Answers to some frequently asked questions.
Yes and no. "Umbrella" is in itself an umbrella term for any conversations that people wanted to have around joint (legal/organizational) structures. Over time and depending on audience we touched on very different subjects. CCT is one result of the umbrella discussions over the past years, one project inspired by it.
Other umbrella projects and discussions continue, also including the CCT team.
A lot of the design decisions for the Center are influenced by the primary goal of improving processes and automating workflows for any legal entity; collecting and building tools that make sense to be used in various scenarios by various entities.
The Center itself is designed to be[come] a "lightweight", scalable fiscal sponsorship non-profit "host". Projects eventually should be able to join with minimal criteria, and be able to leave and take their assets with them as far as legally possible. In contrast with many other existing fiscal sponsorship entities, the "lowest layer" is for projects in early stages, and the goal is to optimize for self-organization within the project and minimal "interference" by the host.
For quite a while, the Center will focus on "getting things right" in terms of financial flows, shared access by project teams to their balances, etc. -- This does not mean that the whole "mentoring layer" and "fundraising" and other services are completely out of scope, but for us most of these "services" happen on top of a basic layer that nobody seems to have gotten quite right and scalable, and, more importantly, most of these "additional services" don't need to be tied to any particular legal entity in the first place.
There are three conversations/building blocks:
- a management platform for financial flows in umbrella orgs
- a minimal set of contracting templates so people can run away with the platform and the templates and adjust them to their own more specific mission
- a broad spectrum "legal entity" able to host Free Software and Free Hardware projects that uses the management platform ("The Center, CCT")
This does not mean that other activities like creating a mentor network, forming groups around particular interests and helping them with fundraising or applications to large European Union grants (like "Internet Freedom projects"), and all the other interesting conversations are suddenly out of scope. It just means that with the limited resources we have so far, we can only do so much as to try and "get the foundation right", for all other activities to follow. We do want to continue to work on the "Big Vision" in parallel, which we know sometimes makes it hard for people to understand "which part of the conversation is happening right now".
"Fiscal sponsorship refers to the practice of non-profit organizations offering their legal and tax-exempt status to groups engaged in activities related to the organization's missions. It typically involves a fee-based contractual arrangement between a project and an established non-profit.
Fiscal sponsorship can enable projects to share a common administrative platform with a larger organization, thus increasing efficiency. In addition to legal status, sponsors can provide payroll, employee benefits, office space, publicity, fundraising assistance, and training services, sparing projects the necessity of developing these resources and allowing them to focus on programmatic activities." (Wikipedia)
Fiscal sponsorship does not mean a project will receive funding, or even necessarily help with finding money. Of course our aim is to make it easier for projects to find money, and our own ressources permitting (in the future), we see CCT as assisting with grant applications, for example. But our basic service goals are those of fiscal sponsorship in the sense above.
a) We needed to find terms that would be accepted by German tax authorities for non-profit status. Using this "wide" definition made this possible.
a) We will adhere to proper definitions of "open source" nonetheless. Our internal agreements and project agreements will specify this.
Yes.
We wanted to find a name that reflects our mission and the ideas behind it: carefully growing something from small seeds to fully-developed projects, ready for the outside world. To quote from wikipedia:
"Horticulturists apply their knowledge, skills, and technologies used to grow intensively produced plants for human food and non-food uses and for personal or social needs.
Their work involves plant propagation and cultivation with the aim of improving plant growth, yields, quality, nutritional value, and resistance to insects, diseases, and environmental stresses. They work as gardeners, growers, therapists, designers, and technical advisors in the food and non-food sectors of horticulture."
We believe this approach makes a lot of sense when adapted to technology and those who work on technology.
No, not anymore. The bylaws are the result of lenghty discussions with the (developer) community and legal entities, most significantly the relevant tax offices. German tax offices actually offer the service of reviewing bylaws before an organisation is founded and registered (up to three reviews), and we made use of this service. Certain provisions and formulations need to be in there to guarantee non-profit status. We made certain that all planned activites fall under (at least) one of the categories for tax-exempt status listed in the relevant laws, and that we also do not necessarily have to follow and achieve the listed goals simultaneously and to the same degree. This keeps us rather flexible.
This is also as close as we get to legally formalising our planned activities without fighting a multi-year legal battle with tax authorities over minor points here and there.
We actually prefer the German term "gemeinnützig" to non-profit, and CCT is therefore actually registered as "gemeinnützig". This literally means "of benefit to the public". Non-profit status in terms of tax-reduction is just what comes with it.
a) We believe that helping open source projects and developing open source technologies is actually beneficial to the wider public. We wanted to see this represented in our bylaws and accepted by the legal authorities.
a) It helps us financially, as we do not have to pay corporate tax.
a) It enables tax-deductible donations to us or to our projects, which is quite an incentive for potential donors.
We could have used all sorts of legal entitites, from associations and cooperatives to foundations. We evaluated the advantages and disadvantages of each and came to the conclusion that for our idea (i.e. this implementation of the "Umbrella" idea), a (limited liability) company is the best fit. It can best interact with external actors, from other companies and institutions to employees, funders, and others.
Internally, we can still make sure that decisions on nearly all issues lie with member projects, not with CCT as their host.
No. In Germany, as in many other countries, almost any legal entity can also be non-profit. A non-profit limited liability company (in German: gemeinnützige GmbH) offers us the best of both worlds. Agility, best interfacing with the outside, tax-excempt status, and our "beneficial to the public" ethics inscribed into our binding bylaws.
In the first year, tax authorities only give preliminary "non-profit" status based on the bylaws. The authorities then yearly examine our actual activities to confirm that they adhere to our bylaws. Only then do we get "real" non-profit status. "Preliminary" and "actual" non-profit status do actually not make much difference in terms of our activities; we can, for example, accept tax-deductible donations for member projects right away, and do not have to pay corporate tax. We just need to keep financial reserves in the unlikely case that the tax authorities take issue with our actual activities and demand payment of taxes afterwards.
Actually, we can:
a) If the activity in question is within our non-profit mission, any profits can (and must) be re-invested in CCT and its non-profit work and projects. Again, in German regulations, it is not about "profit" being generated, but about the activities undertaken being "beneficial to the public" (gemeinnützig) or not.
a) If the activity is not within our mission (e.g. handling accounting for others outside our mission), we can still do this. We will just have to pay taxes on the resulting profits. And activity outside our mission cannot form too large a part of our overall activities. Our non-profit core work must always dominate.
Someone needed to "found" CCT. This could have been the team behind it now personally, but that would restrict future changes here. Also, we needed 25,000 € to found it (a German limited liability company requires this), which is no small sum for us. Having Renewable Freedom Foundation as the sole shareholder offered great advantages:
a) The foundation is set up for eternity, so there is minimal risk of shareholders closing CCT down or withdrawing from it.
a) It also enables us to transfer funds between RFF and CCT more easily (money could only ever be extracted from CCT by RFF, and only used for other charitable purposes).
a) RFF is active in CCT-matters anyway, because the same team is currently behind RFF and CCT.
The Renewable Freedom Foundation was set up in 2012 by a German newspaper publisher. It is dedicated to the protection and preservation of human rights and civil liberties. Over the last years, especially due to Moritz's involvement, this meant especially defending rights and liberties in the digital landscape. RFF works with e.g. Tor, Tails, GNUnet, EDRi, and many more. RFF is a rather small foundation with only 3 full-time employees. For details on its activities, see https://renewablefreedom.org/
a) We looked at many different locations in Europe, all have their advantages and drawbacks.
a) We chose Germany because the team of people actually going forward with this is based there. This makes organization on our end a whole lot easier.