A license is an agreement between the project's copyright holders (i.e. all contributors) and any users. The license typically discusses:
- how the software may be used,
- under which conditions the software may be copied,
- and under which conditions the software may be modified.
Open-source licenses typically allow usage for any purpose, allow copies to be freely distributed, and allow modifications to be made and published. They typically impose minor restrictions like that any copyright and license notices have to be kept intact and shown to users, and sometimes that any modifications must be available under the same license. Forking is generally allowed, i.e. taking the code and starting a competing project.
When an outside contributor wants to share their modifications that they created in accordance with the license, their expectation will generally be that they license their modifications to the project under that license (inbound = outbound licensing, as e.g. formalized by the Github terms of service for public repos). So with respect to this contribution, the original project has no more privileges than other users. For open-source projects, this generally works out fine.
But some projects have additional requirements:
In the future, the project may be relicensed to an incompatible license. E.g. a GPLv2 project cannot be changed to GPLv3 unless all contributors consent – or the necessary rights were previously assigned as part of a CLA. GNU projects also use a CLA so that the project can defend against copyright infringements on behalf of the contributors.
The project may need to prove that it isn't doing any copyright infringement. This requires a “paper trail” so that you can demonstrate for each contribution that the contributor had the right to give you their modifications and gave you the necessary rights to use them in the project. A CLA is one way to do this, alternatively a “DCO” is used.
A project may use a dual-licensing scheme, so that the project is available (for free) under an open source license and alternatively under a (paid) proprietary license for users that do not want to comply with the open source license. This is e.g. the case for Qt, iText, or MongoDB. Without a CLA the project would not have the right to issue these proprietary licenses because they would only have received the contributions under the terms of the open-source license.
How right assignment works also depends on the jurisdiction of the contributor. E.g. here in Germany I cannot assign my copyright in its entirety, but I can issue exclusive or non-exclusive licenses for some aspects of the copyright. Some of these assignments would require a written contract.
If you think that you need a CLA, it is important to consider how these rights will be managed. It is legally fine to manage these rights as a natural person. But what happens if you die or are otherwise incapacitated? If multiple natural persons manage the rights, how do they make decisions? This is not just important for managing these rights, but also for gaining the necessary trust of potential contributors.
A legal entity such as a company or non-profit can survive its individual members. A foundation might also have clear rules on votes and project management that guarantee transparent decisions on the project's future. Aside from technical, financial, and legal support, this trust, transparency, and stability are some of the benefits that a foundation like the Apache Foundation can provide to member projects. Many larger projects start their own foundation as they mature. As an added benefit they make it easier to donate :)
But nearly all open source projects do not have special requirements that would make a CLA or foundation necessary.
Your descriptions of the rights you would like to grant to users does not sound like an open source license. You do not allow usage for any purpose (no competing projects, no commercial usage) and you do not allow the software to be shared freely. If all current copyright holders agree to this, that is legally fine but again: not open source. Even if the source code is publicly viewable. (Such a model where the source code is available but cannot be used freely is sometimes called shared source.)
If you want to accept contributions under that model, you do need to make some licensing agreement with contributors. Unless you provide the necessary rights, potential contributors would not be legally allowed to change the source code. But why would a potential contributor even agree to that if you get all the benefits of their work, and they are left with all these restrictions?
