#2 - Practical info: Public funding of associations
Summary
In recent years, the participation of the public sector - the State, public administrations and, above all, local authorities - in the commons, and in particular the digital commons, has become a key issue in the renewal of public action. The public sector can intervene in a variety of ways to support the development and maintenance of a digital commons: it can initiate its creation; join an existing initiative; finance projects; produce resources for commons project leaders; or even drive a policy in favor of the development of digital commons.
With this in mind, the structuring of digital commons projects as associations makes sense, as it authorizes several support mechanisms - notably financial - from the public sector to these projects. The main way in which the public sector can support digital commons projects is through subsidies, which the law of July 1, 1901 stipulates can be awarded to associations; but the public sector can also become a member of a structure supporting a digital commons project.
The subsidy
While different definitions from different authorities coexisted until now, the law of July 31, 2014 on the social and solidarity economy retains that:
"Subsidies [...] are optional contributions of any kind, valued in the allocation act, decided by the administrative authorities and the bodies responsible for managing an industrial and commercial public service, justified by a general interest and intended to carry out an action or investment project, to contribute to the development of activities or to the overall financing of the activity of the beneficiary private-sector organization. These actions, projects or activities are initiated, defined and implemented by the beneficiary private organizations. These contributions may not constitute remuneration for individualized services that meet the needs of the authorities or organizations granting them".
Unilateral subsidies are precarious par excellence. The association has no right to obtain a grant, nor to have it renewed.
On the other hand, the public sector player must take great care when drafting the agreement under which a subsidy is awarded to an association. Indeed, the agreement runs the risk of being reclassified as either a public contract if it turns out that the administration is the one to initiate the payment; or as a public service delegation if, in addition, the association receives substantial remuneration from the activity entrusted to it.
More generally, when the links established between an association and a public authority result in the former losing all autonomy in relation to the latter, the association must be recognized as transparent in relation to the latter. The consequence will be a reclassification of the association, which will lead to its submission to the rules of public management: public law will apply to contracts concluded and actions taken, but also in terms of liability. On the other hand, recognition of the association's transparency entails, by agreement, its dissolution.
To determine whether or not an association is transparent, the courts apply a number of criteria: the control exercised over the association by the local authority; whether the association's resources come mainly from public funding; and how the association operates (statutes favorable to the authorities, etc.).
Finally, subsidies are a limited mechanism for supporting the digital commons, since the public sector can only intervene within its legal sphere of competence. Public bodies are only authorized to pay subsidies that contribute to: regional administration and planning; economic, social, health, cultural and scientific development; environmental protection; combating the greenhouse effect by controlling and rationally using energy; and improving the quality of life. In the case of a local authority, the activity must also fall within its territorial jurisdiction. This does not mean, however, that an association whose scope of action is broader than that of the local authority providing the subsidy cannot receive assistance from the latter.
Subsidies are therefore a useful way for the public sector to support digital commons projects, but they come with their own set of risks and must therefore be used with care.
Membership
The possibility for the public sector to join a digital commons project is particularly interesting in a context where the latter wishes to renew its approach to supporting citizen initiatives.
Even more than being a member, the public player can be at the origin of the association structuring a digital commons. Indeed, the French Law of 1901 stipulates that a contract of association may be concluded between "two or more persons", irrespective of whether they are natural or legal persons, under public or private law.
The possibility of public-sector involvement in an association has also been confirmed by the Conseil d'Etat, which unambiguously stated that a public authority can be a member of an association, subject to certain conditions. Thus, there must be a relevant link between the association's purpose and the necessarily local interest of the public authority concerned. On the other hand, the freedom of association of public authorities may be limited by legal provisions to the contrary; or when the activity pooled cannot, by its very nature, be delegated.
Membership thus enables the public player to support a digital commons project on a more lasting basis, and confirms the relevance of the association as an instrument for structuring digital commons whose community includes public players.
In any case, public-sector support for digital commons structured as associations will depend on whether their statutes are compatible with public-sector missions.
The articles of association of such associations must therefore be drafted with the utmost care.