Not-for-profit vs coop

Hi, were looking at setting up a coop for our project Astralship.org

We’re a co-living co-working community look to do art and tech projects as a team for our chapel base in snowdonia. We have skills from Dev Ops to Webtech and embedded systems amongst our crew and also creative skills. There are differing degrees of commitment and investment but generally we are highly motivated and skilled.

I’m wondering: A not-for-profit limited by guarantee seems easy to set up. Are these entities elidigible to be part of coops.tech?

If no, or otherwise, what are the disadvantanges of a not-for-profit company?

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CoTech membership is essentially about democratic worker control of the member enterprise. The legal form is less important, but in order to qualify for CoTech membership it should make clear that a) the workers are in control (as opposed to any other stakeholder group), and b) that the entity is in fact a co-op (this is often done by explicitly embedding or referencing the international statement on cooperative identity in your governing document).
A co-operative company limited by guarantee is one of the simplest and lowest cost approaches. @coopsmark is my go-to expert on the legal stuff.

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Here are some models to have a nosy at: https://www.uk.coop/developing-co-ops/model-governing-documents

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Fwiw, some jurisdictions allow nonprofit worker cooperatives. (Ontario Canada explicitly allows it in our co-op act). The new co-op that we’ve started is a nonprofit worker co-op, but we’re still too early to know if that’s a good or bad idea. The only other local nonprofit worker co-op we know of is a green construction company, so its rare even here.

From what I’ve gathered from informational interviews with others, by being a nonprofit, we’ll benefit from easy trust in certain external partnerships, but probably suffer from 1) not having way to compensate someone with share-buy when they come to natural and healthy departure from org, 2) less dynamic conversation around surplus and values, e.g. “member pay-out vs build collective fund pool” conversation doesn’t happen, so not exercising a critical choice there, and 3) nonprofit law is more of an minefield when combines with small collective thinking (e.g. hard to prioritise looking after one another, as law supercedes that concern)

In my understanding, raising capital is often seen as a key tradeoff in nonprofit vs co-op. (With co-op, non-voting shares in coop can be sold to non-members to raise capital and offer modest investment vehicle.) but at least in Canada, that tradeoff point is becoming a moot point, since nonprofits are very confident about the legal framework and precedent around community bonds being used to raise money: https://communitybonds.ca/

Anyhow, hopefully these thoughts aren’t too messy! (Disclaimer: only very recently into co-op space myself over last year, but having lots of conversations!)

hi @astraliam, you can get model articles for a non-profit company limited by guarantee workers co-op from the Radical Routes publication ‘How to Set Up a Workers Co-op’. In fact, an editable set is on the www.seedsforchange.org.uk website - i think the page is ‘resources for co-operatives’ or something like that

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Wales Co-op Centre will also be helpful. https://wales.coop/

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We at Common Knowledge are a formal cooperative recognised by Coops UK and our legal formation is a non-profit company limited by guarantee with cooperative rules and a soft asset lock in those rules. We are also a member of CoTech. So this seems entirely suitable.

This is the simpliest and most flexible way of forming a cooperative and advised to us by cooperative formation guru @Sion.

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Oooo…! Are your ruleset/constitution/bylaws sharable? We’re about to create ours, but don’t have much to model off of in Canadian context, and would love to have some inspiration :slight_smile:

Let me put them up on GitHub so they are discoverable by you and anyone else.

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https://beta.companieshouse.gov.uk/company/11620742/filing-history/MzIxNjg2OTg3M2FkaXF6a2N4/document?format=pdf&download=0

From

https://beta.companieshouse.gov.uk/company/11620742/filing-history

Maybe add them here Templating the Co-op Start-Up Process