In early 2009 the Community Oversight Committee (also known as the core team) sent the OSM board a message that began:

"The Core Team would like OSM to investigate and report on the feasibility of creating some sort of company which can deal with the financial issues currently facing the project.
• as a means of handling revenue and expenditure needed by the project without sacrificing OSM's non-profit nature.
• as a means of attracting or developing new funding sources.
• to make it easier to disburse funds to individuals and organisations to compensate them for work performed which furthers the goals of the project."


The board spent most of 2009 considering how to respond to this in the context of our responsibilities as a non profit board, which are different from the responsibilities of  COC members or other people involved in the Joomla! Project.  In the extensive work that was done in response to this email, the board made the decision that it was important to take a step back. That is, that the COC was proposing a solution, but to a set of problems that had not really been well defined. So, we took the three points on the list as goals and sought to examine how best to reach them, whether through the formation of a for profit company or some other means. So as goals, we knew we wanted to increase revenues, maintain non profit status for OSM, and create the possibility of compensating key individuals and organizations.  However, the board did not accept that the solution necessarily had to be the creation of a for profit company

The question the COC asked the board has to do fundamentally with the long term survival and success of the Joomla! Project. In exploring the issue of how OSM should be organized and should use its resources to best support the long term survival and relevance of the Joomla! Project it is useful to see how this is managed in other large and successful open source projects. Last spring members of the OSM board looked more closely at several. These included Mozilla, MediaWiki, Apache HTTP  Server/Apache Software Foundation, Ubuntu, Moodle, WordPress and Drupal. During the summer of 2008 the mission of the Joomla! Project was  defined as "to provide a flexible platform for digital publishing and collaboration." This combined with the potential loss of the then senior developers (Andrew and Louis) led us to focus in particular on how development leadership is funded in various projects.

 

Background

Joomla! emerged as a fork of Mambo in August 2005. The Mambo codebase was originally developed as a proprietary application with paid developers. When it was released as an open source application Andrew Eddie became the major developer, writing the majority of the new code. His work was funded by the (then) Toowoomba City Council almost full time for a period between Feb 2003 and Oct 2005. Other small contributions were made through consulting contracts; for example the Joomla 1.5 MVC was derived from a commercial project that Louis Landry and Andrew were involved in during 2006. Development of com_comments for Joomla! 1.6 was also partially funded by retail sales of the comments extension for 1.5 by JXtended.  Other than that, essentially all development has been "funded" by the core developers personally through their contribution of time, which at times has meant  20-40 hours or more per week. At some times such commitments have not been possible and development has gone into periods of dormancy. Since the fork, three people have essentially been the senior or lead developers:  Andrew, Johan Janssens, and Louis. In addition there have been a larger group of major development contributors, most of whom have at one time or another been on either the core team or the production leadership team (although not all members of either would be considered senior level contributors). 1

We were particularly interested in how senior developers for the projects we examined are funded. By senior developers we mean the people doing architectural work, doing determinative code review, making final decisions on features, and guiding the work of other contributors. We also looked at parallel questions on the community and operations side of the project, such as support of community managers and administrative staff, but that was not the main focus.


Name
Primary Funding of senior  developers
Primary funding of Community
Primary Funding of Organizational Staff
notes
MediaWiki
Foundation pays a core group of developers and a CTO.
Paid staff
Fully paid staff
Mediawiki raises money primarily from  the users of wikipedia rather than companies engaged in the Mediawiki economy. Also the Wikipedia project receives some large grants.
The foundation also paid for professional usability work. etc
Apache HTTP Server/ASF
Several large companies (IBM, Oracle, Google) have people on their staffs work essentially full time on Apache Server
Community is mainly around mailing lists and IRC, infrastructure for that is paid for. Events are contracted out.
Hire contract workers for secretarial/executive assistant work; pay for system administration and PR
ASF is an umbrella organization that incorporates many projects, each of which has slightly different arrangements.
Moodle
moodle.com pays a group of developers including the lead developer (Martin Dougiamas), a senior developer and several other developers
moodle.com pays a community manager
moodle.com pays staff
Total staff is 14
Mozilla
MF: Direct support of accessibility programming
Core Developers are paid by mozilla corp, a wholly owned for profit company.
"With the formation of the Mozilla Corporation, the Mozilla Foundation delegated all their development and business-related activities to the new subsidiary."
MF decides who can check in code.
MF pays for redesign of website, work on mozdev.org,
Pay full time staff including ED, treasurer, programs director, programs coordinator etc
1) Umbrella organization - Mozilla Foundation
2) Mozilla Corporation - taxable subsidiary (mostly focused on Firefox)
3) Mozilla Messaging - taxable subsidiary (mostly focused on Thunderbird)
4) 3 independent but affiliated NPOs:  Mozilla China, Mozilla Japan, Mozilla Europe. Has about $34 million in cash on hand in 2008 990 (over $1.2 million in investment income).
Ubuntu
Privately funded by Canonical, volunteers, who may or may not be paid by other companies.
Jono Bacon, community manager, paid by Canonical
? Not clear if there are independent administrative expenses.
"The Ubuntu Foundation guarantees the viability of the project independently of the commercial activities of Canonical, and provides a legal vehicle for continued community direction in the project"
"Mark Shuttleworth, as SABDFL, plays a happily undemocratic role as sponsor of the project."
WordPress
Funded by Automattic
?
? Not clear if there are independent administrative expenses. Recently formed a foundation.
Drupal
Funded by for profits in the Drupal economy, most importantly Acquia and Lullabot for the lead committers for version 7.
Some expenses  such as events management paid by Drupal Association plus some private companies.
Paid by Drupal Association.
UPDATE: There is not a paid staff but contractors are paid on an as-needed basis by the DA. See comments.
BDFL Dries Buytaert
Joomla!
Some funding of senior developers as contractors by OSM since October 2009
No paid staff
No paid staff; professional services as needed.



MediaWiki and Mozilla are the two projects with non profits that pay developers directly or through a subsidiary. How do they fund this? In the case of Mozilla, the primary income source has been a royalty arrangement with Google in which Google Search is incorporated into the FireFox browser. In the case of MediaWiki, there is a combination of donations primarily from users of Wikipedia and related resources and grants (such as from the Sloan Foundation).

A number of other projects are primarily funded by for profit companies. Sometimes this is one large company (such as Automattic for Word Press, moodle.com for Moodle, and Canonical for Ubuntu).  In other models the role is given to a group of the largest companies in the field, such as IBM, Oracle and Google for Apache Server. The Drupal ecosystem is obviously much smaller, but the development leadership is funded by the two largest companies.

The Joomla! Project has never attracted the direct funding of senior developers by the for profit companies in its ecosystem. That is, no companies have offered to pay the full or part time salaries of senior developers to work purely on core development or offered consistent ongoing time commitments of senior developers for unrestricted core work. It's easy to speciulate about why this might be (Joomla! development companies are often small and can't afford to contribute such a high proportion of their staff time; a number of the largest Joomla! companies are template houses that don't have staff with the skill set for architectural development; something in the culture of the ecosystem leads companies to see themselves as customers rather than partners; there are many other possibilities as well). Whether direct funding would be a good thing or not is a different question; the simple fact is it has not been offered.

Joomla! has traditionally been funded through monetizing the web sites, largely through the use of advertising. In this sense it an unusual project in the CMS niche in that it generates income independently. Of the projects listed, it is most similar to MediaWiki and Mozilla in that respect. Joomla! is also similar to those projects in the non profit owns the brand assets (the trademarks and the domains).



Type of product
Ownership of Brand Assets
License
MediaWiki
Web Application
non profit (Wikimedia Foundation)
GPL
Apache Server
Server
non profit (ASF)
Apache
Moodle
Web Application
Moodle Trust
GPL
Mozilla
Browser
non profit (Mozillla Foundation)
Mozilla
Ubuntu
OS+Applications
Canonical
Mixed Free Licenses
WordPress
Web Application
Automattic
GPL
Drupal
Web Application
Individual
GPL
Joomla!
Web Application
non profit (OSM)
GPL



After examining a range of options, the board came to the conclusion that it would make more sense to change the organisation of OSM slightly rather than to spin off a Mozilla style for profit. The most important of these changes was to continue to rely on "unrelated business income" generated by monetizing the websites. This meant that OSM would not seek to 501(c)3 tax status from the U.S. Internal Revenue Service because the tax treatment of unrelated business income for 501(c)3s makes it more expensive for OSM to operate as a 501(c)3.  OSM therefore decided to withdraw its application for 501(c)3 status.  Related to this, OSM is currently investigating ways in which it can legally remain a not for profit while not being designated a charity thus enabling it to take non tax deductible contributions from the public. This change will likely involve a switch from designation as a Type B non profit to a Type C non profit under New York statutes.2

Overall this approach allows OSM the flexibility to both stay a non profit and further develop its ability to raise money in a flexible manner. Although there was nothing preventing OSM as a 501(c)3 from compensating people and organizations for their work, the limitations in available methods for raising money made it challenging to do so in an extended way. Therefore this change will allow OSM and the Joomla! Project to move forward toward building income streams to  allow the project to move forward.  Therefore, at this time, it was concluded that is not necessary or advantageous to form a for profit to achieve the goals. That does not mean that any options for the future are ruled out, but it does describe where we are now and how we got here.



notes



1 Others, including Sam Moffatt, Wilco Jansen, and Rob Schley have served as development coordinators.  In terms of community, Brad Baker has essentialy served as a full time community manager. Various individuals (Louis, Johan, Andrew, Shayne Bartlett, Chris Davenport) have served as project managers.

2 See http://www.nycbar.org/pdf/report/uploads/20071806-CommentonLegislationreTypeCNFP.pdf