July 26, 2007

Linux Fund Visa card resurrected with a new backer

Author: Tina Gasperson

Three months ago, former sponsor Bank of America dropped the affinity credit card of the Linux Fund, the "public charity" with a stated mission to support free and open source software. This week the project emerged from hibernation and began accepting applications anew for its on-again, off-again Tux Visa card. New underwriter U.S. Bank is offering consumers a platinum, student, or basic Visa card, each of which provides a small cash reward to open source projects selected by the Linux Fund advisory board. What changed?

Linux Fund launched for the first time in 1999 with a novel idea: to raise money for open source projects by offering an affinity credit card. Affinity credit cards provide small, per-purchase cash payments, usually about 1% to 3%, to a designated organization like a sports team or charitable organization. While Linux Fund organizers are prohibited from disclosing details of the card deal arrangements, the original Linux Fund affinity card, sponsored by MBNA and emblazoned with the familiar Tux penguin logo, soon began pulling in around $100,000 per year.

Yet, leaders of the project seemed to lose interest, perhaps because they saw Linux Fund as "a fun project by a bunch of kids," as founder Benjamin Cox once described it. When the project's Web site disappeared in 2005, former Linux Fund executive director Jerritt Collord said that more than $126,000 remained undistributed. However, Scott Rainey, a founding director of Linux Fund who now sits on the board of directors, says that the fund started giving that money out again "about two years ago."

What seemed the final setback for the Linux Fund came when Bank of America, which had purchased MBNA's credit card business, shut down the affinity card program in April 2007. At that time, David Mandel, the executive director of the Linux Fund project, said, "I do not know of any alternative to the Linux Fund credit card. I suspect there aren't any."

Now Mandel says that he probably misspoke. "Some of the things I said at that time were probably mistakes that I truly thought were correct. Things don't seem to be as bleak as I thought they were."

Rainey says simply, "In this wonderful American system of commerce, one bank didn't want us and another did. Ain't America wonderful? What a country. I was confident that somebody wanted our business. We just had to dig for it." U.S. Bancorp signed an agreement that is similar to the previous one with MBNA, Rainey says. He couldn't disclose the details of the program, but said that it is the same as "any Visa rewards program, except that charity gets the proceeds rather than the cardholder having to figure out how to spend that 85 cents."

Linux Fund will maintain a virtually identical structure to what it has had in the past, Mandel says. "It's been kind of inactive, but I will be reactivating it. Probably the first thing we'll do is look at the board helping us to select the projects that get funded. Some of this is my bias, but I think I'm safe to say that we'll be looking for projects that are fairly successful -- that have a lot of support but are underfunded. If we can throw in $500 a month, I think that makes a real impact on their budget. Yet,if something happens and we can't give them the money, they don't get wiped out. We want to be significant, but we don't want a project to become so dependent on us that we're their lifeblood."

With regard to past difficulties in distributing funds, Mandel says, "We're not hard-core business people. We're tech people, and sometimes our books aren't as good as they should be. We've been going through and straightening things out, trying to run ourselves better and more professional. We've made huge progress. A lot of the other major open source foundations [such as Gentoo] have been going through that process. Some are ahead of us, some are behind us. A lot of the smaller projects still have not gone through the process. But someday, the successful projects are going to have to go through it."

Rainey says he believes the Linux Fund will succeed this time because "the affection for free and open source software is greater than it was when we launched eight years ago. There's more of it that's pretty tangible. Even Microsoft is coming around and doing deals with open source companies." Rainey is quick to add a clarification. "Microsoft is not leading this, it is following this. We're still sort of the rebel alliance, and we like it that way."

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