As a result of the research reported with the document below, we propose appending a new section to the OpenStreetMap Foundation Local Chapters Agreement, worded as follow:
Commercial activities within the Chapter are tolerated, insofar as their proceeds are dedicated to pursuing the goals of the Chapter, as defined in section (2. Purpose).
The Chapter shall not distribute profits to the members.
The Chapter shall not behave as an umbrella for contracting services performed by its members or as a transparent conduit between external clients and members of the Chapter, even if the Chapter retains a fraction of payments.
As OpenStreetMap is an open platform, the Chapter shall refrain from behaving as a commercial competitor. On the contrary, the Chapter must be neutral ground for competitors to cooperate towards the goals of the OpenStreetMap project.
To improve transparency in deciding whether the Board of the OpenStreetMap Foundation should grant a particular candidate organisation Local Chapter status, this document will explicitly state guidelines in order to let stakeholders better understand the criteria.
In order to understand how the OpenStreetMap Foundation decides whether an organisation should become a Local Chapter, it is necessary to understand the benefits that Local Chapter bring to the OpenStreetMap Foundation.
The OpenStreetMap Foundation is a global organization, but its roots are local. As such, it benefits from organizations that provide improved contact with local OpenStreetMap communities.
That is why a Local Chapter must be understood as a local avatar of the OpenStreetMap Foundation, created in its own image. That is the spirit of Article 2 of the OpenStreetMap Foundation Local Chapters Agreement:
"The Chapter and the Foundation each shall seek to mutually support the activities of the other. The Chapter shall represent the interests of its constituency to the OpenStreetMap Foundation. The declared goals of the Chapter must be aligned with those of the OpenStreetMap Foundation"
Local Chapter status means that the OpenStreetMap Foundation officially recognizes the Local Chapter status grantee as acting in the interest of the OSM community in its area in its area of interest - geographical or otherwise.
Recognition provides credibility and legitimacy in interaction with partners of the OpenStreetMap community. To support those materially, Article 5 of the OpenStreetMap Foundation Local Chapters Agreement grants license to the OpenStreetMap logos and trademarks, provided that they are only used inline with the interests of the OpenStreetMap Foundation.
As a forum for an OpenStreetMap community and as an outreach device at the periphery of the OpenStreetMap community, a Local Chapter indirectly benefits commercial activities and the professional development of its members - both of which are borne by organizations distinct from the Local Chapter.
Each Local Chapter can have one representative on the OpenStreetMap Foundation's Advisory Board, to formally represent their community in consultation with the OpenStreetMap Foundation's Board of Directors.
In summary, Local Chapter status enhances the organization as a vehicle for the furtherment of the OpenStreetMap project.
Local Chapter status does not imply that the Local Chapter is entitled to speak for or act on behalf of the Foundation except insofar as may be agreed upon with the Foundation (Article 7.1 of the OpenStreetMap Foundation Local Chapters Agreement).
Local Chapter status does not imply any financial obligation towards or from the OpenStreetMap Foundation.
Local Chapter status does not imply any exclusivity in representation of any part of the OpenStreetMap community.
Local Chapter status does not imply any privilege to exploit the OpenStreetMap trademark for commercial purposes.
Lack of privilege to exploit the OpenStreetMap trademark for commercial purposes does not mean that the Local Chapter is barred from commercial activities, but that the benefits of such activity - its purpose - must accrue directly to the OpenStreetMap project through the actions of the Local Chapter towards its community.
A Local Chapter does not speak for the entirety of the contributors in its area of interest. Any community member is encouraged to express their own opinion and participate in all OSM and OSMF functions and elections – a local chapter has no power to direct their actions, they do not need to hold any particular position (or even be a member) in the local chapter as a prerequisite for participation, and there is no expectation for them to act through delegates or Local Chapter representatives.
In the ideal non-profit, donations go in on one side, actions serving the general good of society go out on the other side. Thus does the non-profit organization keep distinct its purpose from the commercial origin of its funds. Such is the model favored by the OpenStreetMap Foundation and adopted by some Local Chapters who found benefits in that simple, clear and therefore easily manageable separation of concerns.
But in some environments, an OpenStreetMap Local Chapter may fail to find traction with donors. Donor culture may, for example, focus on charity - typically orphanages, hospitals, etc. – and potential donors may perceive mapping as a profit-driven business. For a variety of local reasons, the Local Chapter may find that a donation-driven model is not sustainable. In that case, the Local Chapter may turn to fundraising through commercial endeavours.
UN Special Rapporteur on the Rights to Freedom of Peaceful Assembly and of Association, Maina Kiai, emphasized in one of his thematic reports that “the ability to seek, secure and use resources is essential to the existence and effective operations of any association, no matter how small”
Section 14 of the Recommendation of The Council of Europe on the legal status of NGOs in Europe stipulates that: "NGOs should be free to engage in any lawful economic, business or commercial activities in order to support their not-for-profit activities without any special authorization being required".
According to Article 190 of the OSCE/OIDHR Joint Guidelines on Freedom of Association recently adopted by the Venice Commission at its 101th Plenary Session, "In order to pursue their objectives, associations should be able to both generate income from their activities".
Civil Society Organizations should be allowed to pursue any economic activities if they abide by the general principles of non-profit operation, particularly the principle of non-distribution.
The principle of non-distribution prevents non-profit entities from distributing profits to owners, members, officers, directors, agents, employees and other private parties that may directly or indirectly exercise control over the organization.
An association may conduct activities that advance the purposes set forth in its charter (Law on Associations Article 13(3))
An association may “engage in activities for the purpose of gaining profit,” but any resulting profit must be devoted exclusively to advancing the purposes set forth in the association’s charter (Law on Associations Article 31(2)). The law also expressly forbids an association from undertaking any activities, whether for-profit or not-for-profit in nature, for the purpose of providing profits to its members or third parties (Law on Associations Article 31(2)).
Associations are allowed to carry out auxiliary economic activities if these activities aim to support the association’s statutory activities or contribute to the better managementof the association’s property. Furthermore, the profit generated from such activities may be used solely for the association’s activities, including the administrative costs. The Civil Code sets similar conditions for foundations and funds: they may carry out only auxiliary economic activities and the profit from such activities shall be used only for the support of foundation’s statutory purpose.
In France, Civil Society Organizations may engage directly in any economic activity, related or unrelated to its statutory activities. The relatedness of the Civil Society Organization’s economic activities to its primary purposes becomes relevant only if there is a concern that they are creating unfair competition with the commercial sector.
With regard to tax benefits, German Non-Profit Organizations are generally allowed to engage in economic activities. If the activity is necessary to pursue the organization’s statutory purpose and it does not compete with for-profit organizations more than necessary, profits are not taxed and VAT is reduced to 7% (so-called “Zweckbetrieb,” Fiscal Code §65). Commercial activities which are not necessary to pursue the statutory purposes of the Non-Profit Organization are taxed at ordinary rates if the annual gross income of non-statutory commercial activities exceeds €35,000. (Fiscal Code §64)
As to organizational law, there is a limitation on trading by non-profit associations (Idealvereine), as mentioned above. According to the wording of the law, the association may have any lawful purpose as long as it is not the “purpose” of a trading business. The interpretation of this rule is still not absolutely clear. According to the prevailing view, associations are limited to economic activities that are “subordinate” to their “idealistic” activities, and mutual commercial trading (i.e., among or between members) is not acceptable.
Civil Society Organizations may directly carry out economic activities that are "necessary to achieve its purposes/closely related to its operational goals". Each law regulating three available CSO forms in Lithuania: Law on Associations, Law on Charity and Sponsorship Foundations and Law on Public Institutes articulates this condition for permissibility of economic activities in its text.
A charity, being in principle a fully taxable entity (subjective tax liability), can benefit from a total tax exemption on its activities (objective tax exemption) (Article 161, ITL and Article 3, amended municipal business tax law dated 1 December 1936 (Gewerbesteuergesetz) (MBTL)) provided that, in accordance with its charter/bye-laws, it pursues directly and solely religious/cultural, charitable or general interest purposes.
In particular, the activity(ies) carried-out by the charity must pursue any of the following:
(Paragraphs 17, 18 and 19, Adaptation Law dated 16 October 1934, as amended (Steueranpassungsgesetz) (StanpG))
Activities or a purpose serving the general good of a limited group of people identified according to specific criteria do not fall within the definition of serving the general good of society.
Further, this purpose must be the exclusive purpose of the charity, so that the charity cannot:
A foundation may conduct economic activities within the scope necessary to achieve its aims (Law on Foundations, Article 5)
A Public Benefit Organization can undertake economic activities only if the activities help fulfill its statutory goals (Law on Public Benefit Activity and Volunteerism, Article 20(4))
The Law on Public Benefit Activity and Volunteerism provides that certain statutory activities carried out for fees by a non-governmental organization (including an association or foundation, with or without PBO designation) are not considered economic activities (Law on Public Benefit Activity and Volunteerism, Article 6). These are known as “payable public benefit activities” and are defined as public benefit activities (listed in Law on Public Benefit Activity and Volunteerism, Article 4) designated in the statutes of the organization for which payment is received (Law on Public Benefit Activity and Volunteerism, Article 8). They may include the sale of goods or services manufactured or provided by individuals who are direct beneficiaries of a public benefit activity (e.g., sale of goods made by a handicapped person), or the sale of goods donated for the purpose of benefiting the public (Law on Public Benefit Activity and Volunteerism, Article 8). Any profit gained from payable public benefit activities must be used exclusively to implement public benefit activities (Law on Public Benefit Activity and Volunteerism, Article 8).
Public benefit activity provided for a fee is classified as an economic activity if:
An association or foundation may directly carry out economic activities that have an “accessory character” and are closely connected to the main purpose of the organization.
The Fiscal Code also extends a profit tax exemption to income generated by Non-Profit Organizations from "occasional [economic] activities” (Fiscal Code Article 15(2)(j)). The activities must be for social or professional purposes, in accordance with the organization's statute. Examples include fund-raising events with an admission fee, festivals, raffles, and conferences.
An association, foundation, or federation can establish a commercial company, provided that all dividends from the company are used to advance the purpose of the Non-Profit Organization or are reinvested in the company (See Governmental Ordinance 26/2000 Article 47)
The Russian Civil Code stipulates that “Non-profit organizations have the right to engage in entrepreneurial operations only insofar as such operations are consistent with and advance the goals for which the organizations were established” (Civil Code, Article 50(4)).
An NGO may not be established for the primary purpose of carrying out economic activities.
Although there is no explicit language to this effect in the Law on Associations, an association is considered to have the right to engage in economic activities, as long as economic activities are not its primary purpose.
Associations may only engage in economic activities to the extent necessary to achieve their primary purposes, and the economic activities must be specifically indicated in the association’s governing documents and be related to the primary purposes of the organization (Societies Act, Article 22).
Any earnings from economic activities must be used to promote the association’s statutory activities (Societies Act, Article 23).
A foundation may engage in any activities necessary to promote or realize the purposes for which it was founded, including economic activities (Foundations Act, Article 2).
Civil Societies Organizations may engage in commercial activities devoted exclusively to advancing its purposes of public benefits.
Civil Societies Organizations must not undertake any activities, whether for-profit or not-for-profit in nature, for the purpose of providing profits to its members or third parties.
Civil Society Organization’s must not engage in commercial activities that create unfair competition with the commercial sector.
An OpenStreetMap Local Chapter is neutral ground to all, individuals and organizations, non-profit and for-profit. It is as diverse as the OpenStreetMap community and as neutral as OpenStreetMap itself.
Far from being a monolith, the OpenStreetMap community is a nexus of tensions between interests, personal and organisational - as any human society. The OpenStreetMap Foundation - and by extension the OpenStreetMap Local Chapters provide a forum for that diversity to come together in service of the OpenStreetMap project.
To test whether a candidate organization matches that characteristic of an OpenStreetMap Local Chapter, one may ask the following questions:
That second question hints at why the OpenStreetMap Foundation must reserve the right to grant OpenStreetMap Local Chapter status to more than one OpenStreetMap Local Chapter - should an OpenStreetMap Local Chapter go rogue and resist the withdrawal of its status by the OpenStreetMap Foundation.
Both questions point to the paramount purpose of protecting the OpenStreetMap brand from rogue actors who might monopolize it for the purpose of unfair competition with other commercial actors.
With such a treasure as the OpenStreetMap brand, a member-governed organization may face the temptation of becoming a labor-managed firm - a redistributive organization, providing its members with brand, infrastructure and centralized finances to help them capture opportunities more efficiently than dispersed individuals.
This fails the criterion of non-distribution, the principle of which prevents non-profit entities from distributing profits to owners, members, officers, directors, agents, employees and other private parties that may directly or indirectly exercise control over the organization.
While participation in the OpenStreetMap project has often boosted the personal development of its participants - including their carreers, that benefit took the form of skill acquisition and business networking, but specifically not direct remuneration by an OpenStreetMap-branded organization beyond the limited realm of payment for services in support of the organization's public service goals.
If commercial activities have to take place to support the administrative and operational costs of a Local Chapter, they must be firmly contained within that scope.
If members of a Local Chapter must be paid for services rendered, those services must be in support of the Local Chapter's mandate - not merely to use the Local Chapter as a conduit for cooperative economic activity.
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