Commit 25b05e41 authored by Stephen Michel's avatar Stephen Michel

add documents from wiki. Closes #1

parent e3746dd6
This will be a repository for legal documents (existing ones added soon) and
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title: Legal Issues
Note: alongside discussion page here and these pages, we have a [legal topics email list](
## Documents
All these have been drafted but may not be in final form. See full list of documents [here](/legal/).
- [Articles of Incorporation](/legal/articles)
- [Bylaws](/legal/bylaws)
- [Terms of Use](terms-of-use)
- [Privacy Policy](privacy)
- [Requirements for projects](/governance/project-reqs)
- [Rules for financial transactions](/legal/transactions)
- [Trademark Policy](/legal/trademarks)
- [Code of Conduct](/conduct)
## Discussion
We have a separate page introducing the basic [mechanism from a legal perspective](/legal/legal-description).
### Non-profit cooperative
We intend to operate as a non-profit, multi-stakeholder cooperative with three member classes:
* Workers: those paid to manage and develop the website
* Projects: those whose independent projects receive donations through the site
* Patrons: those who only donate
We are not stock-based but are funded by membership dues (which will be calculated as pledges to the site just as for other projects we support).
### Federal 501 tax-exemption issues
Our mission absolutely fits a social purpose, not a profit or self-interested purpose. Whether that fits the particular boxes and charitable tests of the IRS is another question.
For overall info about the issue with Free/Libre/Open issues and 501, see resources at the [FLOSS Entities Working Group wiki]( That includes things like several records of specific past approved and rejected IRS applications. The chair of that group, Aaron Williamson, is probably the best lawyer we could work with when dealing with this side of things. He also published a [summary of 501 issues for FLO software]( that is worth reviewing.
#### Do we need 501?
Forgoing tax-exemption could be feasible if we don't have any substantial taxable income. We intend to use all revenue to serve the mission, but any holdings unspent at annual roll-over time remain a concern. According to one interpretation, all contributions are non-taxable gift income, but we'd want clarity about that.^[According to [NOLO book on non-profit formation]( The patrons get nothing besides membership in co-op which itself provides no benefits besides say in governance, and the NOLO book suggests this is unambiguously okay.]
Whether we hold funds depends on our [transaction](/legal/transactions) plan: either all funding is direct donations to us with the pledge mechanism as a vote in the use of funds *or* we do split charges via a payment system and avoid holding funds at all.
Forgoing 501 does mean less worry about the scope of projects. We would only be limited by our own rules and Bylaws in terms of which projects to support. This would permit the most flexibility in how we interact with the users in all sorts of respects and deal with many types of legal entities for projects, including international.
#### 501(c)(4) or maybe still (c)(3)
If we did pursue tax exemption, 501(c)(4) might be easier and more appropriate than (c)(3). Thus, we would be classed as a “social welfare” organization. We may self-determine rather than ask for IRS determination, but either way, we must be honestly confident that we qualify fully.
To qualify, we must be mission-driven for serving the public benefit. We must provide no special services to members (note: our site and services are available to anyone whether or not they are co-op members. Members only have say in governance but no other benefits generally, except that the worker-members, i.e. the team — they get paid for their work, but no extra benefit, and they don't get paid because they are members, but because they do work for the co-op).
#### Concerns about 501 classification
##### Do we fit simple 501 boxes enough?
We want to emphasize our cooperative structure, bringing together different stakeholder interests. We prefer not to be limited in the scope of projects (other than non-rivalrous FLO products), and we need to be flexible enough to serve our mission as effectively as we can. We have concerns about whether we fit easily enough into the predefined boxes of IRS 501 categories.
##### Is fundraising an exempt purpose?
Among other concerns, according to an IRS agent, fundraising for exempt purposes is not itself an exempt purpose. On the other hand, the National Taxonomy of Exempt Entities includes codes for "Fund Raising and/or Fund Distribution". Also:
> Rev. Rul. 68-489, 1968-2 C.B. 210
> * An organization will not jeopardize its exemption under section 501(c)(3)
> of the Code, even though it distributes funds to nonexempt organizations,
> provided it retains control and discretion over use of the funds for
> section 501(c)(3) purposes.
> * An organization exempt from Federal income tax under section 501(c)(3) of
> the Internal Revenue Code of 1954 distributed part of its funds to
> organizations not themselves exempt under that provision. The exempt
> organization ensured use of the funds for section 501(c)(3) purposes by
> limiting distributions to specific projects that are in furtherance of its
> own exempt purposes. It retains control and discretion as to the use of the
> funds and maintains records establishing that the funds were used for
> section 501(c)(3) purposes. Held, the distributions did not jeopardize the
> organization's exemption under section 501(c)(3) of the Code.
##### How specific are our requirements for how projects use funding?
However, we are not sure if the scope of control and discretion we hold via our project requirements would be judged as adequate by the IRS. Moreover, the non-profit purposes we want to require of projects do not seem to necessarily fit the 501, especially not 501(c)(3) limitations. So, we want all project funds from our system to go toward FLO development, but not to be overly strict about the nature of the FLO products.
If we fund all sorts of FLO projects as a (c)(3), it could mean the IRS offering the (c)(3) deduction to every single FLO project in practice — not that they projects would get 501 tax exemption themselves, just that there would be a way (via for donors to fund them and get a deduction. In other words, the patrons to would get a deduction, and the projects would be responsible for reporting their income per whatever tax status they have. If we were (c)(4), there would be no deductions, we wouldn't have tax liability, and projects could (we'd hope) be able to have any range of tax statuses themselves and report their income accordingly.
Would there be limitations on which projects we could support if we were 501 of either sort? Would it bar us from supporting fully-FLO projects that were themselves not non-profit or any sort of charitable purpose? (Say, for example, FLO business accounting software or FLO video games or…)
##### Why not (c)(6)
If we consider (c)(6), we should know that it would mean specifically having to serve the interests of the whole scope of a field of business (in this case, producers of FLO works), and we could *not* have a public-benefit mission. Thus, (c)(6) probably will not be a viable option given our mission not only of promoting FLO works but of orienting their work to best serve the public interest (e.g. we want to discourage practices by FLO projects that may be financially effective for them but may be bad for the public, such as privacy-invading surveillance and ad-targeting). It seems unlikely to define a (c)(6) as serving the business interests of specifically the *public-interest-focused* subset of FLO projects.
#### Scope of projects
We prefer not to limit the site to formal non-profit projects even though we *do* limit the site to projects that develop public goods available to all. As with many public goods, the products we independently fund may themselves benefit businesses, citizens, and other organizations alike.
* For-profit businesses may support projects which they use
* This is sticky for software due to recent IRS scrutiny. A software project we support could be used by a for-profit business, for example. Our view is that the same could be said for an educational text. For that matter, for-profit businesses can use public libraries, and yet there is no doubt about the non-profit status of a friends-of-the-library organization. The IRS may be re-evaluating their position based on news from other FLOSS organizations.
* Put simply: a for-profit business could fund the public commons specifically because they want to use a particular work in their business. This does not have to be an issue as long as the work will also benefit and be available to everyone, not just that business.
* Some believe that we simply need the right application with help from a lawyer who understands these issues.
* We might eventually want to sponsor selected projects, fund something like a non-partisan think-tank which produces research or opinion papers, provide development services for other online cooperatives, or organize advocacy for issues pertaining to the digital commons, like net neutrality or patent reform. For reference, 501(c)(4) organizations are permitted to engage in unlimited voter education and lobbying and in limited partisan political campaigning, as long as there is a connection to the organization's nonprofit purpose.
### Ramifications of our mechanism for coordinating pledges
We have two possible implementations for handling funds. The first involves holding funds and paying out to projects as they choose to withdraw them. The second involves having a third-party system manage transactions that go directly between patrons and projects. We describe the details of each on our **[transactions page](transactions)**. We prefer the fund-holding option technically.
### Not a payment processor / money transmitter
We need to be sure we are not classified as a financial institution or payment processor / money transmitter. The one thing we *cannot* do is touch funds ourselves but claim that the funds are still the property of the donors until given to projects. Either the funds are ours (which means we address taxes on holdings either via 501 or via accounting that somehow recognizes the funds as allotted and thus not subject to taxes at annual roll-over) or we don't touch them, we just instruct third-parties about how to process charges and payments.
Some legal background:
* In a [2008 ruling](, the Bank Secrecy Act was determined not to apply to websites like Kiva that involve credit stored in user accounts which can be transmitted at any time to international microloan companies, so long as the website remains purely a clearinghouse for coordinating transactions.
* Any transactions within the system have to be clearly tied to our mission, of course
* The primary value a [payment-processor](payment-services) offers us is that we do not have to implement PCI compliance on our own infrastructure or have our corporate checking set up as a merchant account (as well as helping us with fraud detection).
* Gratipay is a competing FLO-project support service that used to hold funds in escrow, assigned to each user's account until their weekly gifts use up the available funds, at which point a new charge will be made. That process turned out to be (or be too close to) an illegal money transfer service (this came to light when their payment service (Balanced Payments) shut down and they investigated alternative options). At this point, [Gratipay's escrow process]( still describes some of that.
* They recently worked with Aaron Williamson, a lawyer familiar with FLO issues who we might want to use and who would understand these issues.
* Flattr uses this same model (deposit to your account, funds go to projects at a rate that isn't predetermined, then new deposit when funds run out, unused funds carry over from month to month), but they aren't based in the U.S.
* BountySource is also playing with a [version of escrow]( for their "salt" subscription-donation service.
* "There is a minimum billing charge of $5. If your contribution amount is less than $5, you will be charged $5 and the remaining portion will be applied as a credit to your account." Thus they are doing some level of "credit in your account". We don't know how legally solid that is, although it seems reasonable on the surface.
* This old [blog post at WePay]( describes various implementations of money transmitter and online marketplace issues. Incidentally, WePay says they are exempt from Money Transmitter licensing, but we're not clear why (perhaps because they make recipients register in a particular manner and they then only process credit cards and do immediate transfers without any real time holding funds).
* A complex state-based issue in California has people debating whether AirBnB is a money transmitter simply because they escrow funds for a short time before paying the renters of space. In an [article about the debate](, it says "If a company entrusts a regulated bank with the funds it's moving, and the bank maintains control of the funds, the department typically won't classify it as a money transmitter." A [Business Insider article]( is relevant as well.
* **AirBnB is now a licensed Money Transmitter**. It was debated before, but now they show up in the list of [licensed money transmitters]( for California. They do take in funds which they hold, then they pay others later. That's similar enough to what we propose. We should make sure to avoid this status ourselves either through a partner service or through classifying our transmissions differently (not considering the funds coming in as simply being the patrons' funds that we transmit).
* A [Lawsuit against many parties for non-licensing of money transmitter status]( is relevant and important but may be hyperbolic and have exaggerated claims. This is from someone frustrated with the law's burdens ruining his own startup trying to attack others who he sees as getting away with operating illegally. He certainly has at least *some* merit to his claims.
##### Gift Cards
We want to be able to offer gift cards as funds set aside for donation to projects. In some respects, this is more like giving donations in someone's name, although it would give that someone the chance to determine something about the direction the funds go. This is straightforward as long as we do the donation-to-us version of holding funds. Not sure how we would do this if we did the split-charges no-holding version of transactions.
### Other legal concerns
* Accounting and reporting requirements
* Tax filing
* 2013 was only private actions financially. 2014 was the first year of real activity for accounts. All 2014 income was only non-taxable contributions.
* Although we may need to consider some portion of crowdfunding rewards like shirts as being a taxable portion of the donations from the crowdfunding campaign, we still have spent basically 100% of income on expenses, i.e. none goes toward profit.
* We need to determine clarity about what tax filings we need to do for projects that use the system or to what extent the filings are strictly the responsibility of each project.
* Anti-fraud measures
* Online charities are a favorite target as one step in the process of credit card theft: a small charge is made with a stolen card number to confirm that it is still active. Botnets will often register many fake accounts with a site for this purpose. Many failed charge attempts from a single IP or many inactive accounts with failed charges are a sign of this kind of fraud.^[<>]
* Normally the test charge amount is lost to the fraudster, but Gratipay [was specifically targeted]( because it presented a mechanism by which the test amount could be recovered, through fake-account-to-fake-account tipping.
* has some built-in defenses against this, such as monthly transfers (takes longer to recover anything), externally variable share price (makes the amount recovered less certain), transparent donations (can't hide who's donating to whom), and our project vetting process (although the Gratipay scammers also made transfers to some legitimate bystander accounts to cover their tracks).
* But we still need to be careful about credit card testing, since we allow users to withdraw sums from their accounts. The fraud prevention officers of whatever payment processors we end up using should be able to advise us on things like waiting period, maximum amount, etc.
* We may not be able to tell users “your account is suspended pending investigation into potential fraud” because, if it has to be referred to law enforcement, we don't want the user notified that they are under investigation. Otherwise, [we could be held responsible]( for “tipping off” the criminal and giving them a chance to escape. (This is part of the reason why PayPal has such a bad reputation.) It's unclear how to reconcile this with the goal of a transparent organization. Is it a solution to do all we can to avoid touching credit-cards ourselves and rely on the processing services?
### International legal issues for funding projects outside the U.S. and for patrons outside the U.S.
We're not sure about the details, but this is a *complex* topic. Getting money from or giving money to various countries has lots of issues.
title: Articles of Incorporation
categories: legal
Below are our Articles as filed with the State of Michigan.
*Text in italics is legal boilerplate included for nonprofit co-op or potential 501(c)(4) status.*
Note: we intend to amend this prior to accepting our full [Bylaws](bylaws) because we have updated policies, adjusted goals, and other information from legal counsel. So these Articles will be fully revised accordingly, once the Bylaws are finalized.
**Pursuant to the provisions of Act 162, Public Acts of 1982, the undersigned corporation executes the following Articles:**
The name of the corporation is
The purposes for which the corporation is organized are:
To provide a platform enabling the public to better discover, access, and support non-rival resources in creative fields (such as art, research, technology, and education) that are freely available without proprietary restrictions.
* is organized and operated exclusively for the promotion of public welfare within the meaning of IRC Section 501(c)(4) of the Internal Revenue Code of 1986, as amended, or the corresponding provisions of any future United States internal revenue law (the "Code").*
The corporation is organized upon a nonstock basis.
a. The description and value of its real property assets are: None
b. The description and value of its personal property assets are: None
c. The corporation is to be financed under the following general plan:
Funded by nonredeemable periodic membership fees; donations solicited from the public; private/government grants; and sale of trademarked merchandise.
d. The corporation is organized on a membership basis.
1. The name of the registered agent at the registered office is Aaron Wolf.
2. The address of its registered office in Michigan is --- --- ---, Ann Arbor, MI 4810-
The names and address of the incorporator is as follows:
Aaron Wolf --- --- --- Ann Arbor, MI 4810-
*This corporation is organized and operated exclusively for social welfare purposes within the meaning of Section 501(c)(4) of the Code. Notwithstanding any other provision of these Articles, this corporation shall not carry on any activities not permitted to be carried on by a corporation exempt from federal income tax under Section 501(c)(4) of the Code. No part of the net income or net assets of the Corporation shall inure to the benefit of its directors, officers, members, or private persons. However, the corporation is authorized to pay reasonable compensation for services actually rendered and to make payments and distributions in furtherance of its tax exempt purposes. Upon the dissolution or winding up of this corporation, its assets remaining after payment, or provision for payment, of all debts and liabilities of this corporation shall be distributed to a nonprofit fund, foundation or corporation which is organized and operated exclusively for social welfare purposes and which has established its tax exempt status under Section 501(c)(4) of the Code.*
*The Corporation is organized on a cooperative basis pursuant to Chapter 11 of the Nonprofit Corporation Act, Act 162 of 1982.* Membership is organized on a nonredeemable periodic membership fee basis *and shall be available to all patrons. Classes of membership shall be determined only by type of patronage.*
*After incorporation, the Bylaws of the Corporation shall be adopted by the Interim Board of Directors and ratified at the first meeting of the members.* After initial ratification, the Bylaws may be amended by either (A) a consensus vote of the Board of Directors or by (B) a two-thirds vote of the Board of Directors along with ratification by a majority vote of the general membership.
*Net savings (up to but not exceeding the amount of member fees contributed during the fiscal year) shall be distributed to members according to patronage or allocated to retained earnings, operating costs or capital expenditures of the cooperative to reduce the costs of goods, facilities, or services, to improve the quality provided or otherwise to further the common benefit of the patrons.*
title: Board of Directors
categories: legal
#Board of Directors: Role and Resources
This is a page-in-progress for information for board members and others curious about the role, purpose, and process of the governing Board of
## Status of the Board
The Articles of Incorporation have been approved so as soon as we're sure they don't need to be amended and we have Bylaws approved by legal counsel, the incorporators will appoint an initial Board which will adopt the [Bylaws](bylaws) as its first legal act. The Bylaws will then need to be ratified at the first general membership meeting, at which time the first elected Board will be formed. The basic structure, duties, and functioning of the Board will be laid out in the Bylaws.
## What the Board does
### Expectations, duties, and responsibilities of Board members
#### Ethical obligations
* **Avoidance of conflicts of interest:** Directors are expected to disclose any real, potential, or perceived conflict of interest (CoI) to the rest of the Board as soon as they become aware of them. A CoI is not necessarily a breach of trust or an offense against the cooperative but willful failure to disclose a CoI is.
* **Proper use of confidential information:** Information subject to confidentiality or privacy concerns is on a need-to-know basis only. Beyond need-to-know, a director may not disclose private or confidential information obtained because of their position as director until the time appointed by the board for the information to be made available to all members. Directors are also prohibited from using confidential information for business or other advantage, or providing that information to others for advantage.
## Electing the Board
The Board is divided into two types of positions: voting Representatives elected by the membership, and non-voting Officers appointed by the Board. Representatives are further divided into At-Large Representatives elected by the general membership and Member Class Representatives elected by and from each of the three member classes. Officers include the President (the only Officer elected by the general membership), Treasurer, Secretary, and one or more Vice Presidents.
## Induction process
Newly elected Representatives and Presidents and newly appointed Officers are inducted at the annual meeting.
## Training for new (and continuing) Directors
* How to handle cashflow:
* Ensure that all moneys owed are paid on a timely basis to avoid service
charges, interest penalties, and or delinquent notices. Where applicable, bills are to be paid, if cash flow and credit limits allow, in time to receive any discounts for early payment.
## Resources on servant leadership
## Meeting process and resources for reaching consensus
The default decision-making process of the Board as specified in the Bylaws is consensus. By consensus, the Board may adopt Standing Rules that allow for other decision-making processes in specific circumstances.
The Bylaws also provide for a fallback voting process for use in cases of irreconciliable deadlock or emergency issues that must be resolved immediately.
## Records
For legal compliance and internal transparency, minutes for all Board meetings and for meetings of all Board-chartered committees are official corporate records and must be submitted to the Secretary and posted on the website except where prohibited by privacy and/or confidentiality concerns.
* Minutes of Board meetings must include *at minimum*:
* Date, place, and time of meeting.
* A record of the people who attended the meeting and any directors who were absent.
* A brief statement of all matters pertaining to the business of the cooperative during the meeting.
* All defined problems, resolutions, and votes by the board. If a roll call vote is taken each individual response shall be recorded.
* Highlights of the manager’s report, such as volume of sales, expenses, and earnings.
* Signature of the board secretary and president.
## Board Code of Conduct
As a co-op director, I pledge to do my best for the co-op and will:
* Devote the time needed to fulfill the responsibilities of the position.
* Attend all regular and special board and committee meetings.
* Be prompt, attentive, and prepared for all board and committee meetings.
* Contribute to and encourage open, respectful, and thorough discussions by the board.
* To enhance board understanding and cohesiveness, attend and actively participate in the board’s
training sessions and educational programs.
* Disclose any personal or organizational conflict of interest in which I may be involved, and refrain
from discussing or voting on any issues related to that conflict.
* Refrain from becoming financially involved or associated with any business or agency that has
interests that are, or could be perceived to be, in conflict with the co-op’s interests.
* Be honest, helpful, diligent, and respectful in my dealings with the co-op, other directors, and the
co-op’s management, staff, and members.
* Work for continued and increased effectiveness in the co-op’s ability to serve its member-owners.
* Be a team player and agree to abide by actions of the board, even when I do not fully agree with each decision.
* Present the agreed-upon view of the board of directors, rather than my own, when I speak on
behalf of the co-op to employees, members, and the general public.
* Refrain from asking for special privileges as a board member.
* Work to ensure that the co-op is controlled in a democratic fashion and that all elections are
public, fair, and open to the participation of all members.
* Strive at all times to keep members informed of the co-op’s status and plans and of the board’s
* Continually seek opportunities to learn more about the co-op and its operations and about my
responsibilities as a board member.
As a co-op director, I agree to abide by this Statement of Agreement in both letter and spirit.
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title: Creators' License Affirmation and Statement of Intent
toc: false
categories: legal
I/We, the undersigned (“the creator(s)”), do hereby affirm that the creative work(s) attached to this statement (“the work(s)”) is/are entirely the product of our own creative endeavors and that no other individual(s) or organization(s) have any claim to copyright interest in the work(s).
In addition, the creator(s) hereby state my/our intent to license the work(s) under either the:
* [Creative Commons-Attribution-ShareAlike 4.0 license]( (“CC-BY-SA”)
* [Creative Commons-Attribution 4.0 license]( “CC-BY”
* [CC0]( public domain release.
I/We, the creator(s), affirm my/our intention to make the work(s) available to all at no cost, to be freely duplicated, shared, and used in the production of other creative works as per the terms of the selected license.
If using CC-BY, I/we also affirm that these permissions are predicated on licensees meeting the requirement to attribute my/our work(s) in the manner in which I/we wish to be identified; and if using CC-BY-SA, the creator(s) further affirm(s) the requirement for licensees to make any derivative works available under the same CC-BY-SA license.
If using CC0, the creator(s) affirm that the work is dedicated to the public domain by waiving all rights to the work worldwide under copyright law.
The creator(s) request that users attribute us in the following manner:
The creator(s) request to be notified of use that infringes on the terms of this license in the following manner:
I/we, the undersigned, freely make this affirmation and statement in order to further the goals of a more free, libre, and open world.
title: Legal Description of the System
categories: legal
... supports a wide variety of projects that produce non-rival public goods freely available under appropriate licenses. We facilitate financial donations from the public to these projects and offer tools for organizing and other needs. We also work to orient the projects toward acting in ways that best serve the public interest.
Our key feature is a many-to-many matching pledge where a patron's donation rate to a project depends on matching support from other donors.
On a designated day each month, a "share value" for each project is calculated by entering the number of current patrons and the number of shares each patron has pledged into a [formula](formula). The more shares overall, the *higher* the share value. The donation any one patron gives to a project in a particular month equals the project's share value times number of shares the patron has pledged.^[The number of total shares is not fixed but is simply the sum of all shares pledged. For example, if, in a particular month, a project has 500 patrons pledged at 1 share each and 250 patrons at 2 shares each, the total shares will be 1,000.]
## as allocation calculator's function is to determine allocation of funds from patrons to their selected projects in a reliable and socially-reinforced fashion. is funded itself through donations specified to us (as one of the projects), and we intend to charge no fees beyond the passing-on of the costs of processing transactions. We may receive interest on savings from the funds held in escrow but will do so only if that presents no legal concerns.
## Escrow mechanism option
Our primary proposal for operations is as follows: Patrons send funds to to be held in escrow. Each month, project donations are transferred from patron accounts to project accounts. Whenever a patron's funds are depleted, a new deposit may be made or else that patron's shares will be considered "inactive" and will no longer count toward determining the share value for any projects. Project accounts may cash out donated funds to use for project expenditures. Refunds to patrons could be available for unused funds, if that does not introduce legal problems, but there will never be any return of funds from projects to patrons.
This structure is intended to address three issues: First, it assures correct share value and payment compliance. Second, it allows patrons to budget their overall contributions within the system. Finally, it allows us to efficiently handle large numbers of micro-donations with minimal fees (because it could otherwise be prohibitive to process high quantities of very small payments through third-party payment services).
### Not a bank or money transfer service
We believe this operation is something like a clearinghouse and not of a bank or money transfer service, and so we should not be subject to regulations specific to those financial entities. See further discussion about our [mechanism options and concerns](legal#ramifications-of-our-mechanism-for-coordinating-pledges).
## Types of projects
We intend to work with a range of projects with differing legal status. For a 501(c)(3) project, we want donors to benefit from tax-deductibility regardless of using our service in facilitating their donation. We also want the ability to support projects that do not have non-profit status, even though *all* the donations we facilitate will be required to go toward serving our [mission](mission) of furthering the public commons. In other words, a for-profit entity may receive donations through our system if they use those funds specifically to build the non-rival public goods that we support.
## International concerns
We intend to operate internationally, both in supporting projects and accepting donations. We want to operate internationally as soon as possible, but this should not delay initial domestic operations.
## Further legal details and non-profit co-op status
See our [legal page](legal) for links to our drafted documents, such as Articles and Bylaws, which go into more detail about our present and intended legal form as a non-profit multistakeholder cooperative.
title: Cooperative Membership Agreement
categories: legal
**This page is currently a stub but will eventually become the membership agreement for the cooperative, which candidates will need to sign before becoming members in good standing.**
* Much of this will likely be similar to the [Terms of Use](terms-of-use): prohibitions on disruptive or abusive behavior, restriction of liability.
* However there will also be co-op specific issues like explaining the member class system and the circumstances under which class will be reassigned. Much of this will flow directly from the Bylaws and the Standing Rules.
* The Terms of Use bind users to future versions, although they do require public comment periods before substantive revisions take effect. Do we want the Membership Agreement to do likewise or to require members to re-sign it when changes take effect?
* Member-owners' role in the organization and how not to misrepresent it when interacting with non-members.
* This will also need to include a system to issue the statutorily required membership certificate, which lists certain information about the member's rights within the cooperative.
title: Privacy Policy
categories: legal
***Version 0.2 effective February 10, 2014***
** is dedicated to maintaining the utmost respect for user privacy.** Although technology makes private information easy to collect, we choose to collect it *only* when deemed necessary.
## Policy highlights:
* uses cookies to keep your account logged-in, but we do not otherwise track you.
* Anyone may anonymously view the site, but you must register an account to edit a wiki, participate in discussions, or pledge as a patron. Your account maintains a history of transactions such as which projects you have supported.
* You can unsubscribe from non-essential email updates at any time.
* uses third-party payment providers. When using these services, you should check their independent privacy policies.
* No financial information (such as credit card numbers) is collected, retained, or used by
## Policy in full
### Personal information
We consider "personal information" to mean either directly identifiable information (such as your name or email address) or several pieces of information that in combination may directly identify you, even if each piece individually does not.
Also, if we store personal information with other information, we consider the combination to be personal.
### Information collection
We collect information about you when:
1. You give it to us directly (such as through a form when registering for the site);
2. We collect it automatically (such as your IP address when your browser makes requests to our web servers);
3. Someone else tells us something about you (such as when a payment provider shares your email address after you make a deposit); or
4. We perform analysis on aggregated user information (such as analyzing overall geographic distribution based on IP address).
* uses cookies to identify visitors and save login settings. **We do not use cookies for other tracking purposes nor do we retain them long-term.**
* When you log in with Mozilla Persona or sign up with us directly, your email address is required. You can browse without logging in, but you must register an account in order to participate certain editing or discussions or to donate to a project.
* We collect only basic server log data (browser ID, IP address, referring site, and time) and make no attempt to connect that with account information. **All analytics processing is done in-house, not by third-party contractors**. We do not store server logs any longer than necessary and we destroy old information.
* If you are a team leader who submits a project to, we will ask for detailed information about your project that may be displayed publicly, unless otherwise noted. In order to validate identities and manage transfers, we ask for real names and addresses for all team members who receive funds.
* This policy does not cover interactions with projects outside the system. External project websites and other systems may have their own privacy policies.^[We do ask projects to summarize whether their external policies deviate substantially from our standards; that way, any issues may be considered when users choose which projects to support.]
### What we do with your info
**We use your information only in the manner to which you consent.**
* We may use your email address to inform you of administrative messages from (such as notices of updates to our Terms of Use agreement). You may *elect* to receive additional communications from us, and if you do, you can then opt-out from receiving them by following the “unsubscribe” instructions in any such communication.
* If you edit a wiki page or create other content in the, your username will be displayed publicly.
* You may *optionally* fill in details of your public user profile, such as weblinks, contact information (including real name), and profile picture. These will be displayed publicly.
* When you donate to a project, we sign your receipt with the username associated with your account.
* We maintain a history of your transactions, but does not directly process payment information. When you donate to a project, the information that you give to one of our [authorized payment providers]( is governed by that provider’s privacy policy. We strive to identify and work with only the most ethically sound providers, but we do not have direct control over their policies.
### When we share your info
**We do not sell or otherwise share your info with any third-party not involved directly in our operations.** is an open organization, and we may publish non-personal aggregated information that we think will help foster an open web. Whenever we publish information about our users, we'll remove anything private that we believe might identify you.
If we share your personal information, we only share it with employees, contractors and service providers who have contractually promised to handle or use the data only in ways that we approve. If our corporate structure or status changes (e.g., if we restructure, are acquired, or go bankrupt), we will give all users a chance to get private information out of our systems before we pass them on to a successor or affiliate.
* When you support a project, we notify the project team of your username and the number of shares pledged. This helps facilitate interactions between you and the project.
* We share non-personal aggregated statistics with projects on the site usage of their supporters. We provide such statistics as a distribution of numbers not tied to an email address, unique ID, or other identifiable piece of information.
### Storage and protection of data
**We implement physical, policy, and technical security measure to protect your information.** We take steps to make sure that anyone who sees your personal information (such as an authorized employee or contractor) has a good reason, sees only as much as they absolutely need to, and is only able to do things with your data.
Despite our efforts, we can't guarantee that malicious agents will never break in and access your data. If we find out about a security breach, we'll make concerted efforts to let you know so that you can take appropriate protective steps. We only keep information as long as we need to do the things we collected it for. Once we don't need it any more, we'll destroy it unless we are required by law to keep it longer.
You are always entitled to see and correct the private information we have about you. Please see the contact information below if you wish to do so. If you delete your account, we will retain only as much information as we need for our accounting records and destroy the rest.
### Legal process
When a government agency or civil litigant asks for your personal info, we'll only give it to them if we have a good faith belief that:
* the law requires us to, or
* it is reasonably necessary to do so to protect the rights, property, or safety of you, our other users,, or the public.
We follow the law whenever we receive requests about you and we'll notify you any time we are asked to hand over your personal info like this unless we're legally prohibited from doing so, or circumstances require otherwise. Nothing in this policy is intended to limit any legal defenses or objections that you may have to a third party's request to disclose your information.
### Policy changes and contact information
We may sometimes change our privacy policies. When we do, we'll post a notice about the change on and email our users. During our initial beta period, the privacy policy may be subject to change without notice, although we welcome public feedback. Once our site is in stable operating status, we will post any proposed changes for a 30-day comment period before they become effective (3 days for changes required purely for legal or administrative reasons).
If you want to make a correction to your information, or you have any questions or comments about our privacy policies, please [contact us](
*The Privacy Policy is adapted from the [Firefox Marketplace Privacy Policy](, which is licensed by [the Mozilla Corporation]( under the [Creative Commons Attribution Share-Alike License v3.0]( The Privacy Policy is made available by us in its entirety under [version 4.0 of the same CC-BY-SA license](*
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title: Trademark Policy
categories: legal
**Version 0.3 – Effective December 16, 2015**
We are committed to ensuring the clear and consistent use of our trademarks and to protecting the rights of legitimate users.
** reserves as trademarks:**^[Note that the [Mimi & Eunice]( characters are *not* part of the trademarks but are our adaptations of work by Nina Paley and licensed, like all the other non-trademarked parts of our site, under [CC BY-SA 4.0 International](]
* The full name ""
* The primary name "Snowdrift" when used in the context of online fundraising, creative project support, and/or community building
* Our various identifying [logos](
This policy seeks to clarify and promote acceptable use including honest and compliant commercial activity.
We prohibit any use of or reference to trademarks that involves false or misleading implications including any use not compliant with the guidelines below or otherwise authorized in writing, any use in false advertising, or use of misleadingly similar marks.
## Uses that require *no* special permission
* Using one of our logos as a hyperlink *directly* to
* Making true factual statements about or communicating truthfully that your project takes contributions via
* Identifying or describing in articles, blog posts, etc., under the ["fair use" doctrine](
* Describing or promoting your projects on in a way that is not misleading.
* Making trademark merchandise for non-commercial usage.
* Making trademark merchandise for commercial usage, provided truthful and prominent portrayal to customers of your affiliation, or lack thereof, with and of what part of the selling price, if any, will be donated to the project.
## Uses that *require* special permission
* Using trademarks, or confusingly similar marks, in any way that may suggest an affiliation with or endorsement by the Snowdrift project or community where no such affiliation or endorsement has been formally made.
* Using trademarks in a company or organization name or as the name of a product or service or in domain name (even without commercial intent), or using logos as part of another company's logos or branding.
## Best practices for use
* Avoid suggestion of affiliation, participation, or endorsement with if there is any question about the validity of that connection.
* Prominently acknowledge our ownership of the trademark.
Example wording:
[TRADEMARK] is a (registered, if applicable) trademark of
* As appropriate, explicitly disclaim sponsorship, affiliation, or endorsement by Snowdrift on your website and related materials.
Example wording:
X PROJECT is not affiliated with
* Italicize, bold, or underline trademarks to distinguish them from other words.
* Use the exact form of the trademarks, with no subtractions or additions, following our guidelines for logo usage.
* Do not include the trademarks in acronyms.
* Do not refer to as simply "Snowdrift" except casually where the full name has already been made clear in the immediate context.^[Note: we formally use the name "Snowdrift" for the free/libre/open software that runs the website.]
## Seeking permission
For any use not expressly permitted by this policy, to report any unauthorized use, or for any clarification of this policy that may be necessary, please [contact us]( Please include any relevant information about the type and nature of the use and any relevant organizational affiliation(s).
*Like the rest of the site, The Trademark Policy is licensed under [Creative Commons Attribution/Share-Alike license (CC-BY-SA) v4.0.]( This policy may be periodically revised. Revisions will be dated and posted to*
title: Transactions
toc: false
categories: legal
This page discusses issues about accounts and transactions. All of this is tentative until we begin full operations.
In managing our pledge system, there are three concerns:
* We want to allow very small pledges from many patrons to aggregate, and we must consolidate these into larger single charges to avoid excessive fees.
* We want to assure that pledges are reliable (are backed by reliable sources of funds).
* We need a mechanism for patrons to set a budget limit for their overall donations.
* A budget could be per-month budget with no roll-over, or a total amount made available with a new deposit/re-authorization when the limit is approached.
Some general principles:
* All third-party transaction fees will be charged to the user at the time of deposit or withdrawal
* When a patron's total pledges become greater than budgeted funds (and no authorization/deposit is made to change this status), then the remaining budget will be split among the pledges at the next payout.
* Users can change their pledges at any time.
## Option A: "Escrow" {#escrow}
This option isn't really escrow because we won't consider the funds to still be the patrons' funds (true escrow of other people's funds would require registering as a money transfer service, which is probitively costly and burdensome). Instead, **we consider all deposits as donations directly to, and the pledging mechanism functions merely as a vote on how we then use the funds.** In order to avoid tax burden on held funds at annual roll-over, we must either retain 501 tax exemption or determine a legally-sound accounting method in which all held funds are are already allotted to go out as expenses and thus not taxed as net income. See discussion about [legal concerns over escrow](legal#escrow).
* All users have an "account" within
* Funds are held by as funds owned by
* Any processor we implement from our [payment-services list](payment-services) should work to add funds
* Users can set an automatic monthly deposit if the payment service they use supports it, or they can fund manually one deposit at a time
* To add a new pledge, a user must have in their account at least enough funds to cover all their current pledges at present levels for 3 months.
* When users drop below the 3 month buffer for their pledges, they will receive a notice encouraging them to add funds.
* Each month, at a specific (but maybe somewhat fuzzy in public listing) time, the current pledges will be calculated and funds transferred from patron accounts to project accounts within
* Upon closing an account, a user may opt to either receive a refund minus transaction costs (only if deemed legally feasible) or to donate the funds directly to the project.
If we support the step of projects paying team members, then:
* Admins of projects may either manually pay team members or may set up an automatic distribution (which may or may not coincide with or be scheduled at the same rate as the monthly payouts from patrons).
* Only users with "team member" roles are eligible to receive payments to their accounts
* All payouts will be public record as part of project [transparency](/transparency).
* Project team members could patronize other projects.
* *Or their own projects? What are the issues and ramifications here, practically and legally and whatever else?* Perhaps they should be barred from pledging to their own projects as that is direct conflict-of-interest. Is quid-pro-quo (teams from project A pledge to project B and vice versa) ok though? Just if incidental and not a conspiracy?
* Project team members may withdraw funds (up to the amount of their project distributions) from their accounts at any time (effectively, get paid by
* Regular user accounts (not team members of any project) may not withdraw funds, as they have been donated to already.
* When closing accounts, patrons may either immediately split funds to select projects or just donate all to the Snowdrift project
PROS to escrow approach: maximum flexibility, easy support of gift-cards, minimal fees, maximum reliability, ability to accept any arbitrary financial source (including personal checks, money orders, Bitcoin, even potentially cash) where we then just decide how to give voting/pledging authority to the patron (thus better support for anonymous donors and unbanked donors).
CONS to escrow approach: direct handling of funds comes with greater accountability / liability, depending on details; potential limitations on included projects if we stick to 501 status (less flexibility in our rules for projects if we must take extra care that everything fits our 501-accepted mission) and potential limitations on co-op democratic structure per 501 requirements (not clear if this is an issue as of this writing); more complex accounting for avoiding tax on roll-overs if we don't stick to 501.
## Option B: Consolidated charges across projects + arrears
This is more like how Kickstarter operates, and how Gratipay 2.0 works basically.