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Author Topic: To incorporate or not to incorporate?  (Read 3187 times)
nate
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« on: August 06, 2008, 01:31:26 AM »

That is the question that is rarely asked.  Or rather we should ask, when, if ever, is the right time to incorporate?

The latin roots of in-corpor-ate suggest "entry" into a "body".  Into what body do we enter when we we incorporate?  The state and federal body, a web of statutes and regulation creating and defining a seemingly endless series of duties, obligations, and liabilities among the involved parties.  The upside of this is that we may find benefits in this system of regulation that we like.  The downside is that we may find it infringes on our ability to organize or govern in novel or creative ways, or puts a financial burden on the coop that interferes with its ability to carry out its mission.  For example, from the moment of incorporation we set the timer running on all sorts of obligations - filing forms and paying fees to the state, having meetings, elections, tax and insurance liabilities etc.  We may or may not want to do this stuff, but once we incorporate, we have to.  That is not to say that these things are bad, but we should consider the balance of benefits and burdens and what we need now.

There are three basic governing documents for a consumer coop: Articles of Incorporation, Bylaws, and Policies.  The Articles are only a page or two, are filed with the state, and do little more than give the coop a name and a start date.  The Bylaws mostly deal with corporate structure - the organization of the Board, elections, member initiatives, etc.  The Policies are where the ethical meat of a coop is found, where its mission is memorialized and its principles made explicit.  The progression Articles --> Bylaws --> Policies is one from form to content and from procedure to principle.

Although the details of the Articles and Bylaws have some importance, developing them before we work on the mission statement for the coop and its policies is a bit like putting the cart before the horse.  I suggest we try to put together some substantive policies while concurrently doing the Articles and Bylaws. 

To that end, perhaps people interested in taking a role in writing policy can begin to familiarize themselves with the Policy Goverance model:

http://www.carvergovernance.com/model.htm

It is a pretty good system for writing, organizing, and implementing policies for ethically-minded businesses.  It is in wide use among consumer coops in the USA and I believe England too.  I am a reluctant convert.
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Ilsa
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« Reply #1 on: August 06, 2008, 01:14:17 PM »

The Carver Policy Governance model looks useful, Nate. I'm looking forward to studying it. Thanks for pointing us to it.

Ilsa
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Rita
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WWW
« Reply #2 on: August 06, 2008, 06:20:23 PM »

If you decide to incorporate as a nonprofit, there are some downsides that people may not be aware of.  Here's a recent article on how the Patriot Act is now being used to squelch the efforts of charities:

http://www.truthout.org/article/the-patriot-acts-war-charity

Until the Shift, it may be more savvy to incorporate as a for-profit organization in a state that has built-in protections, such as Nevada.  If that's of interest, a good place to get help is Laughlin Associates in Carson City, NV. 

http://www.laughlinusa.com

You are probably aware that the entity doesn't have to be physically located in a particular state in order to incorporate there.  Certain states have superior privacy and asset protection provisions, and you may be better off incorporating there.
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Rita Glover
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