The legal status of Couchers

The issue for me, having been burned by hospitalityclub and couchsurfing, is that you are building something without legal status/ and without giving clear intention of what that status might be. There is no ill intend in asking why, you would wait, until there is group discussion or consensus. When will that discussion take place? How will the structure be decided? A straight vote? Does the leadership team have veto power? Why not develop the legal foundation now, since you are based in Australia? What country or state will you incorporate in? You already have the options on your website.

I wonder has there already any legal /verbal discussion or agreement amongst the current leadership/co-founders about legal structure/stock/ownership? Can you confirm that no bylaws have been created and at moment, you are without legal basis? No directors? No trustees?

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It would be good if there can be the transparency/democracy of BeWelcome’s model, but a without having to have general meetings for every decision.

I wonder if it can be in a constitution that decisions can be made via an online polling system that remains open for 2 or 3 days and requires at least 1/3 (?) of the eligible voters to vote?

Who can vote is important to consider. I don’t know if everyone who signs up can vote is such a good idea considering anyone can sign up. Maybe member above a certain verification score? (But the verification process would have to be clearly defined.)

Thanks for asking these questions, it’s imperative that this is discussed publicly and that there is clarity.

Let me first reiterate what we’ve outlined on the current website regarding governance and the legal aspects. We are committed to making sure that this project stays free and non-profit, and that the platform (codebase), user data (database), intellectual property (design assets and brand), and eventually the legal entity end up being controlled by the community and are not taken over by another entity whose incentives do not align with the community’s (be it a for-profit company or some other entity).

This is our intent. There are then two parts to the implementation: the legal side (establishing a legal entity) and the governance sides (deciding how the direction of the project and legal entity is decided/governed). We are working on both parts. It’s not obvious with a project like this what the right jurisdiction and legal structure are. For instance, here in Australia there are several types of non-profit legal structures (charities, incorporated associations, etc), and each of these comes with different maintenance costs and reporting obligations. Similarly, if we wish to do something more complicated with the bylaws/rules of the legal entity, we will need to spend more time on that.

So yes: at the moment there is no formal agreement regarding this and there is no legal structure. We have been busy working on bringing together the team and on protoyping the app. Our hope was that we’d find someone with expertise in this kind of legalese who would be able to lead the effort. However, we’re now getting to a point where we have so much substance behind the project that it’s time to look into this, regardless of if we find an expert to lead it. In fact, one of us has started investigating the possible legal structures in Australia and we are now moving on this.

This hasn’t been discussed much with the core team yet; partly because there is an understanding of the common goals I outlined above. The way I see this going forward is that we will survey different options for legal structures, then choose one that fits the bill, and incorporate under such a structure. Itsi and I are the original “co-founders”, if you will, and at least at the moment, the project rests heavily on our continued involvment. We will presumably therefore take up leadership positions in that legal entity.

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I think this is a big issue that needs to be addressed. We’ve seen the two biggest hospitality exchange projects crash because they didn’t have a proper non profit status set up to protect the community and volunteers work. I think by now we all should have learned that, even when the best of intentions in mind, things can get… complicated.

Looking forward to see an update on this :slight_smile:

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I can’t understand why.
I see a cultural issue, from my european point of view a non -profit status is a very simple thing to set: you just register and pay a one-time very small fee.
For instance here in Norway until very recently domain names where sold only to organizations, so lot of individuals did register a pro-forma organization just in order to register their own domain name.

In the case of Hospitality Club, Veit Kühne, a german in Germany, knew perfectly well about the difference between a Gmbh , an AG and an e.V; in order to provide HC with a legal status as non-profit he should have declared a Verein. But he didn’t want, HC was to stay his own personal toy.

In the case of CS, Fenton and Hoffer were just scamming everybody by using the fuzzy legal status of Delaware local regulation.

from the “about” page there’s a Finn in the team, in Finland the legalities are similar to the swedish ones, and the status is simple, one-time fee: förening in swedish (also rf), yhdistys in finnish (also ry). This provides at once the juridical/legal framework, even if the organization will be dead-born. Tax will comes after, in case memberships, donations, whatever revenues are collected, and accounting required then in case of salaries/employees, otherwise simple accounting declaration about costs and expenses. But any optional financial aspect doesn’t need to be considered in the beginning. National registers are full of empty, dead, associations that did nothing after they were formally registered.

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I’m the Finn. But it doesn’t make sense for us to set it up in Finland, and I’m not even sure if it’s even possible since I’m not a resident.

I’m aware that in some countries it’s almost trivial to register a non-profit.

Unfortunately, in Australia it’s not such a simple/obvious thing to set up. It’s not clear what the right legal structure for a non-profit of our style is, as there are a variety of them with different requirements and different obligations. We’re investigating this.

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proposal: Then stop everything else (e.g. development) and set up the legal basis for couchers. Given, it might take 1-2 months (Australian context), its not a good idea to entertain volunteers, donations and members at this early stage. I know in the UK, charity trustees can be non-British citizens

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I’ve experienced a business project where a legal basis was rushed because of trust issues, although the outline of the whole project was not clearly settled yet. In the end, it didn’t help build trust and the mismatches in the set-up lead to a lot of costs later on. It’s just one experience, but I would caution against rushing this decision. I think at the start of a project there has to be enough trust to rely on intentions, else it might be better to wait a bit until more can be seen. To me the intentions are very openly and clearly worded here. If all this is just set up as deceipt, in my experience that gets evident soon enough.

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Well, let me chime in. My point of view is that I trust everyone on the team (especially @Aapeli & @Itsi) to do the right thing at the right time. I wasn’t concerned at all about legality initially because I don’t really have anything to gain/lose from being involved the project. I’m putting in what I think is an appropriate amount of work given my personal circumstances and I think the rest of us feel the same. I would also say that I agree with the idea that “no one is going to own this and we’re going to make it impossible for someone to ever own it,” the means by which we achieve that isn’t really a big deal to me (yet).

But now that it’s been brought up here and there around this forum, Reddit, and even on Facebook now, I’d like to hear more details…@subaculture, can you elaborate on how you were burned by hospitalityclub and CS, if it’s not too personal? Maybe it would help us understand better what to be ready for?

I don’t personally think we’ve reached that stage yet, but I could be wrong.

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Update:

Our plan is to create a Company Limited by Guarantee for Charitable Purposes in Australia, and register with the Australian Charities and Not-for-profits Commission. This will:

  • Guarantee not-for-profit status and its associated restrictions
  • Prevent couchers from ever being sold off to a for-profit
  • Prevent itself from ever not being a charity
  • Provide a framework for the volunteers to contribute IP
  • Allow us to collect donations when the time comes

We will legally name it as the ‘Cross-Cultural Exchange and Communities Foundation’, of which Couchers.org will be its primary project.

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If donations and grants shall be a source of financial support, these are regulated by national tax laws or else limited regionally. So it might be good to think about how affiliation could work. I think for example at wikimedia the regional chapters are entirely independent bodies, that are just recognized by the US foundation.

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It’s definitely something we’re considering. I think essentially a co-op of regional chapters could be a good model.

CS was actually a New Hampshire non-profit. In 2011 this entity sold the assts to a Delaware C corporation. Not much fuzziness about the Delaware regulation.

“Non-profit” doesn’t mean much. In the US this is what you need: “irrevocably dedicated to charity”.
And the NH non-profit didn’t have that.

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yes basically, Fenton and Hoffer were scamming people, playing initially on a legal hole of a particular state regulation.

couchsurfing.com was online, marketed, developed and financed by contributing members. When the toy became mature and got significant online presence, they went to Silicon Valley venture. First and only “start-up” I know of that was not a start-up but was running for 5 years…
Any other social networking operation around, like the big ones Facebook, VK, Twitter, Instagram, etc, were a corporation since day one, initial money/time from the founders and investors.

talking of american non-profits, I am donating member of FSF (Free Software Foundation) since end 90’s/beginning 00’s, 120USD/year. FSF is the GNU stuff, which is used everywhere included of course most big data businesses.
when Netscape was disbanded in 98, they opensourced the Navigator code and set the Mozilla Foundation, so the browser wouldn’t die in locked code in case of the company closing, nor be caught by Microsoft. Back then, before the Firefox itself, at the time they were releasing pre-alpha “milestones” it was a small operation and they were taking small donations from individuals.
another old significant not-for-profit software project is FreeBSD, since early 2000’s as 501c3 US organization. Important parts of FreeBSD became part of MacOS X.
etc.

I mean not-for-profit is common status and well known,

what is puzzling is that still a majority of people don’t see that not-for-profit doesn’t mean you don’t make money, but that the money gets into the organization itself, not into the pockets of shareholders or the team. Paid employees are also part of running a not-for-profit.

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Great, cant wait to see governing docs/by laws - https://www.acnc.gov.au/tools/factsheets/governing-documents

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I’d like to pick this up again… so on August 10 the CROSS-CULTURAL EXCHANGE AND COMMUNITIES FOUNDATION LIMITED has been incorporated to hold all the rights associated with couchers. This is the ASIC entry.

I think this is the right first step, because having a limited entity that’s not holding valuable assets is an essentially free hedge against lawsuits, especially for everyone personally related to the project. We’ve already seen legal threats on this forum, basically over a perceived insult. This setup has been discussed at more length on the Warmshowers blog, before they incorporated.

The next step would indeed be to register the foundation and publish it’s governing documents. I suggest to NOT rush this step. If statues are written now, they will be written by just a few and probably limited by their particular backgrounds. That’s not a good foundation. It doesn’t mean we should just wait and see either.

I propose setting a specific due date when these documents have to be published. Until then we can have a thorough community discussion. Parts that in my view would profit from diverse input are the the way that the governing body of the charity makes decisions and consults any members and, given the intended international distribution, the way affiliation would work.

I’ve seen that it took Trustroots about two years until they established the foundation. Well, I wouldn’t suggest two years, but neither just a couple of months.

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It actually was couple of months. :slight_smile: If I remember correct, it was like a month or two of discovery/paperwork. We also had to establish a bank account and things like that.

Our timeline was:

  • Winter 2013/2014 idea
  • December 2014 launch
  • March 2015 Foundation (with bylaws and everything)
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