Why is ISC a not-for-profit?

I was asked recently, “why is ISC a not-for-profit?” Apparently we walk
like a for-profit and we quack like a for-profit but we are in fact not
for-profit. Most companies with a strong brand like ours have share
holders. Why not ISC?

Primarily because the infrastructure we’re responsible for — BIND, F-root,
our network — has to be kept in the public interest. If the current
staff and board got killed by a freak meteor shower, it’s nice to know
that our successors couldn’t take ISC’s assets out of the public’s service.

There’s also some real freedom in being non-profitable. If we had
shareholders our goal would be to reward them, and we wouldn’t have built
the resources we need for our public benefit mission and thus could not
give away services.

To be a non-profit means we have no shareholders, no stock options, and no
dividends; it means that if our assets were liquidated then the state of
Delaware would get the proceeds; it means our employee compensation has to
fit strict audit guidelines; and it means no person or company can be the
sole or primary beneficiary of our operations.

About 25% of the money ISC spends in a year comes from unrestricted grants,
and the rest we receive as restricted grants (like BIND10 sponsorship, BIND
Forum membership, and F-root sponsorship) and commercial revenues (like
BIND support, BIND development, and BIND consulting).

It’s largely those commercial revenues that make ISC seem to walk like a
for-profit or even quack like a for-profit. But let’s break it down even
further. I can see four ways that ISC walks or quacks like a for-profit.

1. Our business operations people — finance, sales, marketing, business
development — are extremely good at what they do, and they got that way
by working for $bigcorp for decades before coming to ISC.

2. Continuity is a necessary side goal, and that means recurring revenue,
which is more reliable as commercial contracts and restricted grants than
as unrestricted grants. (Is the world ready for an ISC walk-a-thon?)

3. Is it profit or just rational exuberance? That we’ve got this great
talent pool and we’re this focused without stock options and without
dot.com level incentive compensation, astounds me no end. Success and high
spirits are the reward we expect from hard work toward relevant goals —
which is all the same whether there are shareholders or not.

4. Ambition doesn’t care about shareholders. When we make more money we
get to do more cool stuff, and we have a really long list of cool new stuff
we would like to be doing. High among my personal goals is to fix up the
company headquarters, buy the staff better furniture and computers, hire
some people so that less vacation time goes unused, offer some competitive
benefits like continuing education, and maybe upgrade some of our I. T.
plant which is in some cases five or even ten years old. (None of that
will sound very sexy unless you work at ISC, but trust me, it’s cool stuff.)

I would never want a shareholder anywhere near what we do here, because
then if the board fired me they could sell the whole thing to $bigcorp.
I’d like to be personally wealthy, but if I decided to focus on that I’d
first start a new enterprise and work on things that ISC has no interest
in, so that when it’s all IPO’d and controlled by bankers, none of my eggs
or my kids’ eggs are still in the basket.

So, ISC is a not-for-profit because this work is what we wanted to do and
we didn’t want anybody able to own it. Remembering what’s happened to the
employees and customers of $bigcorp over the years, you should be able to
imagine my discomfort at having the Internet’s core infrastructure in the
hands of capital asset managers.

 

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