the numbers for your own projections.

j.