Policy for compensation of external spending

Version 2022/05

This document outlines the policy for stichting NLnet with regards to out-of-pocket cost, e.g. acquisition of (infrastructural) hardware, paid software licenses and components within funded efforts. Given the following considerations:

• NLnet operates a cost-based grant framework to enable people, communities and organisations to contribute to the public benefit via the development and maintenance of technology commons.
• NLnet wants to avoid and where necessary remove unnecessary economic thresholds which may act as a filter on who can and cannot make such contributions. Given the core volunteer nature of many activities it funds, reimbursing pre-agreed expenses in some cases can be an important (or even essential) aspect of its grants.
• Evalution of projects a priori takes into account “Cost effectiveness/Value for money”, which includes the entire budget – including proposed costs on hardware, paid software licenses and components.
• NLnet strives to be frugal and transparent, and expects the same of its grantees: in principle the most economic and sustainable option that is still suitable should be chosen as the basis for requesting a contribution of NLnet.
• Individual grants themselves cover a limited timespan, but the lifecycles of the larger underlying open source efforts supported by grants are open-ended – and most societal benefit is expected to come after direct financial support has ended and outcomes start getting used and become part of the digital commons.
• NLnet wants to contribute to the stability and long term viability of the open technologies and technology commons it supports, and intends for these efforts to become self-sustaining. Useful shared infrastructure established within the context of a specific grant will often contribute signficantly to the capability of the community at large to deliver (self-funded) ongoing effort and support on the outcomes of grants.
• NLnet may decide to make pre-funding available to reimburse significant cost. Donations linked to out-of-pocket costs are only final when the proposed work on a grant is completed, and any payments related to expenditure should be considered a preliminary advance which may need to be returned when planned tasks within a project are abandoned.
• (Part of the) economic value of hardware and other economic goods acquired within a project will in some cases remain when work funded inside a grant is technically completed and fully claimed.
• NLnet caps hourly rates to a predefined maximum, and from a fairness principle wishes to ensure that these maximum rates are universally applied – also taking into consideration pro rato any financial benefits derived from the remaining value of economic goods in the aftermath of the grant. These economic considerations apply to a lesser extent to not-for-profit contexts and to predominantly volunteer-driven communities, where such value is left in place to serve the public benefit.
• It is not per se in the interest of NLnet or the public benefit to break down useful infrastructure established within the context of a specific grant – if that means effectively restricting or even terminating the capability of the community to deliver (self-funded) ongoing effort and support on the outcomes of grants.
• NLnet is mindful of its ecological footprint and its social responsibilities in helping the technology sector achieving environmental sustainability.

Notwithstanding any special circumstances, as a general policy the following applies:

• Expenditure on hardware can (only) be a valid component of a grant when it is directly necessary for the tasks within the project. NLnet does not allocate grant money to basic operational IT cost, such as regular laptops, desktops/workstations, or mobile phones.
• Expenditure on paid licenses for proprietary software or (one-time or recurring) subscriptions for online services is not desirable, but in rare cases cannot be avoided – for instance in order to promote cross-platform availability and adoption. This is to be dealt with on a case by case basis.
• Any fiscal aspects of funded equipment and components, such as annual deprecation in the context of bookkeeping, need to be dealt with by the grantee. Amounts donated do not include VAT if the grantee is entitled to recover this from their tax authority, irrespective of whether the grantee chooses to do so.
• Requests for payment of large costs linked to out-of-pocket cost (with an individual value of 250 euro and up) are accompanied by adequate proof, e.g. an invoice or bill.
• Grantees cannot sell or transfer ownership of hardware, licenses or other goods and intangibles funded by NLnet without its explicit permission during or after the project. They should treat equipment and component stocks responsibly and with respect, keeping proper inventory and making sure that financial support does not go to waste.
• If a legal entity involved with a grant from NLnet is acquired or goes bankrupt during or after receiving the grant in question, the eligibility to hold any assets originating from that grant may be forfeited. The new owner or legal curator should contact NLnet in order to return these assets or their equivalent value, or to find the best way to keep the assets in question available to the FOSS community in a sustainable way.
• In the case of open hardware, in accordance with industry practices, NLnet may financially contribute to developer programmes that produce and seed such hardware to an initial community, in order to expediate development and uptake – if such a programme is deemed of strategic value, the project is in good standing and under the condition that the total financial requirements including distribution are cost-based, proportional and reasonable.
  
  Such hardware SHALL be clearly marked "Developer sample. Not for sale." and SHALL bear the logo of NLnet and/or one if its grant programmes. There should be documentation accompanying any hardware distributed that contains the full project name and a direct link to the project URL on the NLnet website, with a clear way to return components or devices should these no longer be of use. If a project is prematurely terminated, it shall return any devices or components not distributed in order for these to be made available to interested parties by NLnet at no cost instead. Beneficiaries from the developer programme can be given the choice to keep developer samples for the original duration of the developer programme, or send them to NLnet.
• Not-for-profit entities and individuals that receive a donation based on an hourly rate less than 2/3^rd of the maximum hourly rate used by NLnet may be allowed to keep economic goods or services acquired within the scope of a project – as long as this does not bring the effective virtual hourly rate¹ above the maximum hourly rate used by NLnet at that point in time.
• Unless otherwise agreed, for-profit entities that acquire economic goods or services with financial support from NLnet within the scope of a project, are expected to return the remaining value at the end of that project and any immediate successor projects – with the remaining value to be established by an independent party. If the remaining value to be returned is below 250 euro, settlement will cost more than it yields and can be waived. The same return policy holds for individuals that get paid more than 2/3^rds of the maximum hourly rate of NLnet. In some cases it can be negotiated to pass equipment, stocks and remaining contract benefits on to a not-for-profit legal entity instead, if this would make them available to the FOSS community in a sustainable way.
• NLnet does not pay for advertisement campaigns of any type for any of its supported projects.