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Comment by niggler | Hacker News Reader

Isn't Mozilla corporation (not foundation) for-profit?

Edit: according to http://en.wikipedia.org/wiki/Mozilla_Corporation it is for-profit

The Mozilla Corporation is a "for-profit" entity, which mostly means it pays taxes on its profits, if any.

The Mozilla Foundation, which owns the Mozilla Corporation, is a non-profit (which means several things in this instance, like the fact that it does not pay corporate income taxes and donations to it are tax-deductible).

Every so often, the Mozilla Corporation, pays dividends to its sole owner (the Foundation).

So one flow of money is as follows: The Mozilla Corporation has revenue, spends some of it on things like salaries, rent for offices, etc, pays taxes on what's left, then saves some of the rest for future capital expenditures and pays the rest out as dividends to the Mozilla Foundation.

Another flow of money is people donating directly to the Mozilla Foundation.

The Mozilla Foundation then spends the money it has on various things that futher its mission, including grants to various open-source projects and whatnot.

The reason the setup is what it is, as I understand, is that there were some questions as to whether some of Mozilla's revenue sources were OK for a legal nonprofit, precisely because nonprofits do not pay taxes on any excess of revenue over expenses. So this dual structure was set up to make sure that taxes were paid on anything that looked like profit from operations, just in case.

Note that in all cases there are no individuals who are getting paid the profits as there would be in a privately held company, nor are there shareholders involved apart from the Foundation.

All of which is to say that the term "for-profit" doesn't necessarily mean the entity's sole purpose is to maximize profit, or indeed to make one at all; it's simply a classification for tax law purposes...

As always, I am not a corporate tax lawyer (nor any kind of lawyer), and this is not legal advice. ;)

> All of which is to say that the term "for-profit" doesn't necessarily mean the entity's sole purpose is to maximize profit, or indeed to make one at all; it's simply a classification for tax law purposes...

Except the minor detail that any for-profit is in fact legally OBLIGED to maximize profit for its shareholders.

Except the minor detail that being for-profit does not, itself, imply that the company has shareholders.

That is incorrect. Any company must act in the best interest of its shareholders. A publicly-traded company must maximize profit because that's the implicit nature of it: I buy stock in the market because I want a return on my investment. But if all shareholders of a given company (say, Mozilla) want to produce something for the good of the Internet and not make a profit, that's up to the shareholders.

A "non-profit" status simply gives the organization certain tax advantages because the state understands that the organization is acting on the best interest of the community, rather than its shareholders. But if a for-profit wants to do the same and not take advantage of said tax benefits, that's up to the shareholders to decide.

http://biztaxlaw.about.com/od/glossaryf/g/fiduciary.htm

Corporations in the United States are legally obligated to maximize profit.

It's not an implicit nature, it's an explicit legal requirement.

I believe the requirement to maximize profit is a requirement of the stock exchanges, not a requirement of being a company.

A company can be created for many different purposes.

Can you provide a link to the law that says a corporation must maximize profit even when it's against the desires of its shareholders?

That's a common belief, but quite false. See Wikipedia:

http://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company#Sig...

Even if that were true, only the shareholders would have standing to sue them for failing to maximize profit. Clearly the only shareholder, the Mozilla Foundation, is not going to sue Mozilla Corporation for doing what the shareholder wants it to.

You're confusing "for-profit" and "publicly traded". It's commonly held that publicly traded companies should be maximizing shareholder value (which is not necessarily the same as profit), because that's the purpose of publicly traded corporations.

There are also various protections for minority shareholders in privately held companies to prevent majority shareholders from screwing them over.

And there are various rules about how the company's officers need to pay attention to the shareholders.

In this case, there is precisely one shareholder: the Mozilla Foundation. So the various minority-shareholder protection stuff does not apply, but the officers of the Mozilla Corporation do need to pay attention to what the Foundation wants the Corporation to do. And what the sole shareholder wants the Corporation to do in this case is decidedly not to maximize profit.

It is fairly common for non-profits to own for profit subsidiaries which often become the main sources of revenue and sustainability for the non-profit.

When they were talking to me about the job they say the corp is required to keep salaries etc secret and otehr operational things.

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