Now, a Florida hackerspace is raising money to purchase a laser cutter.  I have a hunch we can push them over the tipping point…

Everyone’s invited. Originally conceived to connect busy Maker Faire exhibitors who didn’t get a chance to talk during the event itself, i3Detroit’s first Maker Mixer is open to anyone with a passion for DIY and a desire to meet more of their peers. Do you know of an individual or group who should be part of it? Please invite them!

There will be snacks. Also fire and burgers, probably. Feel free to BYO, as well! The party is free but donations help us defray costs and are always graciously accepted.

Parking will fill up. You might have to go down the block a bit to find a spot.

We don’t have a big sign. Haven’t tackled that issue with the city yet. So study the map before heading out, and note that Wordsworth doesn’t cross through the train tracks — you’ll probably come down Wanda from 9 mile. We’ll have balloons on the corner to guide you in.

There are more events around the corner. If you can’t make this one, consider the DIY Filmmaker Meetup on the 9th, the Get Lamp documentary screening on the 11th, or the Needlecraft Gathering on the 14th.

Obligatory disclaimer: although we have done our best to ensure the accuracy of the information in this article, we are not law or tax professionals. Please consult with a lawyer or accountant specializing in non-profits before making any important organizational or tax decisions!

What exactly is a non-profit?

Let’s start by clearing up what exactly it means to be a non-profit. It’s a common misconception that non-profits are organizations that are not allowed to make a profit. In fact, non-profits can (and hopefully do) make a profit! What actually defines a non-profit is that the profits cannot go to any individual owners or shareholders. They can however pay reasonable salaries to their officers and employees.

Types of non-profits

There are several kinds of non-profits, but in the US, the standard is the 501(c)(3) public charity. 501(c)(3) is a section of the IRS code that describes one type of charitable organization that doesn’t need to pay income taxes. But wait! There’s more! If your group meets the requirements for 501(c)(3), you automatically meet the requirements for another section of IRS code, 170(b)(1)(A), which says that if an individual or business makes a charitable donation to your organization, they can claim it as a deduction on their income taxes.

Within 501(c)(3) there are two types of organizations: private foundations, and public charities. Private foundations are more restricted and have higher record-keeping burdens, so organizations like to be public charities if at all possible. To be a public charity, you have to pass a test, called the public support test. The public support test requires that a certain percentage of the group’s income comes from the general public rather than a few individuals. To be more specific, there are actually two different public support tests: 509(a)(1) and 509(a)(2), defined here. You can use whichever works best for your organization, and you can even ask the IRS to chose for you.

501(c)(3) Requirements

There are a lot of specific requirements for being a 501(c)(3), but they pretty much boil down to serving a tax-exempt purpose and benefiting an open-ended group of people. The IRS requires that 501(c)(3) non-profits are organized exclusively for one or more of the following purposes:

• Religious
• Charitable
• Scientific
• Testing for public safety
• Literary
• Educational
• To foster national or international amateur sports competition
• For the prevention of cruelty to children or animals

That means that the purpose of your organization, as stated in your Articles of Incorporation and Bylaws, has to be for these purposes and these purposes only. For instance, “to provide work space, storage, and other resources for member projects” might include some activities that fall into these eight categories, and some that don’t. A common way to clarify that is to add a section to the bylaws stating “the Corporation shall not carry on any activities not permitted to be carried on by a corporation exempt from federal income tax under Section 501(c)(3) of the Code”. And of course, you have to walk the walk as well. The organization must actually conduct activities to further its tax-exempt purposes. An interesting point here is that even if a group is organized exclusively for tax-exempt purposes, it can serve other purposes incidentally. So if you hold a workshop to teach people to make ice cream (an educational activity) and they get to eat some delicious ice cream in the process (not a tax-exempt purpose) that’s perfectly fine.

The IRS also requires that you benefit a charitable class of people rather than a group of specific individuals. For membership organizations like hackerspaces, this seems to be a bit of a gray area. However, the less limitations there are on membership, and the more services that are available to non-members, the easier it will be to meet this requirement. It’s also preferable to have a large and varied board so that the control of the organization isn’t in the hands of a small few.

Public support tests

As mentioned above, to be considered a public charity instead of a private foundation, your organization also has to pass one of the public support tests. The more common of the two public support tests is 509(a)(1). As I understand it, this is the test that Noisebridge and Freeside Atlanta used to get their 501(c)(3) status. It requires that one third of your total support comes from the general public: donations, grants, or the government. It also allows you to pass the test if one tenth of your total support is public support, and you meet additional requirements. The definition of “support” is actually rather tricky though.

A typical hackerspace receives the majority of its income from dues and classes. Suggested donations for classes and events are public support, but mandatory fees are not. Luckily, fees related to the exempt purpose of the group usually aren’t considered part of total support either, so although they don’t raise the public support fraction, they also don’t lower it.

Membership dues are always included in total support, and they count as public support if the member receives nothing of “substantial benefit” in return. So if members receive access to members-only facilities, reduced rates on classes, etc. in exchange for their dues, the dues do not count as public support. Because membership dues are always included in total support, unlike fees for exempt activities, they can actually lower the public support fraction. One common practice is to have some types of “memberships” that are in name only (i.e. not defined in the bylaws) which allows them to be considered fees, and therefore not included in the public support calculation. But, there is an exception to the rule about fees. If “almost all” support comes from fees and an “insignificant” amount of support comes from the public, you can’t use the 509(a)(1) test at all [1]. Luckily, there’s another test you can use if you fall into that category.

The lesser known public support test, 509(a)(2), seems promising for hackerspaces that can’t meet the 509(a)(1) test. It’s intended for things like museums that depend on fees from the general public. It also requires that one third of your income is from public support, but for this test, fees received in exchange for products or services do count as long as the products or services are related to the tax-exempt purpose of the group (eg. museum admissions). Furthermore, this can include member dues even when members receive something of value in return (access to member-only facilities, discounts, etc.).

So as you can see, very fine distinctions like suggested vs. mandatory donations can have a huge impact on whether your hackerspace meets these tests. There are also some additional restrictions that I haven’t gone into. So it’s probably a good idea to review your bylaws and policies with a CPA specializing in non-profits before even beginning the application.

Conclusion

Although the process of getting 501(c)(3) status can seem daunting, several hackerspaces have done it already, and many more are well on their way. If you’ve come across any resources that might help these hackerspaces, please let us know in the comments! And of course, keep an eye out on our blog for updates on our application process and future installments of the Hacker Business Series.

References

[1] IRS Publication 557, Tax Exempt Status for Your Organization
[2] How to Form a Nonprofit Corporation
[3] IRS Form 1023 Tax Preparation Guide
[4] Illustration by philentropist

Update: Noisebridge has posted some of their 501(c)(3) information, including their application here.

Meanwhile, as the literally tons of tools were being “gently” maneuvered into place, many of our other members were engaged in some decidedly less brute force pursuits, participating in the evening’s papercraft meetup. Rather than one of our usual classes with an instructor leading the group, this was run much more as an open forum, with several people taking the reigns and teaching the rest of the group various crafts from origami to paper star beads. The meetup also served to improve the aesthetic qualities of the space by hanging origami cranes and other creations from the floor of the loft area.

For more pictures of Tuesday’s fun, check out the Flickr stream from the event. Also, keep a lookout for other upcoming events such as our inter-hackerspace viewing party for “GET LAMP” on Sept 11th, as well as this weekend’s opportunity to live out your “White and Nerdy” fantasies by mowing someone else’s front lawn with the mowergang!

Also this weekend:

• The People’s Arts Festival celebrates its 4th year of bringing art to Detroit’s Central city.
• The Motor City Haunt Club is having their 5th annual Haunted Garage Sale this weekend.

Long before 3D-accelerated video cards, or even graphics of any sort, there was text. Letters on a screen, a blinking cursor, and you. Imagine the mother of all “choose your own adventure” books — the text adventure game (neologized as “interactive fiction“) takes place as much in your imagination as in the computer.

With thirty-plus years of history, the stories about the games are sometimes as interesting as the games themselves. Independent documentarian Jason Scott (also of Textfiles.com and BBS: The Documentary) has interviewed dozens of people behind this fascinating scene, distilled their stories into an engaging film with its own interactive section, and released the whole package under a Creative Commons (“copyleft”) license.

Come visit i3Detroit (or your own local hackerspace, if you’re not in Michigan) to explore the past, present, and future of interactive storytelling. Bring a laptop, and we’ll get you started writing your very own game.  Seating is limited, so reserve your spot!

The evening started with generous amounts of smalltalk amid frantic searches for enough tables, chairs, irons, and power to meet the unexpectedly large demands of the class. First up after introductions was a brief rundown of the different projects our MCs of the evening had to offer. I say brief, as if they stopped to go into too much detail on each and every project, we’d have been there until 3 AM with the titanic catalog of toys, games, and various playthings the duo had brought.

After everyone was settled with their new projects, Mitch began the lesson in earnest, opening with some sage safety advice, roughly paraphrased as: “If you don’t wash your hands after you solder, the lead in the solder will end up in you. If it ends up in you, it will make you crazy and you’ll lose all your friends. So if you want to keep your friends, wash your hands.” This is a good tip, soldering or not. He also said to be mindful of the soldering iron, as it’s very hot, but the fact that my index finger is currently bandaged indicates I should have listened better…

Safety tips aside, all in attendance gathered around Mitch as he explained the finer points of tip maintenance and solder selection. After this prerequisite learning was out of the way, Mitch built up to his grand finale: actually soldering! In his charismatic way, he demonstrated that the two biggest keys to soldering well are adding the right amount of solder and to delay before removing the tip. That’s about it. Now, ready to try making a project themselves, the students quickly overcame our shop in a wave of melting metal, making TV-B-Gones, LED waves, LoL shields, and many other nifty products. One by one, projects were completed as Mitch and Jimmie walked around to inspect and advise, congratulating  and handing out soldering badges as each kit was polished off in turn. By the end of the night, the shop was awash in multicolored blinking LEDs, silly noises, and the sound of a great time had by all. If you’re sorry that you missed out on all the fun, then you should check our our calendar on the right side of the page as well as our eventbrite listings for upcoming events.

Happy Hacking!

This year’s Maker Faire hosted the second annual Power Wheels Racing event featuring 8 teams, each with their own unique ideas about how best to crush the opposition. With teams from Detroit, Milwaukee, and Chicago, the crowd had no shortage of choices deciding which team to favor with their cheers and support. The competition consisted of 3 events: the drag race, the 15 lap race, and the endurance challenge, though the battle began not on the track but in the pits.

The drag race was a series of nail biting finishes coupled with a handful of runaways, as some teams were unable to get their vehicles shipshape before their turn was up. These setbacks did not deter the teams’ spirits or devotion to having a good time, sometimes even serving as great entertainment. The fans laughed riotously as Pumping Station 1 was reduced to driving their car backwards due to their forward drive system being out of commission,  though this was quickly overshadowed by the comedy of Milwaukee’s pink trike bifurcating itself on the starting line. Regrettably, i3 was matched up with the eventual winner of the drag race competition and was eliminated first round, but this only served to bolster our resolve on the next two.

The 15 lap race was perhaps the best attended of the 3 races with a non stop tale of drama and heartbreak as machines struggled for position only to be cut down by mechanical issues. Driving strategy played a big role in this race with the Milwaukee cars creating a formation to block other players from passing which lead to some exciting and aggressive driving by other teams to defeat this dastardly strategy. i3 maintained a strong lead for much of the race until mechanical problems eroded the multiple lap lead enjoyed by our expert driver, “Kara Thrash“. After some quick fixes, i3 got back into the race but was not able to retain the lead position eventually finishing third.

The final challenge was a one hour endurance race. Given the prior mechanical problems the teams had experienced, this was shaping up to easily be the toughest race of the event. OmniCorp Detroit made an amazing show for themselves by operating the whole hour with only a single, well timed pitstop for more batteries giving them a colossal lead and an easy first place. The real drama was between i3 and Milwaukee’s Baby Burrito car, who had employed a “slow and steady” approach keeping their pit times down and steadily gaining laps. i3 was significantly ahead until a motor controller failure put us in the pit lane for an extended period, surrendering second place to Baby Burrito. Getting back on the track with minutes to spare, Kara Thrash put in a monstrous effort, driving like mad in an attempt to catch second place. Unfortunately, time was against her and she was unable to recover from the pit time, but won massive crowd support for her valiant effort which was still enough to secure a third place finish.

When the final points were tallied, however, i3 had a huge surprise in store for them: they had won first place in the championship! This was due to the “moxie system” which allowed the fans to vote for their favorite teams based on their ability to entertain the crowd doing silly things or just generally being awesome. The crowd opinion became evident as i3 could hardly contain the volume of moxie point slips they received. This edge granted by the fans (who this event is really for after all) was so enormous that it granted i3 first place, so when we say we couldn’t have done it without your support, we mean it! We really couldn’t have done it!

Thanks to all the competitors!

• Pumping Station One
• Paper Street Motors
• Milwaukee Makerspace
• Omni Corp Detroit

If you already own a soldering iron, stand, tip cleaner, or wire cutters, please bring them — we’ll provide as many as we can muster, but more are always helpful. Regardless, you should reserve your seat right away!

Mitch Altman likes to bring newbies into electronics. He’s best known for inventing the TV-B-Gone, a one-button remote control that turns off TVs wherever you may encounter them. He’s also a big fan of hackerspaces, having co-founded one, and is currently touring as many as possible, selling kits and helping get people into electronics.

Jimmie P. Rodgers is a microcontroller geek who enjoys circuit-bending, teaching, and putting entirely too many LEDs on things. His projects include the OpenHeart, various Arduino shields, and lots of noisemakers. He and Mitch are traveling the midwest, holding workshops and generally being awesome.

i3Detroit is metro Detroit’s first hackerspace, an open workshop where members and guests share tools and ideas. i3 stands for “imagine, innovate, and inspire”. Located in Ferndale, the 53-member group builds things, holds classes, and launches high-velocity snack food.

Have you been meaning to meet the girls of i3?  Now is your opportunity.

Have you been wondering what this i3 Detroit thing is all about?  Tomorrow is the perfect opportunity to come and meet some of our awesome female members and learn about the space from their point of view.

Ready to come make something, you maker gal?  Hands and minds are available for assistance!

This event is open to the public and anyone interested in learning more about i3 Detroit is encouraged to come by (girl or guy!)