Our Partner and Shareholder, Jacqueline Radebaugh and Senior of Counsel, Yev Muchnik recently wrote this Exclusive Report: Solving the Riddle of the DAO with Colorado’s Cooperative Laws for The Defiant in which they reflect their legal analysis and anecdotal experience with DAOs adopting the LCA cooperative legal framework in the United States; as with other …
Governance and Shared Ownership
Patagonia “Exits to Climate”: A Win for Capitalism, But a Mixed Bag for Stakeholder Governance
I, like most, was delighted to read the news that Patagonia’s shareholders decided to give away ownership of the company to benefit the climate and not private equity, a strategic buyer, or public capital markets. We’ve written extensively on mechanisms for mission protection in corporate entities. It appears that the Chouinard family, which owned …
Patrons, Patronizing, Patronage Dividend
These are all terms used in the cooperative business community and sometimes their meanings are unclear or jumbled. This blog will discuss the definitions of these terms with examples of how they are used by different types of cooperatives. A patron patronizes a cooperative and receives a patronage dividend at the end of the year. …
VC Investment into Democratic, Worker-Owned PBC
What does it feel like when traditional notions of worker-ownership come face to face with venture capital and a deal gets hammered out? As you might expect, pretty exciting and hopeful. One of our clients came to us a little more than a year ago as a group of workers and friends who left …
How patronage is really paid out to cooperative members: qualified and nonqualified written notice of allocations (2/2)
Patronage dividends represent a unique opportunity for cooperatives to avoid taxation on some of the cooperative’s earnings.[1] Early this month I highlighted the concept of patronage dividends. Generally, when members receive taxable distributions of earnings from a cooperative, such as patronage dividends, they are included in the patrons’ gross income along with other income the …
Thoughts from a new economies’ attorney: distinguishing cooperative governing structure
In my previous posts, I discuss how traditional businesses and cooperatives diverge from a capital (and return on capital) point-of-view. Another common misconception is that cooperatives function like nonprofits, typically from the perspective of governance structure. They don’t. Cooperatives are businesses, and, as such, business principles and governance, and business governing structure apply to them. …
Thoughts from a new economies’ attorney: patterns that create different kinds of (business) ownership – cooperative capital
In my last post, I talked about how capital looks like in a traditional business. As a recap, traditionally, capital is invested in the business with a goal of extracting profits and controlling how the business is done – the more money an investor (owner or shareholder) puts in the business, (i) the more return …
Thoughts from a new economies’ attorney: patterns that create different kinds of (business) ownership – traditional capital investment
If you are reading this post, chances are you are an innovator, you are looking for guidance on alternative business forms, you run or are part of a mission-driven organization, you are considering adopting democratic governance models in your business or nonprofit, or some combination of those. I have to alert you that this is …
Cooperative Equity Capital, Income and Patronage: How They Work Together
Cooperatives have three areas of accounting that need to be understood by their members as the cooperatives are formed and as they are operated. Cooperatives obtain and track equity capital, usually through the members. As a business entity, the cooperative generates income through the products its sells or the services it provides to clients and …
Voting Structures for Businesses
All corporations and cooperatives have some sort of democratic model for decision making. There are two major voting structures for all businesses. The first: “one share, one vote;” means that an investor gets one vote for each share of a company they own. The second: “one member, one vote;” means that each cooperative member or …
