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Governance and Shared Ownership

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.  …

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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 …

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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. …

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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 …

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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 …

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Use of the term “Cooperative”

Edited June 26th, 2020: An earlier version of this blog post implied that only organizations incorporated as cooperatives under Massachusetts law may use the word “cooperative.” This post has been edited to accurately reflect that other businesses may use the term if they distribute earnings consistent with cooperative law. Entity formation is often the first …

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