Reading the website this is for committee members only (it has nothing to do with if a project is eligible). This seems to largely be a requirement for tax reasons.

As a side note, I find it unfortunate that often when things like this get posted, e.g. a foundation who supports free-software in this case, the first posts are not "this is a great thing", but instead someone goes through the website until they find something they disagree with and creates a negative debate and misinformation (several people here already understood the sentence to mean that projects led by non-PhDs can't apply).