[Dev] Some doubts about Parabola's donations

[Tiberiu-Cezar Tehnoetic]

Hello,

On 05.04.2017 13:30, André Silva wrote:
> We've received the GNUcash file [0][1] from our delegate (fauno [2])
> with our current expenses, assets and profits. I have a few questions
> for you, since I have some confusion and I think you could could help us
> clarify. There are several users worried about our donations and gains.
> We also have a policy about transparency for our community which donors
> feel were neglected. Here are the questions:

The GNUcash file you refer to was created by me to help Parabola keep
track of donations and expenses related to the Parabola fund handled by
Fundația Ceata. Before that, I was monitoring the Donations wiki page
and helping fauno and you to keep it accurate and up-to-date, and also
improve it (as it can be seen in the page history, e.g. [4][5][6]). For
each notification of a new donation for Parabola I have received, I have
informed fauno promptly and I'm sure he can confirm this.

[4]
https://wiki.parabola.nu/index.php?title=Donations&type=revision&diff=16404&oldid=16333
[5]
https://wiki.parabola.nu/index.php?title=Donations&type=revision&diff=16750&oldid=16404
[6]
https://wiki.parabola.nu/index.php?title=Donations&type=revision&diff=16752&oldid=16751

I've created the GNUcash file after the first big expenses (with the
occasion of the FISL conference) to further help Parabola. Since then
I've regularly updated and sent the GNUcash file to fauno. I consider
all of this proof of the transparency I've showed Parabola.

Besides this, I've helped Parabola get sponsorships from companies, like
Robofun (BeagleBone) [7], Gandi (domain) [8] and Technoethical, having
noticed that the donations Parabola receives are mainly from individuals
(and some of them are also volunteering time to Parabola).

[7]
https://www.parabola.nu/news/robofun-sponsors-parabola-arm-port-with-a-bbb-board/
[8] https://www.parabola.nu/news/gandi-sponsors-parabola-domain-name/

I have tried to make available to Parabola as many donation methods as
possible, including PayPal.

I've also helped promoting Parabola at conferences such as FOSDEM and
Coliberator [8].

[8] https://www.parabola.nu/news/gandi-sponsors-parabola-domain-name/

I never took credit for any of this, and because you have insisted, I
told you you can credit Fundația Ceata instead. Also, I've never used my
position and my help to influence the internal affairs of Parabola.

This introduction I made is to help people reading this public thread to
get the picture.

> * Why were all of our BTC converted to RON?

Parabola hackers have decided that Fundația Ceata should handle all
Parabola assets, including and specifically also donations in the
cryptocurrencies Bitcoin and Faircoin. Below are excerpts from my
communication with fauno on the matter:

On 24.11.2015 01:07, Tiberiu wrote:
> Have you decided, will the virtual coins be handled by Ceata?

On 24.11.2015 01:09, fauno wrote:
> apparently, i'll send you the details as soon as a i can.

On 24.11.2015 01:11, Tiberiu wrote:
> Okay, meanwhile I'll setup a new Bitcoin wallet for Ceata and I will
> document myself about Faircoin to create an account for this currency

On 24.11.2015 01:15, fauno wrote:
> i can send you the electrum seed so you can regain control of the
> existing btc wallet.

On 24.11.2015 02:13, Tiberiu wrote:
> I have set up Faircoin with Electrum. How should we go about
> transferring control for this currency?

On 24.11.2015 02:23, fauno wrote:
> i don't have a seed for this, give me the new address and i'll
> transfer you the fair and change it on the wiki.  you have to
> exchange it for ron, no?

On 24.11.2015 09:01, Tiberiu wrote:
> That's correct.

On 24.11.2015 14:25, Tiberiu wrote:
> I have no experience with faircoin. How
> long does confirming take and how can I convert them into RON (or
> USD/EUR)? Should I convert them to bitcoin first? Or there is a direct
> way too. I haven't researched yet, maybe you know.

On 24.11.2015 16:29, fauno wrote:
> is it really needed to exchange them to ron?

On 24.11.2015 16:48, Tiberiu-Cezar Tehnoetic wrote:
> Sadly, yes, for accounting.

> I found an email about it
> letting us know it was being done [3].

That's incorrect. I wasn't letting you know "it was being done", rather
that _it has to be done_. I was replying to a donor in Bitcoin who was
expressing his concerns about the "legal headaches" that his donation in
Bitcoin can give to a nonprofit (Fundația Ceata).

In the e-mail you mentioned I've publicly explained on this mailing list
the reason why Fundația Ceata cannot handle BTC without having to
convert them into the national currency of Romania, RON.

On Tue Nov 3 13:45:45 GMT 2015, Tiberiu wrote:
> For sure it's not a problem the originating currency is BTC. It will,
> however, raise the question in the authorities' eyes: where did you have
> USD to pay for that product? No bank statement showing you had that
> money. Next question from the authorities: do you have a separate
> deposit you are not declaring? The answer would be yes, we have a
> separate wallet, in BTC. :-P

I would also like to remind everyone that as per §5 of our Fiscal
Sponsorship Agreement [9]:

> 5. **Parabola Fund Management / Performance of Tax-exempt Purposes.**
>    All of the assets received by Ceata under the terms of this Agreement
>    shall be devoted to the purpose of Parabola, within the tax-exempt
>    purposes of Ceata.  The Parties agree not to use its funds or operate
>    in any way which would jeopardize the tax-exempt status of Ceata.

[9]
https://git.parabola.nu/ceata-agreement.git/tree/Parabola+Ceata_Agreement.markdown

> I remember, we agreed about it with you for legal reasons 

Yes, you (Parabola hackers, including fauno and you) were aware that BTC
needs to be converted to RON and you have agreed with this for the
reasons I mentioned above.

> (at that time I wasn't an investor, and
> didn't understand about economics).

I wonder how this is relevant to running a nonprofit. Or is it just
self-glorification.

> However, I don't remember when it
> was done, if it was **all** or just some of the BTC, for expense, annual
> declaration, etc.

There is no mystery about this. Check the GNUcash file and see the
screenshot attached for verification.

> Could you let us know if there was a consensus about this and if there
> are references from Romanian laws stating that it is mandatory? I
> realize this was a long time ago, but it is an important question for
> our community.

Bitcoin is not a recognized currency in Romania and few countries in the
world give it a legal status [10].

[10] https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country

A donation in Bitcoin received by an individual becomes donation for
Fundația Ceata only when it is deposited in its bank account. Until
then, it doesn't exist in Ceata's accounting, can't be declared, can't
be used for covering expenses.

> * What is the issue if we were to keep donations inside our bitcoin
> wallet (a.k.a. "limbo") until we would declare it (eg. annual
> declaration or when someone will use it for expenses) to avoid wasting
> our gains?

Here you are assuming that the Bitcoin price only goes up and that it
doesn't vary dramatically at times. You assume that the best practice is
to exchange BTC at the end of each fiscal year.

Anyway, this is exactly what I've done in December 2015, as everyone can
see in the screenshot attached and in the GNUcash file. I have exchanged
BTC in RON at BitcoinRomania [11], to my knowledge the only Bitcoin
exchange in Romania.

[11] https://trade.bitcoinromania.ro/

In January of 2016, Parabola has received a donation of 2 BTC, which was
double the amount of bitcoins Parabola had received by December 2015. To
avoid any risk to be judged for waiting too long to exchange BTC while
its price could have dropped, I have exchanged the ~2 BTC the same
month, in January 2016. I considered it's safest to exchange in January,
so that the exchange rate is closest to the one I exchanged BTC one
month earlier.

Finally, there is minimum amount of RON that one can sell BTC for, and
since the BTC donations Parabola has received by end of August 2016 were
only 0.15 BTC, I have exchanged this small amount of BTC the same time I
have exchanged my own BTC.

> * If all money converted from bitcoins (BTC) to RON was for legal
> reasons, then why weren't our faircoins (FAIR) converted too?

As you can find in the excerpts from my communication with fauno on
setting up cryptocurrency donations for Parabola, we couldn't find a way
to exchange FAIR to any intermediary currency to be exchanged in the end
in RON. Considering that the amount of 1100 FAIR (see second screenshot)
had and still has a small value, now being less than $50 USD [12], I
didn't consider it's relevant to anyone for me to lose more of my time
on finding a solution. This was my evaluation back in December 2015 and
I haven't checked later if the situation has improved and if now there
are any options to exchange FAIR to BTC/EUR/USD intermediately or to RON
directly.

[12] https://coinmarketcap.com/currencies/faircoin/

> * If converting our crypt-coins to any currency such as RON, is needed
> we would like to receive references from Romanian laws for better
> clarification and to avoid misunderstanding inside our community.
> Several anon donors asked me for references in private. Could you give
> us references about those points from Romanian laws?

The answer to this question is included in my explanations above. Since
BTC is not regulated in Romania, I can only point you to accounting
questions on forums such as this one [13].

[13] https://bitcointalk.org/index.php?topic=699556.0

> * Why did we convert our assets to RON instead of EUR? Is it a better
> currency than EUR (we have an account in EUR too)? Is it for some legal
> reason? Could you give us references about this?

All fiscal declarations are in national currency, RON. Fundația Ceata's
EUR bank account exists for the sole reason we accept donations in EUR.
If it doesn't exist, our bank opens an EUR account and charges a big fee
of €15 EUR for the emergency opening of an account in foreign currency.
This is why we keep EUR and USD accounts for Ceata.

Romanian national currency RON is quite stable, 1 EUR = [4.3,4.6] RON in
the past 2 years [14]. That is a €0.05 EUR variation (a ¢5 variation).

[14] http://www.xe.com/currencycharts/?from=EUR&to=RON&view=2Y

> * We would like to receive money as paid hackers (not only for
> non-profit things) since we have plans to offer services such as
> technical support, pentesting, webstore, videogames, etc. Is it possible
> to still do this with Ceata since you are a non-profit entity?

Our agreement has been signed on 24 September 2015 for a term of 1 (one)
year and it has been automatically renewed on 24 September 2016. I
remind everyone that Ceata doesn't charge Parabola any fee for handling
its donations and expenses.

Any other free software nonprofit offering fiscal sponsorship (such as
FSF and SF Conservancy) charges the projects under their umbrella with a
standard fee of 10% of income. That is around €250 EUR for the income
Parabola has received so far.

Considering that there is a number of Parabola hackers/donors
unsatisfied with Ceata's fiscal sponsorship, it is our decision to
terminate the current agreement. Please consider this the "sixty (60)
days written notice" I send you on behalf of Ceata, as per §7.

> * If it isn't possible, then we should open a legal entity (eg.
> offshore) for Parabola and declare our gains in our residential
> countries or another similar legal ways (eg. micro-business), then my
> question is: Could be it a trouble for you since we will receive profit
> assets and your non-profit ones? Could help us giving us references from
> Romanian laws to help understand it better?

As per §7(a), as of now you are free to look for a "Fiscal Sponsor
Successor", which has to be "another *nonprofit* organization which is
tax-exempt". As per §7(b), we will only transfer the Parabola fund to a
nonprofit, that communicates "its willingness to sponsor Parabola in
writing to Ceata".

As per §7(c), "Termination Without a Fiscal Sponsor Successor" by the
end of the 60 days, will render the Parabola fund "inactive for any
motive other than transference to a Fiscal Sponsor Successor".

> * Since we have our GNUcash file already sent by fauno, could you send
> to fauno all paperworks, bills, invoices, currency exchange copies
> declared by Ceata about our expenses? It's very important, since
> Parabola has a policy about transparency for our donations. These should
> be posted on our wiki so that donors are no longer worried.

No problem. I believe most of the bills and invoices are already public,
and I will look in the archives for the rest of them. It will all be
ready by the time we transfer the Parabola fund to the Fiscal Sponsor
Successor.

Tiberiu

> [0]:https://repomirror.parabola.nu/other/parabola-accounting/monetary-donations/20170111/
> [1]:https://git.parabola.nu/accounting.git/
> [2]:https://www.parabola.nu/people/hackers/#fauno
> [3]:https://lists.parabola.nu/pipermail/dev/2015-November/003456.html
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