Introduction & Overview

Our Agenda for Today

Introduction

4

Cooperative Policy

Ro McIntyre, Red Emma’s

Annie Sullivan-Chin, A Bookkeeping Cooperative

Parag Khandhar, Gilmore Khandhar LLC

Q & A

5

Ro McIntyre

Red Emma’s

@redemmas

Annie Sullivan-Chin

A Bookkeeping Cooperative

@bookkeepingcoop

Yvonne Yen Liu

Solidarity Research Center

@yvonnegraphy

Parag Rajendra Khandhar

Gilmore Khandhar, LLC

@paragced

Yvonne Yen Liu

@yvonnegraphy

7

MAP FROM US FEDERATION OF WORKER COOPERATIVES

Anchor Approach

8

INFOGRAPHIC BY DEMOCRACY COLLABORATIVE

SEE: Michelle Camou (2016). How Urban Governments Promote Worker Co-ops. Grassroots Economic Organizing (GEO). http://geo.coop/story/how-urban-governments-are-promoting-worker-co-ops

Ecosystem Approach

9

INFOGRAPHIC BY DEMOCRACY AT WORK INSTITUTE

SEE: Michelle Camou (2016). How Urban Governments Promote Worker Co-ops. Grassroots Economic Organizing (GEO). http://geo.coop/story/how-urban-governments-are-promoting-worker-co-ops

Procurement Approach

10

IMAGE FROM NATIONAL AGENCY FOR PUBLIC PROCUREMENT

SEE: Michelle Camou (2016). How Urban Governments Promote Worker Co-ops. Grassroots Economic Organizing (GEO). http://geo.coop/story/how-urban-governments-are-promoting-worker-co-ops

11

SUSTAINABLE ECONOMIES LAW CENTER

http://www.theselc.org/worker_coop_city_policies

Ro McIntyre

@redemmas

13

PEP FOODS

14

1. Out of pocket

2. Worker-owner capital account contributions

3. Loans from friends and family

4. Traditional business lending

5. Credit Unions

6. Gift certificates/prepurchases

7. Crowdfunding

8. Philanthropic lending

9. Co-op friendly lenders

10. Direct Public Offerings/ Sales of Preferred Stock

11. HUD 108 Loans/New Market Tax Credits

12. Owner financed conversion

13. Consumer/Worker Hybrid Cooperatives

Annie Sullivan-Chin

@bookkeepingcoop

Maharlika Cleaning Cooperative

A Case Study

16

  • The founding worker-owners of Maharlika Cleaning Cooperative began as members of Damayan Migrant Workers Association.

  • Damayan Cleaning LLC was incorporated and launched in 2015.

  • In 2016, some members parted ways with Damayan Cleaning and formed the cooperative named Maharlika Cleaning.

Maharlika Cleaning Cooperative

A Case Study

17

  • Additional supporting organizations:

    • Center for Family Life (job skills training, e.g. leadership & office management)

    • Urban Justice Center (legal services)

    • A Bookkeeping Cooperative (bookkeeping, financial literacy training - personal & co-op)

Maharlika Cleaning Cooperative

A Case Study

18

A Bookkeeping Cooperative

More About Co-op Accounting

19

Cooperative Corporation (NYS)

LLC (Limited Liability Company)

  • Member investment = share(s) of stock
  • Member investment = capital contribution to owner’s equity
  • Members are considered employee-owners
  • Members are considered owners
  • Members are paid for their labor with salaries or wages
  • Members are paid for their labor with guaranteed payments
  • Members share profit with patronage dividends
  • Members share profit with net profit allocations

Resources & More

20

Urban Justice Center Community Development Project

https://cdp.urbanjustice.org/

Democracy At Work Institute Resource Guide

https://institute.coop/resource-guide

How Worker Cooperatives Work Short Animation

https://www.youtube.com/watch?v=qbZ8ojEuN5I&t=3s

How Can We Make More Money? A Values-Based Finance Education Kit

http://www.toolboxfored.org/the-revolutionary-power-of-financial-education/

Parag Rajendra Khandhar, Esq

Life Cycle of Cooperatives (and Some Legal Issues)

22

  • Idea Phase - coop and biz law basics, structure, feasibility
  • Startup Phase - formalization, financing, contracts
  • Maturation Phase - employment, property, joint ventures
  • Expansion Phase - property, stock offerings, mergers, spin-offs
  • Transition Phase - succession/founder turnover, new business
  • Dissolution Phase - wind-down, assets, conflict resolution

Note: The information shared in this presentation is not legal advice.

What Entity Do I Choose?

23

  • To function most coops formalize as one or more business entities
  • Governed by state law, which differs widely across the U.S.
  • State-recognized entity is container for the cooperative, but internal organization matters the most
  • This is separate and related to federal tax treatment (tax exemption; partnership/corporate taxation; cooperative taxation)
  • Highly fact-specific; there is no one-size fits all answer

Note: The information shared in this presentation is not legal advice.

What Entity Do I Choose?

24

B Corp

Cooperative Corporation

C Corporation

Limited Liability Company

Benefit Corporation

L3C

Nonprofit Corporation

Public Benefit Corporation

Hybrid

What Entity Do I Choose?

25

  • Coop Goals and Values Must Lead - There is no Single Right Answer
  • Form Must Follow Function
  • Internal Decision-Making Process Should be in Place

Note: The information shared in this presentation is not legal advice.

Key Considerations for Entity Choice

26

Note: The information shared in this presentation is not legal advice.

  • Governance / Control
  • Taxation
  • Financing / Equity
  • Employment
  • Other Startup Considerations

Employment Law Considerations for Worker Cooperatives

27

Note: The information shared in this presentation is not legal advice.

  • Employment laws not always a perfect fit for worker coops
  • History of Work in the United States:
    • Stolen labor
    • Stolen wages
    • Stolen lives
  • Community action and movements to demand rights
  • Not waivable.

Employment Law Considerations for Worker Cooperatives

28

Note: The information shared in this presentation is not legal advice.

  • Wage and hour, wage payment and collection
  • Employment non-discrimination
  • Unemployment insurance
  • Workers' compensation
  • Occupational safety and health

Resources for Coop Law

29

  • Community Economic Development / Social Enterprise / Small Business Clinics at Law Schools

  • Co-opLaw.org (SELC)

  • Email me: parag@gilmorekhandhar.com

Discussion and Q & A

Contact Info and Links

Ro McIntyre

mcintyre.roe@gmail.com

Annie Sullivan-Chin

annie@bookkeeping.coop

Parag Rajendra Khandhar

parag@gilmorekhandhar.com

Red Emma’s

redemmas.org

A Bookkeeping Cooperative

bookkeeping.coop

Gilmore Khandhar LLC

gilmorekhandhar.com

http://tiny.cc/converting

AASE May 21 webinar | http://tiny.cc/may21 - Google Slides