[LACTTE] Re: [Linux-aus] ComputerBank NSW Grant Proposal

[Anthony Towns]

On Wed, Jun 16, 2004 at 05:23:21PM +1000, Michael Still wrote:
> Another way to think of the grant is that we're providing $(( cost of 
> interest )) 

Mmm. The proper way to measure the cost of something is to think about
what else you could do with the money; one thing we could do is just
leave it in the bank -- if we did that, after three years we'd end up
with ~$2.3k more than we've got now. If there's nothing else we could
do with the $15k, then we'd break even if ComputerBank gaves us $2k
now (which can then earn $.3k interest over three years), maxed out
the $10k/$15k line of credit, then paid us back $15k after the three
years. That's not interest free, though -- the interest free version is
the same thing without the $2k up front.

I don't think there's anything else we could do with the $15k over the
next couple of years -- we've just been leaving the money in the bank up
'til now after all. If we did have other uses -- say we were going to
want the $15k to finance roadshows or conferences or needed it to keep
LA running, the above mightn't be the best use we could put the money to,
and would hence underestimate the costs.

>             in return for having a bunch of linux machines which 
> otherwise wouldn't be handed out offered to the public. There is in my 
> mind a clear public benefit to that.

Sure. There's a clear public benefit to leaving the money in the bank
too -- in three years time, LA has more money than it otherwise would to
spend on free software.

Working out which of these is better is a judgement call. Compared to
leaving the money in the bank, we're looking at a loss of about $2k now
-- is there anything we could do with $2k now that'd be better for Linux
in Australia than supporting ComputerBank?

(I'd like the committee to be willing to say "no -- this is better than
any use of $2k we can find now, and $2k is an accurate estimate of the
value to us of that particular $15k in funds over the next three years"
before agreeing to this. I can't see any reason why y'all shouldn't be
able to say that.)

> >Can we ensure we don't end up losing $15k or more outright?
> The email from Stewart details that we will make an attempt to establish 
> ourselves as a "senior creditor" if possible under Australian law, and 
> that payment of the grant is in the form of authorization of payment of 
> invoices. LA has discretional ability to declare the heated spa invoice 
> as not being worthy of payment.

The problem comes if they have a run of bad luck and draw us down to
our $15k limit with legitimate expenses, and then run completely out of
cash and have to shut up shop anyway without being able to pay us back;
recovering $14.9k by putting ComputerBank into receivership wouldn't be
a fun outcome either. I've got no idea on the liklihood of that -- what I
saw looked reasonably coherent and sensible, but I'm not in a position to
judge. How come they're not going to a bank, or ensuring their cashflow
is good enough that they don't need to go into debt? After three years
are they going to need another interest free loan or will they be able
to stand on their own? Is there going to be a problem if LA finds new,
better things to do with its funds by that time?

Cheers,
aj

-- 
Anthony Towns <aj at humbug.org.au> <http://azure.humbug.org.au/~aj/>
Don't assume I speak for anyone but myself. GPG signed mail preferred.

``Like the ski resort of girls looking for husbands and husbands looking
  for girls, the situation is not as symmetrical as it might seem.''
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