(apologies in advance for the length but I think you said some stuff that needs responding to to avoid misapprehension)

I don't think running a business is necessarily in conflict with altruism.

No but like I'm saying in the comment you're replying to it changes whether we should accept an emotion-based appeal from them. The people who own Jiffy Lube may legitimately believe their mission statement and like that they're changing people's oil at a reasonable price. Even if they do feel that way, I shouldn't feel guilt or remorse should they not be able to turn a profit somehow. It would be one thing if it was a charity, but both of these organizations are businesses.

I don't work there so I don't know what happened.

Requiring insider knowledge for judgment is setting the bar a tad too high. It's hard to imagine a case where someone could culpable for something if we had to listen to enough of "their side" until something they said eventually landed.

This isn't a subtle or nuanced issue. This is about as black and white as these things get.

But something went wrong to where "doing good" wasn't the most profitable thing for them.

Like I also said in the comment you're replying to, there were loads of ways they could have made money. It's just that those ways required work and creativity and it's easier to just bundle adware with your downloads. Sometimes the guy who robs a bank isn't Jean Valjean, he's just a guy who likes money. SF certainly doesn't look like a Valjean underdog here. They're just people who thought they'd make some money and nobody would care because they're SourceForge.

Check out Yorba's story on that.

Four years for approval seems excessive to me as well. IIRC Gentoo qualified after a year. It's possible that the four years is actually a good sign in that it may be indicative of deliberations going on behind the scenes. Most of the IRS's statements make it clear that they couldn't see how this was charitable work versus just work that they do and want to have made tax deductible, which is a reasonable response. They restructure to do things like pushing for internationalization of their applications, offering public education programs, adding features to their program that seem targeted for underserved communities, etc. This really reads like someone who thought they gave out tax deductible status like it was nothing.

The way it's worded also makes it sound like they took a reactive approach and didn't push the issue, which may have sped the process along as well. I just say that because they don't mention having continually badgered people on the status of their application (which may have given them a chance to argue their case) and just kind of sat back and waited for it to happen. Again, I don't know that to be the case but that's how it reads.

Then there's this:

The purpose of source code is so that people can modify the code and compile it into object code that controls a computer to perform tasks. Anything learned by people studying the source code is incidental.

Which is actually true. Their claim to be an educational charity was pretty slim. There's nothing I can find about them that would imply that to be the case. I can see putting it on their application with "all they can do is say no" logic but it shouldn't be surprising that they felt this way.

The public work ones could have probably been argued against since there can be a case made for that, but it doesn't sound like they even tried. Their software could be a public work and the copyright one sounds like they just didn't understand that people surrender their copyright claim when they contribute to FOSS. They could probably have pushed that one. It still would have taken more to get tax exempt status but this point is easily pushed back on.

But the reality is that being a non-profit only means you have certain tax exemptions

It's more than just "certain tax exemptions." The 501(c)(3) designation allows people who donate to you to write off the expense as a charitable donation. Corporations do this all the time. It's good PR and sometimes (like with old equipment you were going to surplus anyways) it's actually zero cost or a net gain for the donating organization. There are also grants and other types of special funding you're only going to qualify for if you're a recognized non-profit.

It doesn't mean you don't have regular business expenses like payroll and infrastructure.

As opposed to a for-profit where these things are free? Take eOS for example, you are already taking in money and and paying for the stuff you need. That doesn't change just if you were a registered non-profit. The income you're getting now stays the same but now people have more of a self-interested reason to donate and you can solicit donations without sounding greedy.

Basically what you're saying to me is that the only option is to become a giant corporation who makes the majority of their money outside of the consumer sphere and to basically only have consumer products as a side project. I don't like that at all.

Well that's alright because that's not at all implied by what I said up there. I never said anything about consumer-facing stuff so I don't know where you're getting that. I tried to think of a response and just couldn't. It's possible this is just us talking passed each other here, so you may want to elaborate on what you're meaning there.

Also, public companies aren't necessarily huge. puppetlabs is going public while having a revenue of about $8 million. For a company with that high of a profile, that's basically nothing. You need a ramp up period, a solid business plan, and early investors but it's definitely do-able.

implies is that open source is doomed to permanently be a second-class citizen.

You realize even just Linux by itself is a multi-billion dollar industry. By itself, Red Hat takes in about a billion and a half every year. We should be so lucky to be second class citizens if that's the standard.

I do think there is room for a purely consumer-focused open-source business model to exist. I also think that it can be done without advertisements or data mining

Great, I agree. It's just not pay-for-play like with what exists for proprietary vendors. You guys saw that first hand by trying to rebrand "payments" as being "donations."

FOSS is different than proprietary software because it's developed by multiple stakeholders rather than just a government-granted monopoly where the idea is that the copyright holder will get all the money and use that to resolve any blindspots in the product. FOSS is a community of stakeholders coming together to maintain the same ecosystem of products.

For example, eOS benefits extensively from work done by other companies/organizations. The fact that you have a stable kernel with decent hardware support and a full-featured graphical environment is a testament done by companies like Samsung, Red Hat, Cannonical, SuSE, Intel, AMD, etc, etc, etc. You're paying those guys $0 but getting 100% of the benefit when you're developing your product. That's also a non-trivial amount of work.

But that's OK, because no single company owns the commons. It's great in fact. eOS doing that is part of the reason why FOSS is more ethical than proprietary models which have vendor lock-in where users feel forced to continue their relationship with a company even if they would prefer not to continue it.

In the case of SourceForge, they also had the majority of their product (compiled binaries) done by their customers and basically just needed to profit from being the platform they used to distribute binaries. That's a pretty broad mandate to not be able to think of a single ethical way to monetize your product. I mentioned elsewhere that charging a reasonable fee for automated repository management would be an excellent service, but they just didn't do it. They didn't even try from what I can tell.

And I even think it can be done on a purely pay-what-you-want basis.

I don't think so. Otherwise, what are you going to do when someone strips your branding and redistributes eOS on their own? That's what CentOS is to RH. RH doesn't seem to mind too much but even if they did they couldn't stop CentOS.

It's more viable to sell add-on services like if you were to create a simplified Foreman+Pulp+Puppet systems management system and charge for support, training, consulting, certification, etc, etc. You can also use the platform to tie into pay services you do provide like cloud storage. You can go on from there but the point in saying that is just that there are loads of ways to make money off an OS rather than charging for it and calling it a donation. You are legally allowed to charge for it (FSF agrees with that publicly) you just can't stop someone else from redistributing the software you use. You can stop them from distributing branding because that's copyright/trademark which isn't covered by GPL.

I want open source to be viable.

I think you may be slightly out of touch with the reality of the situation if you don't already think this is the case. The desktop PC is basically the one and only place Linux isn't a huge competitor.