Legal Tools to Integrate Cooperative Principles in Organization's Culture, Structure & Documents

in spanish um anyone who would prefer not to have their place recorded i'm not sure how much this shows up but please feel free to turn off your video welcome to legal tools to integrate cooperative principles in your organization culture structure and documents we're so glad to have you this presentation is being hosted by us lawyers from the cooperative professionals guild i will let panelists introduce ourselves starting with kathy sorry kathy i can't hear you okay so hello i am a cooperative business attorney in massachusetts i have worked for many decades with conventional businesses and i've been delighted in the last few years to devote myself to cooperative work and in particular to become affiliated with this sustainable economies law center thank you hi i'm terry lewis i have an attorney and a proud member of the cooperative professionals guild i have dealt with cooperatives my entire professional life which spans more than 40 years in a variety of settings and circumstances and i am pleased in my semi-retirement to be working with the center for community-based enterprise in detroit michigan which is where i grew up and um and continuing to network with cooperatives of all kinds across the country thanks pain hi my name is payang di fong i am a very new cooperative law sustainable economies law attorney i am also very pleased to be a selk sustainable um economist law center fellow as well as a member of the cooperative professionals guild i was pleased to see a couple of our members join like ricardo and faramaz in the room so uh and and be to be presenting with some of my colleagues here today i'm um based in washington dc also licensed to practice in minnesota and california i look forward to this session with you all paola would you like to introduce yourself thank you hello welcome my name is paola eisner that's paola um i'm a an attorney a co-op attorney licensed in california i work at therese tuttle at a law group um and i'm i'm just really happy to to practice in this space and to be with you all here today as we mentioned uh this session is being uh hosted by the cooperative professionals guild and the four of us as attorneys in that guild if you are the co-ops professionals guild the cooperative professionals guild is a group of cooperative lawyers and accountants who cooperate and learn together and share information as part of this group if that sounds like your kind of space please you're welcome to join us at professionals.co-op the link is at the bottom of this slide all right kathy for a short introduction thanks paula um and welcome and thanks to all of you for joining us we are delighted to be here with you and breaking the co-op law 101 mold a bit today with a somewhat different approach to our presentation we hope you got the message about our change in presentation topic and we hope you'll stick with us we know many of you are knee-deep in legal business and even philosophical questions and by way of answering those questions today we're going to step back from the nitty gritty uh to recommend a self-help framework for decision making that we hope will help you ask and answer better questions and better ways for yourselves so the sheer number of decisions you need to make in a compressed time frame as startups can be overwhelmingly no and you need to recognize the same decision-making burden actually remains true for mature and successful co-ops they've just learned to make those decisions better and faster and you can too so we hope to help you figure out how to make decisions efficiently with a minimum of friction but still thoughtfully and purposefully in line with your values and objectives and to do that you need to have a understand what all those decisions around you are about and a plan for tackling them and a good first step we think in sorting out your decision making and the topics we're going to address today relate to the fact that the great majority of the issues before you relate to relationships and that's the majority of decisions that are going to confront you even as you operate the business because as a business you are in the business of relationships you are in the business of relationships with your customers your suppliers your service providers their suppliers their service providers your lenders your community your state and of course most importantly with your fellow workers so we all intuitively understand relationships i'm sorry could you slow down please yes absolutely sorry i'm a immediately fast speaker we intuitively understand that relationships are defined by mutual expectations rights and responsibilities and less obvious to non-lawyers that's what all the law is about also our legal documents and most laws are primarily concerned with rights and responsibilities within legal relationships and the advantage to you is that you can then use these foundational laws and legal documents to help you make additional legal and business decisions better because they're all framed by relationships so for our program today i'm going to start by proposing that the first step in improving your legal and business decision making is knowing who you are as a cooperative what you bring to the table in a relationship your identity values and principles then paul is going to take it from there to talk about the importance of documenting decisions in the variety of legal documents you have available and then terry and payang will talk about approaches to decision-making governments and conflict resolution and we hope to have um 20 or 30 minutes at the end to hear from you about how you are using your legal documents to incorporate and create your legal identity um did you want to say a word about our format just that if you we will try to check the chat for questions that come during the presentation but we would really love it if you could save your questions to the end we're doing our best to conserve 30 to 20 minutes for questions um and so we we look forward to leaving a good amount of space for discussion at that point at this point we would love to invite participants to introduce yourselves in the chat you're welcome to share your name your co-op affiliation your contact information if you would like to share that and if you'd like please share whether you're joining as a member of an existing co-op um an individual hoping to start a co-op a co-op professional or a co-op developer or the reason why this this presentation is useful and helpful for you and we'll let those those um responses be added to the chat as we continue the presentation thank you so much and kathy oh great let me start with uh slide one paula thanks on finding your cooperative identity yeah so i'm going to reference mondragon a few times so for the benefit of those who may not be familiar i'll just briefly introduce mondragon to you as being one of the world's most successful and large worker co-ops they're located in the basque area of spain we're starting in the 1940s by a priest in the catholic solidarity tradition and they now consist of uh left maybe about a hundred different cooperatives or federation that involves about 80 000 workers i believe and something like 11 billion in sales very successful largely manufacturing organization that has said a lot of precedent will be mentioning later on so mondragon uses the phrase cooperative dna to describe the principles and values that exist in cooperative organizations that distinguish them from other types of organizations i think this is a great metaphor on many levels although we're going to be using a lot of metaphors that deal with growth and building but to stick with this one for a moment we are looking at the slide to illustrate the fact we're all aware that science says that 85 to even 99 percent of our dna is the same as many other animals nevertheless we recognize that even that small difference in our dna creates tremendous and significant differences and obviously we have no trouble distinguishing a human from a mouse similarly 85 of your co-op dna is likely to be the same as most conventional businesses so what's important for you is to just determine what is the other 15 of your co-op dna that makes you distinctly not a conventional business will others be able to recognize you as the co-op you are and will the co-op differences you create for yourself help you become the better business species you hope to be so defining that cooperative identity and that cooperative dna for yourself comes from the choices you make about your cooperative purpose why are you choosing to be a co-op what are your cooperative values and what are you i'm so sorry kathy could you like breathe between sentences or something this is being recorded in spanish also thank you for reminding me i'm so sorry do you need me to pause here for a moment so next next slide please so what you see here is a statement on cooperative identity from the from the ica the ica is an international organization of cooperatives formed over 130 years ago that now facilitates cooperation among its 318 cooperative members from all cooperative sectors in 112 countries and in 1995 the ica distilled the long wisdom of all their members into this statement of cooperative identity that includes the definitions and the ten values you see here it's worth unpacking this definition these values deeply yourself in conversation with each other the key takeaway is that cooperatives are uniquely people oriented and member-centric members are the heart and foundation of all cooperative enterprises as owners workers directors and managers and it's this commitment to multi-dimensional membership participation at all levels um that has led one leading cooperative consultant to dub cooperativism as solidarity as a business model and it's one of my favorite expressions of cooperative identity next slide the third element of ita statement i identity in these together these three elements form a cohesive whole are the seven cooperative principles shown here it's important to understand that these are just the short titles of the principles i often see these repeated without contact so i want you to be aware the ica supplements these with 120 page guidance notes on cooperative principles that really explore these topics in depth and they're much richer than they appear from the few words that are used to title them but what ica explains as well that often doesn't get conveyed when you see just this list is that these are meant to be living breathing documents the interpretations of the principles as are the principles themselves and ica guidance on this says that these principles are to be used to operationalize your co-op identity in the context of the terms of the social economic and cultural aspirations in which your enterprise works so these are these can't simply be repeated they need to be understood and applied and let's see other important thing i want you to point out about principles is that oftentimes principles are not understood for what they are they're far from being platitudes they're really designed or should be used as decision-making tools which is why we're making the point of bringing these up in this context of legal decision making i'm going to just paraphrase something that a non-co-op company ceo has said about this which is the core values may or may not be actionable but guiding principles on the other hand should be inherently useful and actionable they should guide the company and staff through tough times and tough decisions and be a beacon in a decision making process for everyone so if you write your principles in a way that's useful to you in your contacts they will eliminate tough decisions and discussions that can take up a lot of company time next slide so here are the mondragon principles mondragon principles i've only shown you the ones that are significantly different or supplemental to the ica principles but these are another great expression of cooperative identity and unlike ica principles that reflect the consensus of cooperatives in many sectors the mondergon principles squarely reflect its commitment to worker co-ops and the belief that the needs of labor are preeminent and this is in fact expressed in its principle number three which i will read a little elaborated version of which is labor is the principal means by which human beings transform nature society and themselves and hence labor should govern the enterprise and the distribution of wealth the enterprise creates so this is significantly different than ica principles and there is no analog so again this is an evidence of contact-based principles definitely a set of principles you should explore and i do want to point out that mondragon principles are have been adopted throughout the eos in particular the united steelworkers union has launched a cooperative union development plan and uh mondragon principles are being used by the cleveland evergreen cooperative chicago's austin polytechnica madison union cab and others so you have a rich assortment of peer principles to draw on as well as an invitation to write your own kathy in addition the interpreter has asked again that there's a little bit of slow down because they are not able to keep up yeah you should also know kathy that you're at 10 minutes thank you one of the most important decisions that you can make regarding your principles is whether you view these um as what i call an ice cream cone or a cake are these principles principles that you can pick and choose from and select what applies or are these so integral that they are need to be baked into the same cake together i will point out there's lots of different opinions on that principles are subtly linked and when one is ignored all are diminished and a cooperative should be evaluated on how well they adhere to the principles in entirety and that the principles don't stand in isolation from each other and support and strengthen each other the best best truth of that statement is mondragon itself they totally embrace the unity of the principles and i think fairly conclude that that is the basis of their great success next slide so now that we've talked about what you need to do and think about to i bring your co-op identity to the table and making legal decisions we can talk turn to the law and see what the law has to contribute to the the concept of your cooperative dna the law does not define the cooperative there are in if you choose to organize under a cooperative law there will be a few specific requirements but for the most part your cooperative formation will be based on conventional business law principles there are two types of laws to be aware of so i've just talked about the public laws those are the laws written by legislative bodies from town states and federal governments these are the basis for the incorporation laws but there's another body of law that is customarily not recognized as such and that's private law private laws are the rules that you agree to mutually and those become legally enforceable generally you might call them contracts and while nobody's intention is to go to court they're legally enforceable in a court they have that weight of mutual commitment that makes them enforceable and these are the rights that you will draw on in creating most of your cooperative dna because as we turn to uh well we'll stay on the slide for a second as we turn to in the next slide to look quickly at a couple of the statutory requirements you'll see they don't come close to defining anything like the cooperative identity principles that we've just discussed so your private law options for creating that cooperative identity are contracts with suppliers your investment terms your the policies the various resolutions that your board adopts and of course your foundational documents your articles and your bylaws and even certifications like b corp status and fair trades are contractual because you as a as a business are contracting with another entity to comply with their standards for use of those uh next slide uh this slide okay great so this slide um is just illustrates very quickly a couple of examples of the very sparse requirements of statutory law and how even then on the right-hand column you can see at least the majority of the questions about those requirements up to you to decide yes your board your co-op has to be governed by a board but who those board members will be how many and so forth is up to you the uh the five principles of cooperative uh identity that are in the statutes for worker co-ops are the ones you're familiar with you can only have one class a voting stock one vote per share reserved for members and issued only one share per member membership shares and members are limited to employees you have to maintain an accounting system uh for their individual accounts and then distribute net profits annually in accordance with patronage and if you dissolve distribute net assets the same way or as you otherwise wish that's it the rest of it is up to you so next slide so if you rely solely on statutes which is generally where most cooperate cooperators start this is what your house is going to look like a great foundation perhaps but sadly incomplete but the good news is it's up to you to determine what's missing fill it in and make it the cooperatives you want to be thank you thanks so much kathy um and i appreciate the hands up but i believe we're gonna wait until the end of the session you're welcome to put any concerns in the chat um if it's time sensitive um so that's a great overview of why we're having this discussion today and we'd just like to take a second to reflect on what the principles mean to you what is your cooperative purpose why have you chosen to be a cooperative or why do you want to be a cooperative what are the principles and objectives that define you um we're so glad to have 51 participants here right now so we won't open for discussion but what we will do is give you a space to self-reflect with some great quantitative information through a star voting session star voting is a system of ranked voting and it'll give us some great information about you're able to rank the importance of each principle from one to five one being less important five being more important all the same value to you whether low or high you can mark that too and then we'll get information on [Music] what the the most important principles are or whether it's um more of a tie so if you are able to go to the link on your screen one minute to take this online quiz and reflect about the importance of each principle to you and terry if you'll let me know i will um put the link in the chat so people could actually click on it fantastic yeah there you go ma matt thank you thank you so much and if we have a chance at the end of our talk um to to look at these results and discuss them we will but um we'll see if we get to it okay that's our minute all right i hope you had a chance to um reflect and we may have an opportunity to discuss this at the end um okay so hi my name is paula um i just have a few slides for you here and what i would really like to to share with you is the tools that you have for self-governance in a cooperative kathy described cooperatives as a solidarity as a business model and it's really all about it's all about self-governance it's about making these decisions ourselves and in order to to do that in order to to self-govern you need to know where your tools are what they do how to use them and how to forge them yourself um so there are two types of documents that will form the basic legal structure of your cooperative there's formation documents and policy documents i'm using the analogy of the house to kind of describe give you a picture of what each document will do so you see the first document on the top left the formation document the articles of incorporation this is kind of like if you're building a housing co-op and you have a plot of land where you're planning to build this the articles of incorporation is a required document where you let the government know what you're building and where um and let me just disclaim i'm a california attorney and this is true for california co-ops um if you're a different entity or a different state this might be slightly different but it's the same basic idea so you've got your articles of incorporation this is mostly public law this is mostly requirements stated in the laws that apply to cooperatives of what you need to to tell the government about the co-op you're starting to build the second important formation document are the bylaws what are bylaws that's a strange word actually the history of the term bylaws is very straightforward it's the laws of the bi the bai or the burr is the name for a hamlet a small town in norway in old norse so by laws historically this is a self-governance document where you describe how you will govern yourself this is kind of like the wooden frame of the house it gives you your your basic structure that everything else will be built on this describes the fundamental features of the cooperative its purpose its structure including what kind of co-op what are the who are the members if there's additional classes who makes decisions and what's required to make those decisions how resources are allocated um and sometimes commitments and obligations of the co-op to the members and the members to the co-op um the membership agreement the membership agreement to me is kind of like handing a potential member the plan of your house this is what it looks like this is what it does here's where all the pieces are and it's a contract between a new member and the cooperative and also includes both legal requirements and defaults and also additional information and information that's specific to the cooperative that you will add or can add to that document on the other hand policy documents um are optional documents that you can use to agree as a cooperative on the specific processes you will use to make decisions and how specifically you run the cooperative so as you can see you might have the same wooden frame of the house and your policy documents might make the difference between what the co-op looks on the left versus what the co-op looks on the right and you can actually shift as as you have a different structure as you choose to use different decision making processes without changing the fundamental structure of your cooperative so it's actually useful to have documents that change in different ways so that you can keep that fundamental structure and still change as you grow learn new things and adopt new processes the policy documents are really useful for that um so really one thing that we recommend yeah i am so sorry to interrupt but i honestly think there's several participants that don't have themselves on mute and there is just so much background noise it's hard to hear at least on my end okay um part of that might might be on my end and i'll meet myself when i stop stop talking um cayenne will take care of checking about other participants on mute but we had a storm last sunday that um took down several trees near my home and um so i'm not able to use my usual wi-fi um so i do have some background noise on my end but that will end as soon as my piece of the presentation ends thank you so much for letting us know i appreciate it um so when we're looking at these different documents what we recommend to clients what we're looking for is a balance between flexibility for the cooperative and creating a sturdy foundation and framing for your cooperative so when we're thinking of including the principles and our cooperative documents we both want to have the flexibility write something that's flexible enough so that we can make changes in our processes as as needs require while also protecting the lip those so-called like load-bearing beams the principles that really are are foundational to our cooperative terry how am i doing on time i can't hear you sorry i'm good yes you're fine fantastic look at that all right so i'm going to give you um a few examples from some of our documents um and basically that the balance between flexibility and a sturdy foundation you um you can make some of these documents harder to change and then include some of these principles in those documents often you might see i'll go back to the other side you might see like a higher voting requirements to change a certain part of the bylaws you might see certain principles actually get added to the articles of incorporation which in california require an extra step to change versus policy documents which often can be changed by a simple majority vote of the members and that balance allows you to protect some principles that you think are important while also create like leaving in a lot of flexibility um and that's that's a decision that you're going to make based on that quiz we just took which principles are more important how you want to create the cooperative here are a few examples so in this document this is one of my article of articles of incorporation documents for the client as you can see there's not actually that much information grayed out this document is mostly just legal document defaults that we're required to include in the articles of incorporation as a reporting document to the government we did not add much in terms of cooperative principles or anything specific about what this co-op is looking to do because this will co-op was in the beginning stages of development they want to have the flexibility to decide together as the members who they are and what they're going to do so at this stage the purpose and i'm using purpose statements is the example of how much or how little we can integrate the principles here the only purpose statement we have is the specific information we are required to describe in the purpose statement for the government and that's it um and then here are a couple of different examples this is an operating agreement for an llc type of cooperative by janelle orsi this document was originally in spanish this is the original translation or originally bilingual this is the original bilingual translation and in this case the co-op chose to describe a more specific um purpose statement and this will contractually bind the co-op to this slightly more specific statement the purpose of this cooperative and reading from it is to create stable job opportunities for members of our community to practice workplace democracy to feed our community and to grow community wealth we value equality and respect and we seek to create a just and healthy workplace and i think you can see how this description includes the principles without being specific specifically naming the ica principles and wonderground principles that we went over this is more specific to this particular cooperative and i have another example of this here in this um this third document this is from thomas beckett um in this case the co-op described their purpose as a triple bottom line this limited liability co-op company shall be operated according to triple bottom line principles the duty of the managers is to react to maximize financial benefits the members is supplemented by a co-equal duty to responsibly pursue optimal benefits to concerns of the community the company's community including its employees and associates and the health and safety of the public and the sustainability of its biological environment so these two last llc co-ops chose to have a slightly more specific purpose statements and that worked for them in these documents at that time we really hope that you are slightly more familiar with the key documents that create the legal structure of your organization all of these documents have a large aspect of this private law contractual um nature which means that you are creating what this who what this co-op is what you do what your commitments and obligations are and it really is um it's really and in the cooperative space this is about self-governance this is about making those decisions yourself um and we hope you feel more comfortable with where to do that um thank you and i'm going to pass this to terry thanks paula um paula created the framework upon which everything i'm going to talk about should be harmed but i'm not going to talk about enterprise decision making starting from that framework and working downwards i'm going to start from the bottom and work my way up leaving it to you and your co-op to make the ultimate decision as to where in your legal documents to set forth various decision-making processes i am going to continue clearly to outline the difference between formation documents and policy documents as locations for decisions i'm also going to say now that there's a difference between creating a cooperative entity as an llc limited liability company and as a corporation which may have specifics that are different and they call their formation documents different things okay so what am i going to talk about i'm going to talk about what kinds of decisions get made who makes them the worker the team management the worker owners who votes on decisions and how decisions are made so operational decisions in terms of individual workers each individual worker has a set of tasks and they're outlined possibly by the organization they might be outlined by the individual worker it's thought through certainly by the individual worker the steps are decided upon by the individual worker as long as the task outcome is accomplished it's entirely that person's responsibility but people don't often work alone they mostly work in teams and within team making decisions have to be made by the team group and finally in terms of bottom line operational decisions there's a whole lot of project management that takes place there are logistics issues there are um groups within the enterprise that do specific things within the enterprise that add up with the stuff that's get that gets done by all the other groups to the organizational outcome that the organization as a business is trying to create then there are strategic decisions by the way all of those operational decisions if they are governed at all in your corporate in your cooperative documents are in your policy documents they should never be in your formation documents when you get to the realm of strategic decisions that's where the line needs to be drawn there are large-scale operational decisions logistics of the organization finance for the organization in terms of who to borrow from when to borrow day-to-day financial decisions what uh what vendors to to work with what customer groups to work with that kind of large-scale operational decision is still an operational decision and doesn't begin to come into the into the realm of your formation documents but the minute you look at enterprise strategy decisions that's where the line is drawn the enterprise also makes strategy decisions but they're more issues of policy and this is where we begin to talk about governments in addition to the enterprise strategy decisions which are probably going to be in your operating agreement or your bylaws depending on whether you're an llc or a corporation um you want to go back paula there you go good stay here for a minute so clearly within your within your governance documents within your formation documents you're going to talk about enterprise structure and here's the decision between um whether you're going to be an llc or a corporation you're going to operate on a cooperative basis either way but there's one important decision that needs to be considered and that is whether your workers are only going to be owners and are only going to work in the enterprise as owners or whether they're also going to be employees and that will have legal consequences within your state and in general if you choose to have employee owners in addition to just worker owners you're going to be subject to a bunch of um a bunch of state laws on um that you have to contribute to uh unemployment compensation and so on and so forth but also you're going to have to ask your employees for their social security numbers which means that if you have undocumented worker owners they are going to have the decision of withdrawing or lying and that's not something you necessarily want to put your members to the test about finally within governance there's enterprise finance what's your budget you know what are the big economic decisions next slide so i'm going to talk about within all of this scope of decision making voice and vote on a personal basis my personal principles way up at the top include a commitment to voice within all decision making including operational decision making organizing team decision making organizing project management organizing strategy implementation if you have a small organization and you have one or two teams those the decisions and how to have voice in those decisions is going to be kind of organic but if you have 500 worker owners you're going to need some sort of just of structure within your policy documents that govern this kind of decision making in terms of using cooperative documents to govern to determine governance decision making those are clearly going to be within your formation documents in your articles of organization in your cooperative bylaws and it seems to me that they should that the way in which you do this should be well laid out in those documents the thing i'm going to emphasize here is that there be transparency in decision making people need to have voice they need to have the right to offer their opinion but they need to have information on the basis of which they're going to have those opinions so if you don't have financial transparency if you don't have management transparency your workers will not have the foundation upon which to voice their concerns and their opinions transparency in both operations and governance is critical and finally i'm going to talk about the participatory decision-making processes that ought to exist now this is mostly an introduction to something that paella is going to cover in more in more um in more detail but i'm going to say three things okay there are a number of participatory decision making processes sociocracy is a good one um a very good one and whenever a decision is to be made using any decision-making process please remember that there are almost no decisions for which there is a single right answer right most decisions are made in the context of reasonable answers so the outcome of a good decision-making process is one among many reasonable decisions that you or the group or the enterprise depending on the level of decision making can live with and commit to until things change or substantially more information is available and with that introduction i'm going to turn it over to paella thank you terry and uh thank you kathy and paula yes we are coming to the section where we are going to try to discuss and present a few practical tools so to start this segment i would highlight the following general principles what is on paper only has value if it is actually done more than what you say what you do shows who you are preventing harm is better than correcting harm the measure of a good cooperative is not what it does in good times but it's what it does in hard times inclusion is not about special actions outside of regular operations it's how the cooperative operates all the time and it shows in every aspect of a cooperative's work so this segment seeks to address first what can be done to avoid the words and then if really needed then a few tools if a world happens we're going to change sides sociocracy is a very useful tool so on par with financial challenges governance tends to be a major cause of cooperative wars and failures how many cooperatives dissolved because members could not work together and left how many cooperatives identify membership fluctuation as a source of ongoing lack of stability a lot of those failures are tied to the complexity of implementing true and effective democratic democratic governance sociocracy offers several tools for governance and decision making that can be integrated in an organization's documents and processes a general statement in the bylaws can acknowledge this organization operates according to sociocratic principles sociocratic processes can be embedded in the bylaws and in the procedural rules for the meetings so there are four key elements to a sociocratic system that consists of the concepts of circles double linking proposal processes to reach consensus and good enough decisions democratic governance is concerned with equal participation and equal decision making power however anyone who has been part of group processes knows that collective decision making and collaborative collaborative action of very difficult processes trying to bring together different opinions personalities and values sociocracy offers some tools to facilitate those processes the concept of circles distributes different tasks into different containers of ideas and people who seek to achieve specific aims meaning to serve different functions each circle is given a specific sphere of authority for action and related expenditures that derive from the circle above it a top circle may be the container where all circles converge for coherence and coordination in actions and decisions for the whole of the organization the concept of double linking means that one person from the lower circle represents the lower circle at the top circle and one person from the top circle represents the top circle at the lower circle that double linking supports the circle's ongoing coherence and coordination the concept of making proposals to reach consensus in decision making implies two distinct processes first the decision to be made must be articulated in a concrete form that is actionable meaning the creation of a proposal second once the proposal is formulated it goes through a step-by-step process that ensures that a the proposal is understood through clarifying questions b that the proposal leads to a logical choice and not an emotional response through time for reactions and c opportunities are provided to reward the proposal to match the opinions and needs of all participating decision makers the concept of good enough for now acknowledges that a proposal may not perfectly meet the needs of each participant however it meets their aim sufficiently that all can vote yes good enough for now we change sides next we're going to look at our money troubled waters no matter how well intended close to each other our idealistic cooperative members might be money as with family and friends remains a sensitive and difficult matter to discuss and share cooperatives search for equitable ownership and equitable profit sharing opens the door opens the door to many challenging money related decisions how much is a fair membership share price how much equity can you require from founding members what is a fair compensation structure all of those questions often involve sensitive and difficult conversations and decisions among members whether the cooperative has very little or a lot of money is general good practices may help alleviate voice difficulties and keep and can be integrated in the organization's documents and processes one financial literacy is a basic necessity for equal participation in decision making about finances two as much as cooperative members want to trust each other implementing a good financial management system that meets gap generally accepted accounting principles standards is a good practice that means having two levels of financial review having two signature requirements and so on some cooperatives purposefully rotate financial management roles that is a good way to train all members on financial management and ensures transparency and accountability either the balance or financial policy manual can reflect those requirements and processes three looking at existing models is very helpful to compare options and learn about possibilities for example the mit fair compensation their compensation calculator is a popular tool among cooperatives that can be tailored to their members specific circumstances asking other sister cooperatives what their best practices is also very useful finally for it might be helpful to contract for about your facilitation services to better manage with delicate internal discussions and decisions we're changing slides another area to address would be language access good practices language access is the foundation for democratic participation and governance good communications of the foundations to good working relationships cooperatives that want to remain true to democratic participation and governance and want to promote good working relationships should provide language access we will highlight three areas of language access in the u.s and other countries low literacy levels remain a reality for communities that have been traditionally excluded from economic opportunities clean language and using other means of communications such as images cartoons videos and podcasts can make information more accessible and promote greater participation limited english can be addressed by translating and interpreting communications in all the languages spoken by cooperative members and potential cooperative members in addition attention should be paid to cultural differences and nuances training translators and interpreters in the specific terminology and values of a cooperative movement will help them to more accurately relay that information and be less likely to default to their own interpretation another major area of language access addresses the needs of members with different physical and mental abilities technology solutions such as closed captioning and large print size can make virtual meetings more accessible furthermore presentation styles that are engaging and structured can make information more accessible to neurodivergent members finally attention to words and trigger warnings can make cooperative meeting spaces safer for persons dealing with mental health issues change slides lastly we'll talk about non-voluntary termination clauses and processes sociocracy and other inclusive models advocate that it's not that people don't belong are not the right fit it might just be that they are not in the right place within the organization finding the spot where people are most effective and successful are training them to be the right people for the right spot would be the first action if that does not work out then non non-voluntary termination may become unavoidable non-voluntary termination is a painful experience everywhere but especially for cooperatives that seek alternative models of working together making management decisions together and owning things together with shared equity the situation is even more challenging the following three models of clauses represent the minimum due process that can be provided they can be integrated in bylaws operating agreements to prepare for a fairer and smoother transition even in non-voluntary termination situations in a worker cooperative wherever in a workout cooperative where there might be more worker owners who might have smaller amounts of equity there might be less concern about equity repayment repayment of the members therefore the salk sustainable economic law center model bylaws only address the due process of a non-voluntary termination it provides for a 15-day notice and the disclosure for the reason for termination it offers the opportunity of a hearing that can that must be requested at least five days before the determination becomes effective the suspended member should be paid pending the effective termination in a workout cooperative where there might be a few number of worker owners who may own large amounts of equity the salk model operating agreement devises a plan to delay and incrementally repay the equity of a departing member over a period of five years with interest this prevents financially damaging the worker cooperative finally in a cooperative weather where there may be a sharper division between a management team and the rest of the workers such as in cooperatives with an employee stock ownership plan azops a unionized cooperative model could be available this would follow the usual union workers rights protection process a collective bargaining agreement may set the rules for termination it would typically include a negotiated grievance and arbitration process there might be a workers bill of rights included concludes my presentation okay thank you so much um so glad to be able to cover all of that in this session um we will be happy to take questions now and while you're thinking of your questions and putting them in your chat in the chat or raising your hand we're happy to take either we can also start by taking a look at the results of star voting um and so i'm going to throw that link in the chat again the star voting platform is available for free to host um you can host elections like this online for free and it's really a fantastic tool for creating a better system of voting ranked voting um so when i look at the results um you can pull up the link um and look at the and click show results and then you'll see what i see on my screen which um doesn't it shows up mirrored and i'm saying that just in terms of total points interest and concern for community is the highest principle but when you look down at the runoff phase which is really the additional value provided by ranked voting you see that there's actually um a pretty equal value for both concern for community and democratic member control but that in general more people that in general there was not really a high level of preference between the principles when you take fortunately the system does it for me but it says that 60 percent voted once the numbers are all tabulated that there's no preference between the principles so that's actually a very interesting result for me we'll take a question from this individual who i'm just asked to unmute sure yeah can you hear me yes yeah okay thank you uh ron garcia fogarty with teal language justice cooperative for in north carolina and dc and columbia we have members in a few different places so my question was about open and voluntary membership and i think somebody else in the chat also asked about this early on uh just you know how open you know should membership be and it's been something that we've struggled with we've had two processes you know with bringing in new worker owners you know and just trying to figure out the right balance between you know worker owners making decisions and but also you know having that process to what degree is it transparent and open to you know people who we contract with or you know other people in our community so that's my question i'm going to say a couple of things in response to that and leave it open for my co-presenters this is terry it the type of cooperative you have in the business that you're in is going to have something to do with how open membership works if you're in a housing cooperative for example there are a certain number of dwelling units and that's that right and the notion of open membership then becomes don't exclude types of people right if you are worker owned a little different you have size issues with some worker-owned enterprises and not with others right so open membership in a situation in which it's conceivable that every single translator for example working in your area might choose to be a member of the cooperative would that create a problem for your enterprise yes or no right so that's the next question if there is not a size issue and if open membership in terms of having every possible person become a member then the next question becomes one of quality control right and there are two kinds of quality that i think of initially one is the quality of their work and the other is the quality of their participation in the ownership entity right so that's sort of my riff on this the way in which to think about open membership depending on the kind of cooperative that you're doing i'm gonna ask my co-presenters to go ahead and and just to add a little bit to that i guess is that i think it would be unsustainable for us to open it up to anybody you know who wanted to join and so we're we do look at you know how do we grow in a way that's reasonable for us you know but but then where is the balance of okay we make all these decisions internally or do we open it up so that people can apply as well and you know that i guess that's where i'm trying to go to hey this is kathy i'll jump in on that for um to add on to what terry just said so as terry pointed out um the um let me let me give you the full phrase i was trying to put this in the chat but i'm not able to copy and paste for some reason but the full expression of principle one is that cooperatives are voluntary organizations open to all persons able to use their services and willing to accept the responsibilities of membership without gender social racial political or religious discrimination so there is the condition in there able to use their services and willing to accept the responsibilities and membership which go to what what terry explained and in um the guidance notes which i really encourage you to read the ica spends 10 pages on this particular principle going in depth on on many of the issues you're raising um and they do clearly acknowledge that with respect to organizations that have limited capacity for the membership they use example phishing cooperatives serving people in a single port or housing cooperative as terry mentioned or a worker co-op who can only limit a certain number of uh excuse me only employees or number of members there there's no obligation to open your doors and distrust the company by hiring everybody but the focus is on open without discrimination and and that's very broadly interpreted and voluntary means that they have members have the right not to join which is also a little bit controversial because many co-ops are experiencing situations where people who are eligible for membership are choosing not to join and the termination of those people may seem inconsistent with the principles but anyway these issues are explored in quite depth and very interesting discussion in the guidance document which i'll try to get into the chat that's a link were you going to answer the same question no i wasn't oh okay i was going to get to one of the questions in the chat and i realized that we have one hand raised and then another question but at least i'll i'll follow up with andrew's question about lcas and the the types of um legal structures that cooperatives can take so one of the uh i guess one of the um one of the things to understand about cooperatives formation is that the basic choice is to choose to actually incorporate as a co as a cooperative and there are studies that are available in most states that allow to register as a cooperative so whether as an lca a limited cooperative association a cooperative corporation uh or um yeah usually was was types and then the other thing that happens is that you may choose a specific legal structure that is not quite called a co-op but you may also elect to just act as a co-op and because you are acting as a cooperative following cooperative values then you may qualify for some of the benefits that um that are available to um to cooperatives that would be the very simple answer uh you would definitely i guess need to talk to um hopefully an attorney in your legal jurisdiction who could really give you better choices or reach out to our group definitely be cooperative professionals guild and somebody may be able to get back to you hope that answers your question andrew if you have uh additional qualifications that that you would like to ask please uh write it in the chat or speak up thank you thank you i'd love to hear from alexandra seaman who's had her hand their hand raised yes hi thank you so much um i was wondering terry it came up during your part of the presentation but if you could speak to the difference between employees and worker owners uh okay yeah i saw your question in the chat um the state provides certain benefits under federal law workers compensation and unemployment unemployment insurance right in order to get those state in order to participate in those state funded state collected benefit groups you have to be an employee it is entirely possible for the entity to create analogs to those things if they do not have employees right there is insurance that can provide an almost exact analog to workers comp right you can also set up a situation in which every every worker is an independent contractor and they can provide their own insurance there are bunches of ways to create analogs but in order to protect to be required to fund unemployment compensation and workers comp you have to be employees does that help yes it definitely helps thank you for clarifying thank you um so next uh we'd love to reim reims hospitality group has included their question in the chat would you like to um unmute and and make that question verbally if not i'll just read it out terry does the difference between worker owners and employee owners include that only employee owners will receive certain state benefits like employment insurance and paid family leave this seems connected to the last question yeah i think that's exactly the last question and i think i answered it i hope i answered it fantastic um in that quite in that case um ron garcia uh i asked my question already okay fantastic terry i am sorry a follow-up question just surfaced for me sure um so if they weren't if you went the route where there are no employees just worker owners they're not worker owners right at the offset of working with the group are they no they might be independent contractors at the outset okay and we'll have a probationary period okay right then they would become if they were voted in depending on how you decide to to make worker ownership work within your organization after that probationary period they would become members a i.e owners and you can you can cover both the probationary period and the worker ownership period depending on how you arrange your analog to the um to the state provided benefits great do we have any additional questions we still have about eight minutes if there are no questions we uh the panelists we were thinking that we would love to hear best practices from you know different co-ops because obviously this is a field where um each cooperative can really tailor you know and and create its own culture so um being able to share good good practices would be wonderful um ron garcia the tilde language justice cooperative asks for the link to the ica guidance can you put that in kathy do you have it uh yes i yes i was trying and then for some reason i wasn't able to cut and paste but thank you got it thank you so much okay um yeah can i add to that prompt too um just as some examples for instance um you know mondragon has its uh wage solidarity statement which is sort of controversial i one of the one of the practices you might have considered putting your legal documents is about wage spread you know your commitment to living wages or as mondragon does a spread of wages not more than one to six that's an example or climate climate action uh principles so just give you some ideas of things you might want to raise with us as innovative practices you've adopted i'm going to talk about um sweat equity and i'm going to say that a lot of startup cooperatives workers and especially worker cooperatives get started with uncompensated uh efforts on the part of founders and equity in dealing with that uncompensated effort to found an organization that distinguishes the payback of that to um a forever equity stake in addition to one's ordinary equity stake is something that you should seek to avoid we have had at c2be a chance to work out what we what worked for a particular organization that got a lot of uncompensated effort in the in the initial formation and the first thing i'm going to say about it is that the comp that compensation for that might be some sort of equity state coming out of a specific amount that accrues at whatever rate it accrues um but doesn't necessarily have a specific payout when the organization doesn't know how it's going to pay out because otherwise it's taxable right so avoid that but always have it terminated when that when the total amount including interest is paid out of net savings so that you don't have a situation in which there are super workers and worker workers i hope that was a little clear that's such an important point i feel like so many co-ops uh come across that thank you so much melly raised hand yes hi i'm melissa i'm really new to the um cooperative movement um i own a llc um and i was wondering i kind of missed this part came a little late where you were talking about how the depending on how you file your business in in your legal jurisdiction will determine how you essentially form your coop can you talk a little bit more about the like the llc and the lca that you mentioned i'm not sure if i'm if that's clear sure um well okay so llcs and lc is different in the sense that a limited liability company is a fairly traditional business structure it exists in most states a limited cooperative association is a newer legal structure for cooperatives it was created historically because in the farming sector for example it became necessary to i guess have cooperatives that were working on processing raw products and therefore they needed land they needed buildings they needed heavy equipment maybe vehicles and therefore they had an incen an intensive capital need to start their new cooperatives so out of that i guess we created this new business structure which which is a limited cooperative association what is different about an lca is that it allows for patron members who may have you know a a primary unified purpose that is uh that is based on their work or their the type of services products that they um they provide but in addition to the patron members that are unified again within a common purpose you might also have investor members that may have nothing to do with with the main purpose of the um of the cooperative so the lca provides for that hybrid membership and uh and the multi-stakeholder membership in traditional cooperatives you may not have so easily uh and so readily uh investor members that are um that are part of a cooperative some cooperatives feel that it's it's not a good idea i mean the whole reason why cooperatives were started was actually to avoid capital being you know in charge or in control so so there are ways to limit the um the the the control of capital owners in lcas llcs are completely traditional business structures however lca's llcs can act as if they are cooperatives and then uh if they act as if they are cooperatives they may file taxes as a corporation that then may be eligible for tax benefits that cooperative corporations are eligible for hopefully that explains a little bit yeah fantastic great question um i'm sure that was helpful for for more people we are hitting our um the end of our session so i just wanted to say thank you for everyone who joined us today i also want to say thank you to thomas beckett who provided the language interpretation that's so important to us and finally want to again invite any co-op lawyers or co-op accountants who are not yet part of the cooperative professionals guild you're very welcome to join us um can join our webinars and and committees and let's let's continue collaborating thank you so much any other last words from the panelists oh thank you for being with us today thanks for the great questions