It isn't inherently a loophole, I never said that, I said from the point of view of the IRS it could open up a loophole, possibly.
Giving to the public isn't the point of nonprofit status, there are lots of different kinds of nonprofits, and the one under discussion here is a very specific kind, and in order to qualify for it, the IRS requires a lot of specific things.
From what I understand, the issue the IRS has is the fact that the recipient of the charity was too broad, and to qualify for 501(c)(3) status, the recipient of the charity should be more targeted.
Think of it this way, I could give away free food all day, but if I'm doing it at the top of a ski resort, it probably doesn't help the kind of people who need free food and my case for being considered a charity may be diminished.
There is nothing to say that companies doing open source can't qualify, many have, and they obviously did so with better lawyers and maybe a more concrete/directed plan as to who would receive the charity they are offering.
The IRS isn't concerned with the benefit to society, that's not what they are regulating, they are regulating the flow of money and exemptions to taxation. Software that is tax free and used by entities which may exploit that are what the IRS is probably considering.
Giving to the public isn't the point of nonprofit status, there are lots of different kinds of nonprofits, and the one under discussion here is a very specific kind, and in order to qualify for it, the IRS requires a lot of specific things.
From what I understand, the issue the IRS has is the fact that the recipient of the charity was too broad, and to qualify for 501(c)(3) status, the recipient of the charity should be more targeted.
Think of it this way, I could give away free food all day, but if I'm doing it at the top of a ski resort, it probably doesn't help the kind of people who need free food and my case for being considered a charity may be diminished.
There is nothing to say that companies doing open source can't qualify, many have, and they obviously did so with better lawyers and maybe a more concrete/directed plan as to who would receive the charity they are offering.
The IRS isn't concerned with the benefit to society, that's not what they are regulating, they are regulating the flow of money and exemptions to taxation. Software that is tax free and used by entities which may exploit that are what the IRS is probably considering.