FOTSC/Co-Op

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Arguments for a Co-op mode of Organization for ATX Hackerspace

General principle

  • Cooperatives are community-owned organizations, and as such are directly responsive to member needs.
  • All revenue generated in excess of existing liabilities are returned to members either directly or in the form of reinvestment.
  • As democratic entities, cooperatives develop a strong value set for institutional guidance; these may be explicitly stated through Ends Policies and a Vision Statement.

Resources

  • Because cooperatives are owned by members as equals, members have a positive incentive to donate materials, tools, and funds to a co-op. This incentive is not present in a conventional business. Such a model would enable greater range of opportunity to fundraise for particular tools and projects.
  • Cooperatives may take membership fees in the form of regular dues, in contrast to nonprofits.
  • Cooperatives have the flexibility to earn revenues or “profits” like a conventional business, without being bound by or restricted to profit-making activity.

Resilience

  • Because a cooperative is a member-serving entity, it can more easily weather periods of low revenue during which owners of a conventional LLC might prudently abandon the entity for more profitable ventures.

Structural Considerations

  • Co-ops are governed by a Board of Directors elected by and directly accountable to members. They also employ member referenda for major decisions about values, organizational direction, and capital investments.

co-op links/info

General info about Co-ops from the International Co-operative Alliance (IAC): http://www.ica.coop/al-ica/

From Texas Business Organization Code, the law we would live by:Texas Cooperative legislation

Info about the Wheatsville co-op including their membership pledge: http://wheatsville.coop/faqc.html

Info about business co-ops from the National Cooperative Business Association (NCBA): http://www.ncba.coop/

Possible funding and support from the Cooperative Development Foundation (CDF): http://www.cdf.coop/

Black Star Co-op

The model:

In its simplest definition a co-operative is a business that is owned and directed by the people that it serves, its membership. In practice that members of Black Star Co-op actually OWN one membership share, and all members have equal voting power to elect the Board of Directors who set the long term goals of the Co-op in the form of Ends policies. After the Brewpub is up and running (Summer 2010), the excess net savings of the business can be distributed to the membership on the basis of patronage. Anyone over the age of 21 can become a member-owner, and as of April 2009 we have member-owners in twenty US states and three foreign countries.

Each membership share is priced at $150, but new member-owners can get started at just $40 and make payments over time. Two people who share a mailing address can also join together, but each is assessed a full membership share.

Every member-owner holds one vote, including Joining Members, but only Invested Members receive the full benefits of membership, such as running for the Board of Directors. Joining Members may upgrade their membership at any time by making payments on their membership share, and must make at least one payment per year to remain active member-owners. Once Joining Members have fully paid their membership equity they are automatically upgraded to Invested Members.

What are the benefits of membership? Some of the benefits are:

  • Voting power!
  • Member appreciation events
  • Patronage refunds
  • Bragging rights
  • ”Beer with the Board” specials
  • Free “Birthday” Beer
  • Eligibility to join University Federal Credit Union www.ufcu.org
  • As the co-op develops, more benefits will become available.

(From http://www.blackstar.coop/co-operate/membership-info/ )

Feedback from the hackerspace.org list on a hackerspace co-op

Will Bradley:

I understand what a co-op hackerspace might look like, but I don't think it's a contentious question... for example HeatSync isn't a "co-op" per se but it is a 501c3 nonprofit whose members get to vote in the board of directors and also participate in self-governance via proposals and votes at regular meetings. But there is still a board, an organizational bank account, we're a registered nonprofit corporation with the state.

I suppose a co-op would include more strict language in its bylaws indicating that paying members are all given an equal vote and are the highest authority in the organization (as opposed to a board-based org.)

But colloquially, I'm pretty sure that some form of member self governance is a very common feature of hackerspaces.

Far McKon:

Right, There is a big difference between something that is functionally owned by it's members (aka, coop by action) and a legal cooperative.

cooperative by action: Many hackerspaces act as a cooperative, such that all members are owners of the organization, and have voting rights. (As opposed to a few board members run the nonprofit, and members have little or no say).

One of the downfalls of cooperative style management is having people take ownership. Some hackerspaces have members that would rather do the 'buy a gym membership' model than 'we are a cooperative mini-democracy' model. For the people that fall into the first case, trying to run things in the second case can burn them our, or frustrate them. And vice-versa.

cooperative by law: It gets to be a state by state thing at some point. Some states have easier reporting for taxes for cooperatives, others for state nonprofits, others for the new 'For Benefit' types of entities. Your Mileage May Vary, I Am Not A Lawyer. If you are a cooperative, check how the state taxes 'profits' from the entity. Cooperatives, for-benifits, or technically for-profit (but just to be filed) may cause a tax burden on members since end of year cash on hand can be counted as 'income' in some states.

Most spaces I don't see a need to be a federal 501(c)3. very few spaces get donations where tax deductions play into it.

Yoy may want to check out Space Federation if you just want to start hacking on things. They are a national org for hacker/maker/art spaces that can/will act as a 501(c)3 sponsor. e, they accept donations, verify you are using them in a way that matches nonprofit standards, etc.

In short: I think cooperative in action can make a great hackerspace, or can burn people out. Cooperative by law is a state by state situation.

Will Bradley:

In my experience with member self-governance, there are lots of talkers who disappear when it comes time to do something. Also, voter turnout frequently stinks. So a few dedicated people are frequently needed either way. Finally, having a small number of "go to people" is useful when dealing with other entities.

The hackerspace ethos prizes action over talk (see: the bikeshed problem) so limiting talk and empowering passionate people with the ability to do stuff can be more valuable than giving every single (armchair quarterback) a say. I.e. a meritocracy or do-ocracy instead of a democracy.

We didn't get a single significant donor until we got 501c3 so I highly recommend talking with Space Federation or filing for your status. Many larger companies will not help you unless they get a tax writeoff.

...

As a counterpoint, I've begun to see people complaining to board members instead of taking on a task themselves. Natural human laziness aside, it might be a good thing to really be co-op about it so that nobody is in a better position to action on something than the person who has the idea. We have to untrain people from the idea that the board exists to solve people's day to day problems.

Eric Moore:

HTINK in NYC is a legal co-op. www.htink.org

We aren't a classic hackerspace, our members provide educational services to school districts, homeschool groups, individuals and companies in our area.

The incorporation type creates a lot of challenges and opportunities. Our managing directors both have been providing these services for years and one receives a salary from HTINK while the other board members provide other services to the co-op. We only have a handful of full members since being part of the co-op means you have either purchased a member share or earned equity.

Opening a space is part of multiple potential revenue streams for the co-op, but the model requires an individual be motivated to join the co-op and manage the space as their activity, or the board must vote to attempt to hire and individual to provide those services, but that can be dangerous if the person hired doesn't share the groups values because they automatically get a vote equal to everyone elses.

Egalitarianism has some inherent drawbacks, but through the appointment of different officers and managers most of the decision making can be done by motivated individuals with the board existing to provide governance rather than management.

Fund raising requires either a 501c3 partner or in some states the selling of preferred non-voting shares. An individual may own only one member share, but they may own any number of preferred shares. Getting set up to sell shares is very difficult and requires significant investment by the co-op.

There is a ton more, I am not the best person to talk to you about co-ops in our group. Ping me off line and I'll ask the rest of the board if anyone would like to discuss this in more detail with you.