OPEN PANEL — Operating Contracts

The operating-governance contracts that make the two-entity structure run legally and predictably. Where FOUNDATIONAL_CONTRACTS describe durable technical interfaces, this file describes durable organizational interfaces — the policies that keep the 501(c)(3) exemption intact and route officer wealth to the for-profit side. Status: DRAFT v0.1 — working assumptions, not legal/financial advice. Source of truth: CANON.md §2, §5, §7. Legal spine: business/LEGAL_STRUCTURE.md (forward ref). Business model: business/BUSINESS_MODEL.md.

0. How to read this file

Eleven operating contracts (canon §7). Each is specified as: Purpose · Scope · Key provisions · Owner · Review cadence · Failure mode prevented. Two entities throughout:

FOUNDATION = OPEN PANEL FOUNDATION (US 501(c)(3) public charity, IP owner, free comics).
VARIANT = the for-profit sister (licensing, merch, partnerships, collectibles).

The through-line: every contract below exists to satisfy the canon §2 hard constraint — no private inurement, no excess-benefit transaction — while still letting officers build real wealth, but only through VARIANT equity/profit, never through FOUNDATION residuals.

1. Governance charter

Purpose. Establish two genuinely separate boards with defined decision rights, so the FOUNDATION’s independence from VARIANT is structural, not cosmetic.
Scope. Both boards; board composition, reserved matters, inter-entity decision flow.
Key provisions.
- The two boards are not identical. A majority of the FOUNDATION board is independent of VARIANT (no VARIANT equity, employment, or compensation; no immediate family with same).
- Reserved matters requiring independent-director approval at the FOUNDATION: adopting or amending the master license, setting officer compensation, approving any Foundation↔VARIANT transaction, approving the reinvestment plan and reserve targets.
- Officers who sit on, or are interested in, VARIANT are recused from FOUNDATION votes touching VARIANT (ties to contract #2).
- Clear decision-rights matrix: program/editorial → FOUNDATION; commerce/licensing terms → VARIANT; the master license + IP ownership → FOUNDATION, negotiated arm’s-length.
Owner. FOUNDATION board chair (with VARIANT board chair for the joint sections).
Review cadence. Annually; plus on any board-composition change or new entity relationship.
Failure mode prevented. Overlapping/captured boards → the IRS treats the two entities as one, attribution destroys arm’s-length status, and the UBIT royalty exclusion and exemption itself are at risk.

2. Conflict-of-interest policy

Purpose. Govern every Foundation↔VARIANT transaction (and any insider transaction) so none is a disguised distribution of charitable assets.
Scope. All directors, officers, and key employees of the FOUNDATION; all transactions with VARIANT, with insiders, and with insider-affiliated parties.
Key provisions.
- Annual written disclosure of all financial interests, VARIANT holdings, and affiliations by every director/officer/key employee.
- Recusal: an interested person discloses, leaves the room, and does not vote on or influence the matter; the transaction is approved only by disinterested directors.
- Each inter-entity transaction must be found fair and reasonable to the FOUNDATION on the record, with alternatives considered where practical.
- Contemporaneous minutes record who was present, who recused, the comparability/ valuation basis, and the vote.
Owner. FOUNDATION board secretary / governance committee.
Review cadence. Policy reviewed annually; disclosures collected annually and on any new material interest; applied per-transaction.
Failure mode prevented. Self-dealing and excess-benefit transactions (IRC §4958) — insider excise taxes, manager penalties, and in egregious/repeat cases loss of exemption.

3. Compensation policy (nonprofit officers)

Purpose. Pay FOUNDATION officers reasonable compensation only, via the §4958 rebuttable-presumption safe harbor — and explicitly forbid any revenue share for nonprofit officers.
Scope. All FOUNDATION officers, directors, and disqualified persons; all forms of compensation (salary, bonus, benefits, deferred comp).
Key provisions.
- Compensation set by an independent compensation committee (no one whose own pay is being set; no VARIANT-interested members for the matter at hand).
- Decision rests on comparability data — pay at similarly sized, similarly missioned organizations in a comparable market.
- Contemporaneous documentation — the committee records the data relied on, the decision, the basis, and the date, at the time of decision.
- Any bonus is tied to mission / non-financial metrics (reach, titles published, accessibility, creator satisfaction) — never to FOUNDATION revenue, surplus, or royalty receipts.
- No revenue share, no profit interest, no equity in the FOUNDATION for any insider. All upside-via-equity lives in VARIANT (contract maps in §12).
Owner. FOUNDATION compensation committee (independent directors).
Review cadence. Annually per officer, and on any new hire / material raise / role change.
Failure mode prevented. Excessive or revenue-linked nonprofit comp = private inurement / excess benefit; the safe harbor shifts the burden to the IRS instead of the org.

4. Reinvestment policy

Purpose. Codify that FOUNDATION residuals are mandatorily reinvested into the charitable mission — never distributed to insiders — and set reserve discipline.
Scope. All FOUNDATION net surplus (RESIDUALS), including royalties received from VARIANT.
Key provisions.
- RESIDUALS flow, in priority order, to: (a) the free-comics program, (b) fair creator pay, (c) operating + program reserves.
- Reserve targets: a stated floor (e.g. 6–12 months operating expenses) and a cap above which surplus must be redeployed to program; targets approved by independent directors.
- Zero distribution to insiders — restated here as an absolute, cross-referenced to contracts #2 and #3.
- Annual board-approved reinvestment plan; variance reported to the board.
Owner. FOUNDATION board / finance committee; executed by FOUNDATION CFO/treasurer.
Review cadence. Annually (plan + reserve targets); quarterly variance review.
Failure mode prevented. Surplus accumulating without charitable purpose (exemption scrutiny) or leaking to insiders (inurement); also undercapitalization that forces mission cuts in a downturn.

5. IP intake & licensing policy

Purpose. Define how IP enters the FOUNDATION and flows arm’s-length to VARIANT via the master license, with independent valuation.
Scope. All works created through the charitable program; the FOUNDATION→VARIANT master license; any amendment, renewal, or new grant.
Key provisions.
- Intake: IP created in-program is owned by the FOUNDATION per the Creator Agreement (canon §5 hybrid: FOUNDATION holds a perpetual free-distribution license + first commercial option; creator co-owns). Chain of title recorded in the Ledger.
- Arm’s-length license to VARIANT: royalty terms set by independent valuation, approved only by disinterested FOUNDATION directors with full COI recusal (#2), memorialized in a written master license (FOUNDATIONAL_CONTRACTS #6).
- The FOUNDATION grants rights, not services — to keep royalties passive and UBIT-excluded under §512(b)(2); any service component is isolated and separately priced.
- All grants, terms, and payouts are represented in the Rights & Royalty Ledger (FOUNDATIONAL_CONTRACTS #4) so the legal text and the data agree.
Owner. FOUNDATION board (approval) + general counsel; VARIANT as counterparty.
Review cadence. Valuation refreshed on each material grant and at license renewal; policy reviewed annually.
Failure mode prevented. Below-market or sloppy IP transfer = excess benefit to VARIANT insiders, and a services-flavored license = lost UBIT exclusion (royalties become taxable).

Purpose. Operationalize the canon §5 hybrid creator economics — how shares are set, accrued, paid through the Ledger, and made transparent to creators.
Scope. All creators with a Creator Agreement; all downstream licensing revenue attributable to their work.
Key provisions.
- Default share: author-favorable placeholder — 50% of net downstream licensing revenue attributable to the work (canon §5; operator to set final number).
- Terms are machine-readable in the Creator Agreement data model (FOUNDATIONAL_CONTRACTS #5) and drive the Ledger — accrual is computed, not manual.
- Accrual → payout: revenue attribution recorded per work; shares accrued per term; paid on a stated cycle via the Ledger payout rail; statements issued each cycle.
- Transparency: each creator can see attributed revenue, accruals, and payouts for their works; dispute/audit path defined.
- Creator pay is funded from VARIANT proceeds (a program cost), distinct from FOUNDATION residual reinvestment (#4).
Owner. FOUNDATION creator-relations + finance; VARIANT supplies revenue data.
Review cadence. Per payout cycle (operational); policy + default % annually.
Failure mode prevented. Opaque or mis-accrued creator pay → loss of creator trust (the business’s lifeblood, per Image Comics benchmark) and disputes/clawbacks; also keeps creator economics from muddying the charitable program.

7. Data & privacy policy

Purpose. Protect readers — especially minors — and set the FOUNDATION/VARIANT data posture (minimization, retention, lawful basis).
Scope. All reader/account/event data across web, mobile, desktop, backend; donors; creators; licensee contacts.
Key provisions.
- Minors / COPPA: comics skew young — age-gating at account creation; for users under the COPPA threshold, no behavioral tracking and verifiable-parental-consent flows where required; minimal data collection.
- GDPR posture: lawful basis per processing purpose; data-subject rights (access, deletion, portability); EU representative/transfer mechanism if EU users are served.
- Data minimization: collect only what the reading/commerce product needs; no third-party ad trackers (canon §4); privacy-respecting analytics only.
- Retention schedule per data class; deletion on schedule and on valid request.
- One identity across reader/buyer/licensee contexts (FOUNDATIONAL_CONTRACTS #3) with context-scoped data use.
Owner. Data-protection lead (FOUNDATION); shared obligations on VARIANT for commerce data.
Review cadence. Annually; on any new data flow, vendor, or jurisdiction.
Failure mode prevented. COPPA/GDPR penalties, reputational harm with a youth audience, and mission-incoherent surveillance (“library energy, not paywall energy”).

8. Editorial & content-rating policy

Purpose. Define what gets published, how it is rated, moderated, and taken down.
Scope. All comics and creator-submitted content across both standard issues and VARIANT editions; reader-facing UGC where applicable.
Key provisions.
- Acceptance criteria: quality, originality/rights-clearance, mission fit, and completeness of CPF metadata (FOUNDATIONAL_CONTRACTS #1) including credits and alt-text.
- Ratings system: an age/content rating carried in the CPF and surfaced to readers, consistent across surfaces; drives age-appropriate display (ties to #7 age-gating).
- Moderation: review pipeline for submissions; reporting flow for published content.
- Takedown: defined process for rights complaints, ratings errors, and policy violations, with timelines and appeal.
Owner. FOUNDATION editorial / trust & safety (WS10).
Review cadence. Annually; rating taxonomy reviewed as standards/markets change.
Failure mode prevented. Publishing infringing, mis-rated, or harmful content to a young audience — legal exposure, platform-trust collapse, and exemption-relevant program risk.

9. Brand & trademark usage policy

Purpose. Keep all marks owned by the FOUNDATION and license their use to VARIANT and partners under quality control.
Scope. OPEN PANEL, OPEN PANEL FOUNDATION, VARIANT, and all related marks/logos; every use by VARIANT, sublicensees, manufacturers, and partners.
Key provisions.
- FOUNDATION owns all trademarks (canon §1); VARIANT and partners use them only under a written trademark license.
- Quality-control provisions (mandatory for a valid mark license): brand/usage standards, approval rights, and the FOUNDATION’s right to inspect and enforce.
- The trademark license to VARIANT is itself a Foundation↔VARIANT transaction → subject to COI (#2) and arm’s-length valuation (#5); royalty/fee for mark use, if any, flows to the Ledger.
- Sublicense terms flow brand standards down to manufacturers/partners.
Owner. FOUNDATION (mark owner) + general counsel; brand/design (WS9) for standards.
Review cadence. Annually; on each new partner/sublicensee; mark filings tracked per renewal deadlines.
Failure mode prevented. Naked licensing (no quality control) → loss of trademark rights; uncontrolled brand dilution; and unpriced mark use that becomes an inurement flag.

10. Financial controls

Purpose. Ensure the FOUNDATION’s finances are auditable, UBIT-clean, and segregated from VARIANT, with disciplined transfer pricing.
Scope. Both entities’ finances; the inter-entity money flows; reserves; tax filings.
Key provisions.
- Annual independent audit of the FOUNDATION (and consolidated view of inter-entity flows).
- UBIT monitoring / Form 990-T: track any unrelated-business income; keep the master license passive royalty (no substantial services) to preserve §512(b)(2) exclusion; file 990-T if UBIT arises.
- Segregation of duties: initiation, approval, and recording of payments are separated; separate bank/Stripe accounts for FOUNDATION donations vs. VARIANT commerce (canon §4).
- Reserves tracked against the targets in #4.
- Inter-entity transfer pricing: royalty and any service fees set at arm’s-length, documented, and reconciled to the Ledger; periodic benchmarking.
Owner. FOUNDATION CFO/treasurer + audit committee; VARIANT finance for its side.
Review cadence. Annual audit; quarterly financial review; 990/990-T at filing; transfer pricing benchmarked annually.
Failure mode prevented. Commingling, undetected UBIT, mispriced inter-entity transfers, and fraud — each of which threatens the exemption, the royalty exclusion, or solvency.

11. Inter-team SLAs

Purpose. Make the three operating surfaces — product, FOUNDATION program, VARIANT commerce — interoperate predictably, with defined escalation and reliability.
Scope. Product/platform ↔ FOUNDATION program/editorial ↔ VARIANT commerce/licensing; the shared Ledger and reader engine as contract points.
Key provisions.
- Response/turnaround SLAs: editorial review turnaround for submissions; commerce response for licensee/partner requests; product support/incident response.
- Uptime targets for reader delivery and commerce surfaces; degradation/incident comms.
- Escalation ladder: owner → team lead → cross-entity steering, with timeboxes.
- Contract points: changes to the Ledger or reader engine follow the FOUNDATIONAL_CONTRACTS change discipline (“change rarely, break loudly”).
Owner. Shared — product lead, FOUNDATION program lead, VARIANT commerce lead.
Review cadence. Quarterly SLA review; per-incident retrospectives.
Failure mode prevented. Cross-team ambiguity stalling launches, missed creator/partner commitments, and silent breaking changes to the shared backbone.

12. Mapping to the legal structure & foundational contracts

How these operating contracts enforce business/LEGAL_STRUCTURE.md and the foundational contracts — so officer wealth stays on the VARIANT side and the exemption is protected.

Legal requirement (canon §2 / LEGAL_STRUCTURE)	Enforcing operating contract(s)	Foundational-contract tie
No private inurement / no excess benefit	#2 COI, #3 Comp (no rev-share), #4 Reinvestment	—
§4958 rebuttable-presumption safe harbor	#3 Comp (indep. committee · comparability · contemporaneous docs)	—
Officer wealth via VARIANT equity only, never FOUNDATION residuals	#3 (forbids NP equity/rev-share) + #4 (residuals → mission)	—
Arm’s-length Foundation→VARIANT license	#5 IP/licensing, #2 COI, #10 transfer pricing	#6 Inter-entity License; #4 Ledger
Royalties passive → UBIT-excluded §512(b)(2)	#5 (rights not services), #10 (UBIT monitoring/990-T)	#4 Ledger; #6 License
Board independence / no captured boards	#1 Governance charter	—
Mandatory reinvestment of residuals	#4 Reinvestment	—
Creator rights + machine-readable terms	#6 Creator rev-share	#5 Creator Agreement; #4 Ledger
Marks owned by FOUNDATION, licensed w/ quality control	#9 Brand & trademark	—
Reader/minor data lawful	#7 Data & privacy	#3 Identity & Entitlements; #7 Event/Analytics
Auditable, segregated finances	#10 Financial controls	#4 Ledger

Net effect: #3 + #4 keep all nonprofit upside out of insider hands; #2 + #5 + #10 keep the inter-entity bridge arm’s-length and the royalties passive; #1 keeps the boards independent so the IRS can’t attribute the two entities to each other. Together they let VARIANT carry officer equity/profit (legal) while the FOUNDATION carries only mission and reasonable comp (exempt).

13. Adoption checklist

Before launch (entity formation / WS0):

#1 Governance charter adopted; independent-majority FOUNDATION board seated.
#2 Conflict-of-interest policy adopted; first annual disclosures collected.
#3 Compensation policy adopted; independent comp committee constituted.
#4 Reinvestment policy adopted with reserve targets.
#7 Data & privacy policy live (age-gating + retention) before any reader signup.
#8 Editorial & content-rating policy live before first publication.
#9 Brand & trademark policy adopted; marks filed; quality-control terms drafted.
#10 Financial controls baseline: segregated accounts, segregation of duties, audit engaged.

Before first license (Foundation→VARIANT or any partner):

#5 IP intake & licensing policy adopted; independent valuation obtained.
#6 Inter-entity master license executed (FOUNDATIONAL_CONTRACTS #6) and represented in the Ledger.
#2 COI recusal exercised and minuted for the license vote.
#9 Trademark license to VARIANT executed with quality-control provisions.
#10 Transfer-pricing basis documented; UBIT posture confirmed (passive royalty).

Before first payout (creator or royalty):

#6 Creator revenue-share policy adopted; default % set by operator.
Creator Agreement data model live and driving the Ledger (FOUNDATIONAL_CONTRACTS #4, #5).
#10 Payout controls (segregation of duties, reconciliation to Ledger) in place.
Creator transparency/statements path operational.

Always-on (cadence owners assigned):

#11 Inter-team SLAs published; escalation ladder staffed.
Annual review calendar set for every policy above; annual audit + 990/990-T scheduled.

OPEN PANEL — Operating Contracts

OPEN PANEL — Operating Contracts

0. How to read this file

1. Governance charter

2. Conflict-of-interest policy

3. Compensation policy (nonprofit officers)

4. Reinvestment policy

5. IP intake & licensing policy

6. Creator revenue-share policy

7. Data & privacy policy

8. Editorial & content-rating policy

9. Brand & trademark usage policy

10. Financial controls

11. Inter-team SLAs

12. Mapping to the legal structure & foundational contracts

13. Adoption checklist