FAQ about CS B corporation
“CS belongs to Casey, he can do whatever he wants with it!”
If you are saying this it’s probably because you don’t know the history of CS. Yes, it was Casey’s idea (but not an original one, since “hospitality exchange” organizations existed long before he was born), but the execution of this idea is due to hundreds of volunteers who developed the code, who were always suggesting and adding new features, who were translating texts, etc. So, in fact, the CS site is what it is today thanks to volunteers and their work. And the fact is that they willingly contributed trusting they were donating their time and work to the community, to a non-profit organization which was a registered charity in the state of New Hampshire, and which had applied for official charity status with the USA tax authorities; and these volunteers were people like you, who used the site, who hosted people, attended meeting, made many friends, etc., not a kind of staff team who worked and was paid as employees. So it’s not true that the structure of CS belongs to Casey, actually, we believe that the structure belongs to the community which created and developed it.
“OK, but nothing has changed until now, why don’t you wait and see what will happen? Maybe the site will continue to be totally free and get even better!”
Though we think this is very implausible, the matter is that even if this were true and the site continued to be totally free, got better, etc, we still wouldn’t regret not being here anymore. Because the problem is that we don’t think that what has been done is ethical. So, we don’t want to be part of it anymore, we don’t want to support people we can no longer trust, people who fooled us, pretending to build a non-profit project and turning it into a corporation to make money out of it. Actually, even if for us, members of CS, there was (for the moment) no great change in the everyday practice, a lot have changed ideologically: now, instead of being a true community, we are all customers/consumers of a service sold by “Couch Surfing International, Inc.” Like one said: “when it comes to corporate social networks, if you're not paying for something, you're not the customer; you're the product being sold.” And we don’t want it, and that’s why we are no longer offering our couches and hospitality so that a for-profit organization can sell them to customers for verification fees and as premium services, pocketing the bulk of the money and graciously donating a miniscule part to look “socially responsible”. We don’t want people making profits from the generosity of hosts and travelers. Especially, not these people in charge of CS now, people who appropriated the work of hundreds, thousands, of volunteers to themselves. Something which is not only ethically incorrect, but maybe even illegal, since one cannot appropriate the goods of a non-profit organization.
So the problem is not that we are against people getting rich or against corporations in general (even if for some of us that is true), but to the way that CS became a for-profit corporation, namely, stealing the goods of a non-profit organization.
“But there was no other option other” or “becoming a B-corporation was the best option.”
Well, the first sentence is not true. There were many options: shutting down CS in New Hampshire and reopening it in another place or country being the most obvious one, and that doesn’t even imply that the CS staff would need to be relocated, moving the legal structure would be enough (more about this “we did our best, there was no other alternative, we were forced to do it etc., in the item 5). The second sentence involves a question of value, and so it’s not absolute: best for whom? Best to achieve which goals? Certainly, it was not the best solution COMPATIBLE with the old CS principles (what is clear, since it forced CS to change its nature, from a non-profit organization to a real corporation).
“OK, but Casey said that if CS quit New Hampshire, the state would reclaim 1 million dollars”
Casey is not telling the whole story, so we have to speculate: first of all, it’s not true that a non-profit organization needs to pay to close. What they have to do is give their assets to another charity or to the government. So, this statement would only be true if CS had 1 million dollars in assets, which is unlikely especially because Casey had taken the precaution not to list the member database among the assets when he incorporated CouchSurfing International Inc. in 2003. Another possibility is that this 1 million dollars is how much money CS was owing to the government in taxes. For when it was denied the federal non-profit status (the now famous 501c3), it had to pay retroactively the taxes of the past years. But this debt is not dependent on what happens to the organization.
“But they tried to continue to be a non-profit organization, but the US government didn’t approve it!”
In fact what the US government denied was the tax exemption, CS could continue to be a non-profit organization, though it would need to pay taxes. But more important, there are also many doubts if Casey really wanted to obtain this status, since doing it would mean passing the point of no return, that is, if this status was obtained, CS couldn't t be sold anymore. Casey also said that CS was something that was too revolutionary, and use this an excuse of the refusal by the US government, but at the same time Servas, another hospitality service obtained this status (and its complete application is public by law, and can consulted by anyone). And too many mistakes were made throughout the application and review period, which makes us suspicious. But, in order to be sure of this matter, we would need:
- to see the refusal letter from the IRS (the U.S. government agency responsible for approving or denying the non-profit status at the federal level) which states the motives of the refusal. But we know for example that one cannot be at the same time president and CEO of the organization (as was Casey) to obtain the 501c3 status.
- to know why every year the tax returns were filed late, which isn’t helpful in obtaining a favorable decision from the IRS.
- why the proportion of spending on what could be considered programs in line with the claimed charitable cause was so low.
We can see that there are some indications that he didn’t try too hard to obtain this status, what makes us think if that was really his goal, and not only to have more time to make CS grow and sell it for a higher price.