Although we have effectively been operating as a democratically run organization for many years, our old bylaws still preserved total power in the initial three board members. Now we are fully up to speed and looking forward to our first official membership meeting in the Fall.
While I’m here… I’m curious to get feedback from the UK based coop community on the topic of profit, ownership and legality with coops. In the US, coop law is state law, so we were constrained by the laws of New York state. Unlike some other states in the US, New York state does have a coop designation for incorporation. However, it does not allow for a multi-stake holder coop, so we were not able to use that law to have both consumer members and worker members.
Therefore, we were faced with the option of incorporating as a “limited liability” for profit corporation or we could choose to keep our existing non profit status, but become a membership nonprofit (in which we are legally bound to elect board members from our membership). We opted for the second option.
Over our 6 month process, we have encountered very slight opposition to our inclusion in the coop movement based on not choosing the coop incorporation option and also based on not technically “owning” the organization (at least according to capitalist logic).
I’m curious to know how this plays out in the UK. Are there nonprofit coops in the UK? Are non profit coops with bylaws that abide by the 7 principles accepted as coops in the community here?
I think, although IANAL, that in the UK, non-profit has a subtly different status than in the US. I get the impression, reinforced by what you’ve written here @jamie, that non-profit status is more of a legally definable thing, whereas here in the UK I could set up a company, say that it is not for profit, and maybe include something in the governing document that sets out what would happen to any surplus created. On that basis we do have co-ops in the UK that self-identify and ‘non-profit co-operatives’. So, for example, in order to qualify for Paypal’s non-profit pricing, a UK entity needs to be a registered charity.
My own view is that a co-operative is by definition a trading entity, and needs to generate a profit or surplus in order to be sustainable, so the idea of a non-profit in a co-op context is more about prioritising other goals over and above making a profit, in contrast to a conventional business which would commonly be focussed on profit as the primary goal.
In terms of whether such an organisation would be viewed as being part of the co-op movement, almost certainly it would. We have a wide range of legal structures and forms here that can be used to create a co-operative, which I guess leads to a more relaxed view about what a co-op looks like.
Thanks for your thoughts @Graham and your welcome to the coop world!
In the US, the non profit legal structure prohibits you from extracting profit from the organization.
And, there is an additional federal designation commonly called 501c3 (which may be more similar to the “charity” status you describe) that requires you to actively engage in charitable work in exchange for not having to pay taxes (it’s possible to be a non profit and not be a 501c3).
“Profit” is a hard term to pin down - non profits, after all, are expected to make a profit (otherwise they wouldn’t be sustainble) but are barred from extracting that profit to owners or share holders.
I agree with your assessment that non profits and coops may prioritize different things. Specifically, non profits can not prioritizing the maximizing of profits - they are expected to have a different mission.
But… it seems not all coops, even for profit coops, prioritize maximizing profit either, right?
and looking forward to our first official membership meeting in the Fall.
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