Distributed Manufacturing... notes + discussion pre-Panama GOSH

Hi all. As you know there’s a group of us @jcm80 @Stephload @amchagas (@Nat_Irwin but he’s now at another job) who’ve been continuing to pursue this distributed manufacturing idea. The goal is to create a common organization to support developers to get products into the world, and support manufacturers with a line of open source products and sufficient sales to grow.

In Argentina had similar conversations with @nanocastro @pablocremades and @jarancio as well. Based on those conversations, it seems there’s potential for this idea to grow the movement in South America also.

This is a topic I want to discuss at Panama GOSH a lot, so I’m posting some notes here to get people thinking about it.

Background

New Stuff

Today I met with Matt Bower, a US lawyer, who provided some information about legal structures and how they relate to our desired goals. Notes are below. I’m hoping to follow up with another coop expert here in ann arbor to take additional notes. If I do I’ll post them here as well.

Conversations with Matt Bower (lawyer)

About cooperatives in the US

A cooperative isn’t an entity in the face of the state like a limited liability corporation, or a c-corp, or a partnership, etc. A cooperative is just a way to set up an organization (governance). It can be a non or for profit and can be a range of actual organization types in the face of the state.

Most cooperative lawyers in the US are familiar with housing cooperatives or trade cooperatives… this is something that’s unique because it’s a mix of a producer cooperative and marketing cooperative… so likely we’ll need to create some new structures.

Setting this up as a 501c3 (tax exempt) non profit in the US

  • tax exemption would not allow members to have a stake in the business, so you cannot have a model in which beneficiaries (devs and manufacturers) have governance roles (are on the board)

  • it’s possible to be a non-profit, but can’t be tax exempt.

Can we set this up inside GOSH?

  • Well, yes, but then none of the members (devs, manufacturers) would or even could have any role in governance (couldn’t be on the board, etc.).

  • It may also be a bit more complex in getting additional services (finalizing a product, marketing, etc.), to ensure that there’s no conflict of interests.

  • This feels like a no go, but I suppose if dev’s and manufacturers are OK without any governance in the process, then maybe it’s ok (?)

What about setting it up as a subsidiary of GOSH

  • Basically this only adds complexity. A subsidiary is build to eliminate double taxation of money flowing up from the subsidiary to the parent… in our case, that’s not the goal.

  • It wouldn’t help the distributed manufacturing group raise funding through the non-profit… it would actually probably only make it harder.

So a for- or non-profit cooperatives using c-corp or llc is probably right

  • The only thing is it can’t be a 501c3 because we want members to also have governance.

If it’s a cooperative, what country should we make it in?

  • We chose the US because we already had people here, and because when moving money around, the dollar is a really convenient common currency (transactions to a from).

  • However… other countries actually have cooperatives as a legal structure, perhaps with additional rights or benefits (?)… it’s possible there are enough benefits to that to make it compelling to work another place.

General questions about structure

Just to note - We’ve discussed these a lot already, but just posting here to give a flavor of the questions that need to be answered while setting up this org.

  • is there a board?

  • is there an ED?

  • what are the rights / obligations membership

  • what are the rights and benefits of membership

  • what are the membership dues

  • goals and mission of company

  • what are the terms of those agreement

  • how are we going to fund this to get started?

Next steps

  • Greg will see if I can talk to this cooperative guy in Ann Arbor… he’s worked on a wide range of diverse cooperatives and may have some good examples or provide some interesting answers to how to structure this.

  • Meet again before GOSH panama to prepare to present and discuss this idea.

3 Likes

@gbathree Thanks for the update! Please post your discussion notes from Panama on this topic for those of us who aren’t able to be there. I’ll be interested to watch your progress.