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Catalyzing worker co-ops & the solidarity economy

Why Is It So Hard to Pay for Contributions?

January 5, 2017

by Ana Jamborcic

We are a team of developers that helped to build some of the Bernie Sanders campaign tech and want to extend this and make it available to all activists. We need to have an org structure that isn’t dependent on VCs or grants for political reasons, and one that also fosters innovation and is fairly scalable. After looking at many different org structures, including co-ops, distributed orgs, non-profits, etc., we determined that we should borrow heavily from sociocratic organizations and want to set up something like a for-profit co-op. After a lot of work and financial modeling, we came up with an org structure that we think will enable us to continue to build our product,, via loan and labor investments, without giving away our ability to govern the org ourselves and keep the power and money in the hands of the workers.

I’ve been looking for a while now for an example of this being done before… and the closest thing I’ve found is the concept of “sweat equity,” which at some point turns into a traditional corporation. This is a start, but doesn’t solve our problem because we don’t want to ever transition over. We want to have profit shares distributed across all contributors (money and labor), and also have them expire in order to accommodate future employees’ access to profit without continuous dilution.

This model could be a better way to deal with the challenges of starting a co-op by creating more market incentives and greater scalability/growth than a traditional co-op model but still keeping the power and profits in the hands of the workers the way coops are intended to do. In addition, if we solve this challenge — it could spur another wave of financing and greater innovation due to greater entrant market participation the way Kickstarter did or WeFunder is doing now.

These articles talk about this concept in some depth. The idea we had resembles this closely but not completely.

We are looking for input regarding anyone who has done something like this or is thinking about similar things and has ideas how this may fit into existing legal and accounting frameworks. All input and feedback is welcome and appreciated.