Who owns Wikipedia?, I am not a lawyer Options

[Peter Damian]

I've heard claims here occasionally that Wikipedia could be sold off. Is that possible? Who actually owns it? What is it they actually own? Could anyone get their hands on it and make a ton of money from ? What would they be getting their hands on?

[gomi]

Legally, the Wikimedia Foundation (or whatever it is called) owns Wikipedia.

Owning Wikipedia means these things:

1) Owning the trademarks, domain names, logos, and assorted intellectual property associated with Wikipedia and its related sites;
2) Owns the right to make agreements of any sort, including exclusive ones, surrounding and affecting its online systems and services;
3) Owns the right (subject to the limitations of a not-for-profit organization) to dispose of (by sale, license, or other agreement) any of its assets, including (potentially) any of the Wikipedia sites and related marks and materials.

This is not an exhaustive list. The Wikimedia Foundation would be within its right to sell the Wikipedia site to a for-profit company in exchange for a revenue stream. That for-profit company could shut down all user accounts and install advertising if they wanted to. The resulting revenue stream would (for a time) be very substantial. The Wikimedia Foundation would need to use the proceeds from such a sale for its charitable purpose.

There are potential complications if such a sale is construed as disposing of "substantially all" of its assets, or if it didn't get a fair market value for the asset, but those are details.

I'm not saying this is likely to happen, but it is all legally possible.

[Kelly Martin]

This is not an exhaustive list. The Wikimedia Foundation would be within its right to sell the Wikipedia site to a for-profit company in exchange for a revenue stream. That for-profit company could shut down all user accounts and install advertising if they wanted to. The resulting revenue stream would (for a time) be very substantial. The Wikimedia Foundation would need to use the proceeds from such a sale for its charitable purpose.

And, in fact, it would probably have to do this if it wanted to monetize the site, because of the restrictions on charities receiving income from business activities. The wholly owned for-profit subsidiary would have to pay corporate income taxes, and distribute some or all of the retained earnings after taxes back to its parent nonprofit. (See also the Mozilla Foundation and Mozilla Corporation.) Arguably Wikipedia should have been set up this way in the first place.

[Abd]

This is not an exhaustive list. The Wikimedia Foundation would be within its right to sell the Wikipedia site to a for-profit company in exchange for a revenue stream. That for-profit company could shut down all user accounts and install advertising if they wanted to. The resulting revenue stream would (for a time) be very substantial. The Wikimedia Foundation would need to use the proceeds from such a sale for its charitable purpose.

And, in fact, it would probably have to do this if it wanted to monetize the site, because of the restrictions on charities receiving income from business activities. The wholly owned for-profit subsidiary would have to pay corporate income taxes, and distribute some or all of the retained earnings after taxes back to its parent nonprofit. (See also the Mozilla Foundation and Mozilla Corporation.) Arguably Wikipedia should have been set up this way in the first place.

Mmm... nonprofits can sell advertising, and can pay officers fat salaries. It's what they do with the profit that affects nonprofit status. Selling ads for a publication is not an unrelated business if the business is publishing, as it is. It's just a means of accomplishing the purpose: education, right?

Yes, the WMF, if it sold the name, would have to use the proceeds for a charitable. Purpose. Without impugning any member of the board, but from what happens sometimes in other nonprofits, the WMF would toss it in a big endowment, and then host conferences in plush resorts so that the board can be "advised" as to what to do. Absolutely, they'd need that corporate jet to ferry the board members and other staff around, right?

Bottom line, Wikipedia is owned by a nonprofit corporation, which is controlled by a self-elected board. Self-elected? Don't we vote for the board members? Sure. Those votes are advisory only. Who makes the bylaws? Believe me, this is all pretty standard, boringly so.

The community has real power because the community provides the labor to maintain the project and to expand it. Generally, it seems, the WMF has been terrified that the hoi polloi will organize and actually exert power, that's why, my guess, anything that hints of off-wiki coordination is snuffed ASAP.

My view, it's all short-sighted. But quite traditional.

[gomi]

Mmm... nonprofits can sell advertising, and can pay officers fat salaries. It's what they do with the profit that affects nonprofit status. Selling ads for a publication is not an unrelated business if the business is publishing, as it is. It's just a means of accomplishing the purpose: education, right?

Re "fat salaries", the IRS newly requires non-profits to submit on their Form 990s the salaries of all "highly compensated" executives, and certify that the total compensation for those executives is comparable to that of executives at similar institutions elsewhere. "Excess compensation" is prohibited and can endanger the tax-exempt status of the institution.

Regarding selling advertising, many non-profits do so (for example in their magazines, or whatever), but it is usually "unrelated business taxable income" which is usually limited to 30% of the non-profit's revenue. The key test for UBTI is "not substantially related to furthering the exempt purpose of the organization". The IRS goes on to say that "the causal relationship [to the exempt purpose] must be substantial" and "the activities that generate the income must contribute importantly to accomplishing the organization's exempt purposes to be substantially related." The IRS uses an example of advertising in a yearbook, and concludes that ads are unrelated business income. There are other relevant examples in IRS Publication 598.

Note, however, that sponsorship advertising (of the kind, e.g. that Public Broadcasting does) is not generally considered UBTI, but the sponsorship statements cannot be "inducements to purchase, sell or use ... products or services". Note also that any "trade or business in which substantially all the work is performed by volunteer labor without compensation" is specifically excluded from being UBTI in the statute. It is all quite complicated.

I'll keep explaining this to you guys, but I have no idea where this conversation is going.

[anthony]

Regarding selling advertising, many non-profits do so (for example in their magazines, or whatever), but it is usually "unrelated business taxable income" which is usually limited to 30% of the non-profit's revenue. The key test for UBTI is "not substantially related to furthering the exempt purpose of the organization". The IRS goes on to say that "the causal relationship [to the exempt purpose] must be substantial" and "the activities that generate the income must contribute importantly to accomplishing the organization's exempt purposes to be substantially related." The IRS uses an example of advertising in a yearbook, and concludes that ads are unrelated business income. There are other relevant examples in IRS Publication 598.

Note, however, that sponsorship advertising (of the kind, e.g. that Public Broadcasting does) is not generally considered UBTI, but the sponsorship statements cannot be "inducements to purchase, sell or use ... products or services". Note also that any "trade or business in which substantially all the work is performed by volunteer labor without compensation" is specifically excluded from being UBTI in the statute. It is all quite complicated.

Thanks for that. I've always wondered whether or not a charity with an exempt purpose of dissemination of informational content could justify (at least the more informational forms of) advertising as being directly related to that exempt purpose, but it's not something that I'd recommend without a private letter ruling or signoff by someone more knowledgeable than myself on the relevant case law.

And yes, I'm aware of qualified sponsorship statements, but I'm thinking of advertising that would not qualify, among other things due to "containing qualitative or comparative language, price information, or other indications of savings or value".

But in the end, for something like Wikipedia, I'd say the benefit of being able to retain earnings tax free comes nowhere near the detriments of having to deal with the IRS's micromanagement of charity organizations.

This post has been edited by anthony: