Trade Associations Are Never Neutral

Tuesday 10 February 2015 by Bradley M. Kuhn

It's amazing what we let for-profit companies and their trade associations get away with. Today, Joyent announced the Node.js Foundation, in conjunction with various for-profit corporate partners and Linux Foundation (which is a 501(c)(6) trade association under the full control of for-profit companies).

Joyent and their corporate partners claim that the Node.js Foundation will be neutral and provide open governance. Yet, they don't even say what corporate form the new organization will take, nor present its by-laws. There's no way that anyone can know if the organization will be neutral and provide open governance without at least that information.

Meanwhile, I've spent years pointing out that what corporate form you chose matters. In the USA, if you pick a 501(c)(6) trade association (like Linux Foundation), the result is not a neutral non-profit home. Rather, a trade association simply promotes the interest of the for-profit businesses that control it. Such organizations don't have the community interests at heart, but rather the interests of the for-profit corporate masters who control the Board of Directors. Sadly, most people tend to think that if you put the word “Foundation” in the name0, you magically get a neutral home and open governance.

Fortunately for these trade associations, they hide behind the far-too-general term non-profit, and act as if all non-profits are equal. Why do trade association representatives and companies ignore the differences between charities and trade associations? Because they don't want you to know the real story.

Ultimately, charities serve the public good. They can do nothing else, lest they run afoul of IRS rules. Trade associations serve the business interests of the companies that join them. They can do nothing else, lest they run afoul of IRS rules. I would certainly argue the Linux Foundation has done an excellent job serving the interests of the businesses that control it. They can be commended for meeting their mission, but that mission is not one to serve the individual users and developers of Linux and other Free Software. What will the mission of the Node.js Foundation be? We really don't know, but given who's starting it, I'm sure it will be to promote the businesses around Node.js, not its users and developers.

0Richard Fontana recently pointed out to me that it is extremely rare for trade associations to call themselves foundations outside of the Open Source and Free Software community. He found very few examples of it in the wider world. He speculated that this may be an attempt to capitalize on the credibility of the Free Software Foundation, which is older than all other non-profits in this community by at least two decades. Of course, FSF is a 501(c)(3) charity, and since there is no IRS rule about calling a 501(c)(6) trade association by the name “Foundation”, this is a further opportunity to spread confusion about who these organization serve: business interests or the general public.

Posted on Tuesday 10 February 2015 at 11:15 by Bradley M. Kuhn.

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