Thursday, July 2, 2009

Should Wikipedia Not be Tax Exempt? Its British Cousin is Not!

Wikipedia describes itself as a "free encyclopedia that anyone can edit."  It has an .org suffix, presumably confirming its tax exempt status (or at least strongly suggesting it, but I presume it is tax exempt without checking, besides its free and I don't see any advertisement on its site).  No doubt it is "educational" in the Big Mama Rag sense of the word and therefore deserving of tax exemption under IRC 501(c)(3).  But our UK cousins have apparently determined that the UK arm, known as Wikimedia UK is not "educational" because the mere dissemination of ideas "is not in itself a charitable object unless it is combined with teaching or education."  Balderdash, I say!  By the way, this astonishing tidbit was reported to us by the very informative International Journal of Civil Society Newsletter (June 2009)..   According to the online Charity Finance"  (quoting the HMRC)::

In its guidance The Advancement of Education for the Public Benefit, the Charity Commission says organisations must provide evidence of educational benefit and states: “A modern example might be a ‘wiki’ site which might contain information about historical events but, if this information is not verified in any way, it would not be accepted as having education merit or value without positive evidence.”

To see a full copy of the UK determination letter denying tax exemption, go here.  The key language is this:

The production of an encyclopaedia is not the charitable advancement of of education and has not been accepted as such in law. In Re Shaw [1957] 1 WLR 729 Mr Justice Harman said "If the object be the mere increase of knowledge it is not in itself a charitable object unless it is combined with teaching or education". Nor is the support the Wikipedia, the stated primary purpose of Wiki UK Ltd, a charitable purpose.

Here is what the Wikimedia UK Secretary told its Board:

Their objection goes to the heart of what we have been established to do. On the surface, it does not appear that any different wording in our constitution or correspondence would have given us a different outcome. Nonetheless, the legal issues may be arguable - our job is not just to produce content in isolation, but also to spread that knowledge and make it accessible to all. I should imagine this will come down to the finer points of law, and it is probably best to engage a lawyer at this stage when we appeal. If we had applied to the Charity Commission before HMRC the application would have been considered by different lawyers but the same law would apply. Therefore, it is likely that we would have come up against the same problem. I'm contacting the Foundation to ask them if they are aware of any lawyers familiar with UK law who could help us pro-bono on this. I'm also sending a note to our MP to thank him for his help in speeding this up: although it is disappointed to get this response, it is better to get it now that in 3 or 6 months' time. In the meantime, we should probably stop referring to ourselves as a "charity" or an "exempt charity". Before receiving this letter it was reasonable for us to do this as that was our honest view. Now we know there is some disagreement over this, I suggest we should describe ourselves as a "not-for-profit" instead. Whilst we can still get Gift Aid declarations (HMRC have previously confirmed this was ok) we should probably add a caveat on the form explaining that our charitable status is contested.

Me thinks our brethren have this completely wrong.  The dessimination of uncensored, raw and un-commented upon information (nevermind that the dessiminator cannot possibly dessiminate without at least implicit comment, even the organization of information is a subjective comment) is, if that is even possible, as valuable or more as censored, edited, and commented upon information.  Stupid is as stupid does.


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