John Lilly, the new CEO of Mozilla Corporation, doesn't want you to pay attention to his new charge. The for-profit arm of the nonprofit Mozilla Foundation produces the Firefox browser and makes money largely by partnering with search engines — that's why the Firefox browser comes with a Google or Yahoo search box built in. "The most successful case for [Mozilla Corporation] will be when the corporation itself is sort of invisible," Lilly writes. Now, why would Lilly want you not to pay attention to his very profitable business — $66.8 million in revenues for the foundation, $56 million of which came from the corporation, in 2006, the most recent year for which it reported results? Perhaps it's because there are questions he'd rather you not ask.
Ostensibly it's because Lilly wants attention focused on Mozilla's army of unpaid volunteers, who help write code for Firefox. But I can think of another reason why Lilly wants to deflect attention away from Mozilla's operations.
The foundation which owns Mozilla recently won approval for "public charity" status. That seems odd, when Mitchell Baker, Lilly's predecessor as CEO, is pulling down a $500,000 salary, and Firefox is making tens of millions of dollars for Mozilla. The test for a public charity, under the tax code, is that it must have substantial support from the outside.
In reality, the Mozilla Foundation is almost entirely supported by the profits of its wholly owned corproration. But the IRS allows nonprofits to look back over several years. One-third of its support must come from donations to qualify as a public charity. Here's the relevant line of Mozilla's voluminous tax filings:
Note that bottom line: Mozilla squeaked over the one-thirds line by a mere 0.12 percent. Suspiciously close. The consequences, if it hadn't just met the required number, would have been severe: Mozilla would have been forced to pay out a substantial portion of its endowment every year. To this day, it retains substantial monies in a reserve fund for just such an event.
There are other tests Mozilla could apply to retain public-charity status — what's called "facts and circumstances," Frank Hecker, the foundation's executive director, told me in November.
Let's talk facts and circumstances, then: The facts are that Mozilla is gushing money, thanks to its search deals. The circumstances are that Mozilla would prefer to retain as much money internally as possible, rather than have to spend it.
This may well be for the good. Firefox is an excellent browser, and open source a worthy cause. But wishing that this all would be "invisible," as Lilly hopes, and hiding behind the legalities of the tax code, as Hecker, in my opinion, sought to do, is unseemly. And unworthy of Mozilla's high purposes.
Mozilla may qualify, just barely, as a "public charity." But it's hardly a charity case. By his statements, I'd say Lilly is unqualified to be the CEO of Mozilla. The community of developers, and larger community of users, deserve a leader who embraces transparency, not invisibility. And someone who will give real answers about Mozilla's finances.