4 ms·

The author talks about this as a charitable (501c3) vs for-profit endeavor. I don't see any talk about using a cooperative structure. Cooperatives don't need

The author talks about this as a charitable (501c3) vs for-profit endeavor. I don't see any talk about using a cooperative structure. Cooperatives don't need IRS approval, since they operate commercially; any profits (and there won't be) are distributed proportionally to the users of the facility via 1099-DIV. Then, you run a membership drive to raise money. The membership then is used to select the board. Anyway, there's lots of experience doing cooperatives for stores like this. It is not easy, but starting a business of any kind is not easy. If you can't do a membership drive that builds enough grass-roots support and community buy-in, then don't do a cooperative. Here are some additional resources: https://www.nasco.coop/ https://www.nasco.coop/ https://www.ncba.coop/ https://www.ncba.coop/ http://www.uwcc.wisc.edu/ http://www.uwcc.wisc.edu/

someguydave 8y ago
Wouldn’t the members each be legally liable for anything that goes wrong?
- sdenton4 8y ago
  It's still a legal entity, just like any other private business. Liability should still be held by the company.
- jrochkind1 8y ago
  It's a corporation. "limited liability" is part of the basic idea of a corporation, right? The _board_ will be individually liable for gross negligence or criminal malfeasance, same as any corporate board. The members are no more liable than shareholders in any other corporation, ie virtually none. (Beyond losing their equity completely, of course).
  - someguydave 8y ago
    I thought you were specifying a partnership, not an LLC.
robotbikes 8y ago
Cooperatives still require everyone to pitch in and some way of dividing the labor and building accountability for performing the tedious tasks that are essential to maintain a legal entity. Unless you have the funds to pay everyone a living wage and in return some form of sustainable sizable income it is difficult to get the same level of contribution from people. In my experience with cooperatives they aren't the magical solution they are imagined to be. Many people are comfortable not bring in charge or arguing about how the people in charge are doing it wrong but they don't have the skills or background ideology to manage decision making cooperatively. As a legal structure there isn't a ton of support, you are basically creating a member managed LLC or corporation and then transplanting a cooperative agreement on top of it. Getting the same level of commitment from a large number of people is the difficult thing. But if there is a small sense of joint ownership and a shared vision then perhaps it could work but as the article mentioned rotation of leadership and task assignment is a good idea lest one person be stuck holding the bag.
- jrochkind1 8y ago
  It's definitely just a tool, and not a magic bullet. I too think it's a pretty good tool for the kind of enterprise talked about in the OP though. I also agree with the OP (and you) that forced rotation of leadership is a great idea, for a variety of reasons. But to be sure, starting a small retail business and succeeding is hard no matter what. And starting a _collective_ enterprise is hard no matter what too (for different 'political' reasons, even if it has no budget).
biztos 8y ago
Germany has a nice legal entity for stuff like this: the eingetragener Verein, or "Registered Association." This is used for pretty much every village football team, so you can raise money, have a bank account, sign contracts, etc. It's also used for larger things: my first encounter with the form was in the 80's as an exchange student. The whole exchange program was an e.V. It's also used for a lot of things that would be Foundations or Nonprofits in other countries. The catch, if it's a catch, is that you have to have at least 7 people and there's no way to be "in charge" if four of them think you shouldn't be. https://en.wikipedia.org/wiki/Registered_association_(Germany) https://en.wikipedia.org/wiki/Registered_association_(German...
wolverine876 8y ago
I was a member, and later board member, of the housing co-ops in Ann Arbor, Michigan, the Inter-Cooperative Council (icc.coop). In many ways, it was an incredible institution (and maybe still is; I'm long out of touch): Highly democratic and very successful. It's continued to exist and grow since the 1930s, with almost complete turnover in membership every two years. They owned at the time around 20 properties, housed around 600 people affordably - their primary mission - and had assets and budget well into the millions. I still don't understand quite how they did it. They did have a small permanent staff of an executive director, financial director, and a couple maintenance people. Everything else was done by mainly college-age membership that, as I said, turned over almost completely every two years; they were the board of directors, maintenance, collected membership dues (the equivalent of rent), made major investment decisions (buy a new house?), etc. etc. One contributing factor may have been that it was a bunch of intelligent people, self-selected for their commitment, who had little long-term vested interest (they'd be gone in a couple of years). I might expect the latter to be a disaster, but it also eliminated a lot of politics - nobody had a career, a future, a promotion, a reputation, or much ego depending on the outcomes. Based on your links, I'm pretty sure you know about the ICC. Any thoughts on how it, and similar organizations work, where others that require community commitment, like the bookstore in the article, fail?

someguydave 8y ago

Wouldn’t the members each be legally liable for anything that goes wrong?

sdenton4 8y ago
It's still a legal entity, just like any other private business. Liability should still be held by the company.
jrochkind1 8y ago
It's a corporation. "limited liability" is part of the basic idea of a corporation, right? The _board_ will be individually liable for gross negligence or criminal malfeasance, same as any corporate board. The members are no more liable than shareholders in any other corporation, ie virtually none. (Beyond losing their equity completely, of course).
- someguydave 8y ago
  I thought you were specifying a partnership, not an LLC.

robotbikes 8y ago

Cooperatives still require everyone to pitch in and some way of dividing the labor and building accountability for performing the tedious tasks that are essential to maintain a legal entity. Unless you have the funds to pay everyone a living wage and in return some form of sustainable sizable income it is difficult to get the same level of contribution from people. In my experience with cooperatives they aren't the magical solution they are imagined to be. Many people are comfortable not bring in charge or arguing about how the people in charge are doing it wrong but they don't have the skills or background ideology to manage decision making cooperatively. As a legal structure there isn't a ton of support, you are basically creating a member managed LLC or corporation and then transplanting a cooperative agreement on top of it. Getting the same level of commitment from a large number of people is the difficult thing. But if there is a small sense of joint ownership and a shared vision then perhaps it could work but as the article mentioned rotation of leadership and task assignment is a good idea lest one person be stuck holding the bag.

jrochkind1 8y ago
It's definitely just a tool, and not a magic bullet. I too think it's a pretty good tool for the kind of enterprise talked about in the OP though. I also agree with the OP (and you) that forced rotation of leadership is a great idea, for a variety of reasons. But to be sure, starting a small retail business and succeeding is hard no matter what. And starting a _collective_ enterprise is hard no matter what too (for different 'political' reasons, even if it has no budget).

biztos 8y ago

Germany has a nice legal entity for stuff like this: the eingetragener Verein, or "Registered Association." This is used for pretty much every village football team, so you can raise money, have a bank account, sign contracts, etc. It's also used for larger things: my first encounter with the form was in the 80's as an exchange student. The whole exchange program was an e.V. It's also used for a lot of things that would be Foundations or Nonprofits in other countries. The catch, if it's a catch, is that you have to have at least 7 people and there's no way to be "in charge" if four of them think you shouldn't be. https://en.wikipedia.org/wiki/Registered_association_(Germany) https://en.wikipedia.org/wiki/Registered_association_(German...

wolverine876 8y ago

I was a member, and later board member, of the housing co-ops in Ann Arbor, Michigan, the Inter-Cooperative Council (icc.coop). In many ways, it was an incredible institution (and maybe still is; I'm long out of touch): Highly democratic and very successful. It's continued to exist and grow since the 1930s, with almost complete turnover in membership every two years. They owned at the time around 20 properties, housed around 600 people affordably - their primary mission - and had assets and budget well into the millions. I still don't understand quite how they did it. They did have a small permanent staff of an executive director, financial director, and a couple maintenance people. Everything else was done by mainly college-age membership that, as I said, turned over almost completely every two years; they were the board of directors, maintenance, collected membership dues (the equivalent of rent), made major investment decisions (buy a new house?), etc. etc. One contributing factor may have been that it was a bunch of intelligent people, self-selected for their commitment, who had little long-term vested interest (they'd be gone in a couple of years). I might expect the latter to be a disaster, but it also eliminated a lot of politics - nobody had a career, a future, a promotion, a reputation, or much ego depending on the outcomes. Based on your links, I'm pretty sure you know about the ICC. Any thoughts on how it, and similar organizations work, where others that require community commitment, like the bookstore in the article, fail?