[NCUC-DISCUSS] Reuters reports new cooperative formed to take over management of .ORG

Wed Jan 22 20:03:45 CET 2020

Kathy,
The issue of whether the transfer from a nonprofit to a for-profit is allowed is indeed a legal matter and will be settled in the courts. It will not be affected in the slightest by the public relations efforts of the “stop the sale” advocates. I do suspect, however, that things between ISOC and Ethos would not have gotten this far if the answer was obviously negative. But who knows?

Once that issue is resolved, we are still left with the RA between ICANN and PIR, are we not?

--MM

From: Ncuc-discuss <ncuc-discuss-bounces at lists.ncuc.org> On Behalf Of Kathy Kleiman
Sent: Wednesday, January 22, 2020 11:34 AM
To: ncuc-discuss at lists.ncuc.org
Subject: Re: [NCUC-DISCUSS] Reuters reports new cooperative formed to take over management of .ORG

I'm sorry David (from Australia), Wolfgang (from German) and Carlos (from Brazil),

There is more that to life than the revised registry agreement that ICANN pushed through over the objections of over 98% of the 3200 commenters.

There is US law. A non-profit corporation cannot simply become a for-profit  corporation. It does not work that way. Our US tax laws allow nonprofits organizations to exist; they have several flavors, but they share in common that they don't pay taxes to the government. We waive those taxes in light of the important charitable, educational, research, religious, political and social welfare functions they provide ("exempt purposes").

Non-profit organizations do not have profits that inure to the benefit of their officers or directors- that's not the way it works. And they don't have shareholders either. Those who own and run a non-profit in the US *must use the monies they raise (via donation or, say, selling domain names) for the mission of the non-profit organization.

Upon dissolution of a non-profit organization, you can't simply sell it or give away its assets to a for-profit company. That is against the tax code and the reason why the US Internal Revenue Service treated it as a non-profit for so many years (without taxes).  Upon dissolution or breakup of the company, its assets *must continue to be used for one of the exempt purposes listed above.* A non-profit may give its assets to another non-profit.

**Thus, depending on the obligations which ISOC undertook when it took on .ORG**, it can transfer PIR (its child company) to another non-profit. But flipping the asset to a commercial owner is going to raise a number of legal and tax questions -- as it already does. We have set up a number of protections for non-profit and to prevent the abuse and misuse of nonprofit companies in the US.  "flipping them" to for-profit is not what the law generally allows or supports.

Best, Kathy

p.s. Sample DISSOLUTION provision of a non-profit organization: Upon the dissolution of the corporation, assets shall be distributed for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or localgovernment, for a public purpose. Any such assets not so disposed of shall be disposed of by a Court of Competent Jurisdiction of the county in which the principal office of the corporation is then located,exclusively for such purposes or to such organization or organizations, as said Court shall determine,which are organized and operated exclusively for such purposes.
On 1/21/2020 8:42 PM, Carlos Afonso via Ncuc-discuss wrote:

+1 to David, Wolf & Milton.

[]s fraternos

--c.a.

On 21/01/2020 07:42, Wolfgang Kleinwächter wrote:

1++ to David.

They key point is the contract, the RA. This is the only legal instrument ICANN and its constituenceis have. Milton has put the finger in the right direction. The PIR - ICANN RA has to be in line with Article 1 of the ICANN Bylaws:  MISSION, COMMITMENTS AND CORE VALUES. If there are some doubts, that the new owner of PIR will ignore "core values", ICANN can ask for an amendement,  to turn promises by Ethos (freedom of expression, respect for the special NGO culture, no price explosion etc.) into a contractual obligation. taking into account the special profile the .org domain has won over the last 20 years. With other words, it would be useful if the NCUC/NCSG would come with some concrete language for such amendements. <https://www.icann.org/resources/pages/bylaws-2019-12-03-en#article1><https://www.icann.org/resources/pages/bylaws-2019-12-03-en#article1>

The other "work stream" could be to join NRO to discuss the case within the "empowered community" (Article 6 of the Bylaws).   <https://www.icann.org/resources/pages/bylaws-2019-12-03-en#article1><https://www.icann.org/resources/pages/bylaws-2019-12-03-en#article1>

An emotional battle by using the media is not helpful.

my 2 cents.

Wolfgang

BTW, the transfer of the .org domain from NSI/VeriSign to PIR was part of a package (1999) which obliged ICANN to introduce competition into the gTLD market, both at the registrar and registry level. Already in 1999 ICANN recognized the first five alternative registrars. The demonopolization for registries was more complicated. At this time NSI (later VerSign) was the registry for .com, .net and .org. I remember the ICANN meeting in LA (November 1999) when I wanted to got to the meeting of the Registry Constituency and Don Telage (NSI) was the only man sitting in the room. We had a very nice talk. The whole DNS was defined at this time as a "public good", but the main argument for the proposed transfers was competition.  VeriSign got the contract back for .com. It had to transfer .org to the new PIR. But it won the battle for .net, although there had been five alternative bidders in the final contest (including DENIC from Germany which had a very excellent proposal, lobbied

even US congress and but lost). The argument of the time - to give it back to VeriSign - was "security". The security  for mostly US registrants and the ability of the US government to oversee some of those operations after 9/11 was seen as more important than competition.

David Cake <dave at davecake.net><mailto:dave at davecake.net> hat am 21. Januar 2020 um 10:47 geschrieben:

I’m still essentially baffled by the argument for CCOR.

I can see an argument for blocking the sale. The situation was a total surprise, safeguards that a privately owned PIR would do as well by the community seem lacking, the presence of so many ICANN insiders is disconcerting.

I can see an argument for allowing the sale, but adding additional safeguards to the Agreement.

I can even see the argument for revisiting the whole agreement and preparing for a re-assignation of the contract at some future point, using a similar process to the previous (though presumably a much more complex and thorough one is likely considering the amount of money involved. ISOCs idea of the PIR/.org obligations appears different to many others, perhaps a review and revisit of the arrangement is appropriate.

I can even see that practically, much as we dislike it ICANN might find that the legal case to change the agreement is weak.

I still can’t really see the argument for CCOR.

The two main objections to the sale seem to be the objections to the interference of ICANN insiders, and a conservative approach to re-delegatng a major pubic asset.  Yes, price rises are also a factor, but a realistic price rise is unlikely to have a major effect - the only domain name holders who are so price sensitive that a major price rise of, say, $20 a year is going to be significant next to the value of an existing domain name to the holder are speculators. And on those two remaining major issues - CCOR is just as full of ICANN insiders, only those from an earlier era prior to the IANA transition and huge accountability reforms. A major thrust of their campaign appears to be lobbying from the US senate. I have absolutely no confidence that CCOR is presenting any compelling case that it would be a necessary improvement.

And in terms of a conservative approach to major internet institutions - there are good arguments to be very conservative and keep the existing arrangements in place, for sure. And there are good arguments for a full review and revisit of those arrangements. CCOR is asking for neither. It is presuming that we radically change that agreement, just do a full re-assignment of a billion dollar asset, but we rule out of consideration both the long term holder of the contract and an open process, and give it to an insider group with a poor accountability record. also

I don’t get why it sounds like an attractive proposition to anybody, I don’t see its merits except dubious rhetoric.

I’m not simply taking the Ethos side. I would certainly like to see Ethos not just make promises about accountability and grant process, but reveal a realistic plan for how they can service the debt they plan to use for the purchase. Until they reveal it, they are just standing there on one leg while we wait for the other shoe to drop. And that a bigger issue than the promise of a Stewardship Council and some grants that they wave visibly in front of us in their hands.

David

 also

On 21 Jan 2020, at 5:36 am, Joly MacFie < jolynyc at gmail.com<mailto:jolynyc at gmail.com> <mailto:jolynyc at gmail.com><mailto:jolynyc at gmail.com>> wrote:

I'm interested to know what more community commitments , in reality, CCOR, or even ISOC, can be expected to make beyond those outlined in the the  Ethos/PIR Stewardship Community Webinar <https://isoc.live/pir/2019-12-19_PIR_Stewardship_Community_Webinar.pdf><https://isoc.live/pir/2019-12-19_PIR_Stewardship_Community_Webinar.pdf>.

Here is an excerpt:

/*Brian Cimbolic* I briefly touched on the safeguards that we are going to be putting in place, to ensure that we continue as an exemplary registry. The Stewardship Council is one of those safeguards. Previously, PIR had a tremendous Advisory Council. They're dedicated people, from around the world, that provided informal advice to PIR staff that we often incorporated into what we do, into our mission, and we appreciated that advice tremendously. At the end of the day, though, it was a body that advised PIR staff. It was not a public facing body that had any sort of reports coming out of it, as to the activity activities of the council,. It fed directly into PIR. What the Stewardship Council does, is take that notion and elevate it significantly. It will be transparent, an independent body comprised of members from the .ORG community. It's meant to serve as a cross section of the .ORG community, from nonprofits, CSR, those that seek to do good around the world. through

.ORG. That's the idea of the Stewardship Council, and who they will be. What they'll do is, they're focused on balancing the interests of all .ORG stakeholders,, those .ORG registrants, donors, shareholders, PIR employees. The Stewardship Council is really meant to serve as a bridge across all of those interests , and really strike the balance in its advice, that it provides to PIR. We anticipate that the Council should be up and running within 90 days of closing. The Stewardship Council has three main roles. I'll expand on each of these briefly. It will provide direct oversight to safeguard the interests of the .ORG community. It's going to provide advice, and strategic recommendations, to the PIR board, and issue periodic reports. PIR, as I mentioned previously, we already do transparency reporting on our anti-abuse efforts. We also issue annual reports. The Stewardship Council will continue in that tradition, but also elevate both the ways that we report the

information, and what we're reporting. What makes this Stewardship Council different, from many advisory bodies, is it has direct power over a number of some pretty core elements of PIR, moving forward. It provides direct oversight, to safeguard the interests of the .ORG community, in a number of ways. First and foremost, it will have the ultimate say on the core values of PIR, how we conduct our business here, how we conduct ourselves to the outside world, how we serve as stewards to .ORG. It ultimately has that authority over PIR. Secondly, it will ratify policies on safeguards against censorship, of free expression, in the .ORG domain space. This is really key. At PIR, we are not Internet censors. We don't ever want to be, and we won't. The Stewardship Council will ultimately have to ratify these policies on censorship, and free expression, and we as a company will follow them. So, the Stewardship Council will ultimately serve as a very prominent safeguard, with

transparent outputs that the community can digest, and recognize that PIR will not serve as Internet censors. They are a virtual guardrail to ensure that that does not happen. Finally, the council will make and manage grants on behalf of the Community Enablement Fund. This is one I'm personally very excited about. We can innovate, and invest back into the .ORG communities, in ways that we couldn't previously. This is a prime example. The Stewardship Council will oversee donations that come from the Community Enablement Fund, moving forward. Those are the oversight functions. The Stewardship Council also has some critically important advisory functions. First, and foremost, it's going to provide strategic advice on the balance and priorities for the various stakeholders in the.org <http://the.org/><http://the.org/> community. The Stewardship Council will help strike that balance, and provide strategic advice on what that balance should be. /

/

/

/Also, something Nora mentioned, we are going to be forming a Public Benefit LLC. Contained within the Certificate of Formation will be a statement of public benefit. The statement of public benefit will enshrine, in the organizational documents, the price commitments that Erik Brooks recently blogged about. That will be built in to the organizational structure here. If we ever sought to try and change that, it would require changing those documents. Before that would happen, the Stewardship Council would have to provide advice, in a transparent, open, way on any proposed change like that. Finally, the Stewardship Council will issue recommendations on a product and service roadmap for the .ORG community. These people are here for a reason. They're influencers representing important parts of the .ORG community. Having that sort of advice from them will be extremely valuable in our products and services moving forward. /

/

/

/ Mechanically, talking about the Stewardship Council, it will meet at least twice a year, and will have staggered overlapping terms of up to three years. The nominating committee will select the members of the Stewardship Council, once the Stewardship Council is up and running. The initial slate of stewards would be selected by the PIR board. One of the first things that the Stewardship Council will do is to create a nomination, or selection committee. That body, in conjunction with the PIR board, would ultimately be the entity that selects its own members. The Stewardship Council will work on the basis of consensus. it would receive reimbursement for its expenses, an honorarium provided by PIR, but, ultimately, serving on the council is intended to be the honor unto itself./

/

/

joly

On Mon, Jan 20, 2020 at 1:17 PM Mueller, Milton L < milton at gatech.edu<mailto:milton at gatech.edu> <mailto:milton at gatech.edu><mailto:milton at gatech.edu>> wrote:

    Thank you, Martin, for hitting the nail on the head:____

    __ __

    So, unless we can oppose with success, we need to know what are the rules that our conflict will be ruled by. As I see, or best shot is to use the leverage we have to “reasonable oppose” to ask for modification in the agreement with ethos, so we make sure .org stays for the community. In the end, I don’t see ICAN legal going to court against ISOC, Ethos and PIR in a million dollar conflict, jeopardising the .org stability and the ripples it would cause.____

    __ __

    If we are going to re open .org and terminate ISOC, then we should do an open round, no hand picking. And we should put all our concerns in the agreement. ____

    __ __

    +100____

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--

Kathy Kleiman

President, Domain Name Rights Coalition
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