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OGM + Lionsberg General Counsel, 2021-04-06

People

Bill Larson, Jordan

Jerry, Charles, Klaus, Pete, Doug

Meeting

Intros

• (not captured in notes)
• Meta: I (Pete) wish I could turn off the Nyan Cat status bar in HackMD

Wrap 1:27

• Bill and Jordan to add legal section to MoU for OGM to look at
• Klaus to suggest to Global Regeneration CoLab
• OGM to socialize and reflect internally

Content of Meeting 0:17

process so far

• alignment
• technical details
• legal details <-- you are here

goals

• rapidly, rapidly replicate model
• global movement
• sustainable prototypes
• structural (..) that lets it replicate
• stewardship
• preserve autonomy
• highlight interdependence
• pragmatically solve problems and demonstrate / model solutions
• learning community / finding answers
• prototype, learn, keep each other safe at each step
• strong pool of knowledge (an OGM core strength)
  • maybe annual conferences where we come together to share knowledge
• change culture
  • concerned about each other
  • concerned about sharing

structure

• organizations
• commons between organizatoins
  • what are the commons?
    • trusts
    • knowledge "seed banks"

directions / options

• fiscal sponsorship route - help OGM spin up an org that can be
  • light, traditional path
  • puts OGM on the path to having its own non-profit status
  • fiscal sponsee has its own organization
• create fractal replication of the Lionsberg structure
  • create a branch, with fractal non-profit+for-profit (clone both)
  • fork + subsidiary that can be autonomous
  • subsidiary is immediately non-profit (instead of 9 months with IRS)
    • subsidiary owns a C corp
  • Delaware 501(c)3 + C corp
  • long-standing for generations; non-profit; tax cap
  • non-profit that is owner of a for-profit
  • Jordan's hypothesis: gets the same useful/valuable structure at a fraction of the time and cost
    • non-profit + C corp = basic fractal building block
  • quick replication, easier to administrate
  • allows for governing documents to be different at different fractal levels
  • for the fractal approach, we then start a 501(c)3 + a Delaware C Corp right away? plus a bank account for each?
    • in Californa and Delaware, a single person can be the director (sole member of the board) of a non-profit
    • a "board" is needed for legal reasons, but we want to evolve governance beyond that
      • "weight friends"
• subsidiary within Lionsberg (sort of fractal)
  • could be spun off
  • owning org would acknowledge up-front that subsidiary can spin out
  • HR, having employees
    • Lionsberg has HR infrastructure already
  • language of "subsidiary" creates some un-comfort
    • better: upside-down, tree trunk
    • maybe: aspen grove
    • would like to come up with better language
  • what does "sovereignty" really mean
    • ownership is a bundle of rights
    • fee simple absolute deed = "ownership", but actually doesn't capture ALL rights

Tree trunk + branches

• shared services in trunk
• some allocation from branches back to trunk to cover costs
• the more we have running in parallel, the better
  • ecosystem diversity
  • can afford better shared services
  • there are already lots of good niche orgs; a lot of it is just connecting

Good services to share

• legal
• governance
• HR

Non-profit

• solicitation registration required in 41 US states
  • non-profits are often not aware
  • includes even a "donate" button on a website or solicitation on Facebook
  • can costs 5-15k per registration
  • centralized donation with an entity

Bill's explanation:

• sometimes non-profit gets into activities that are on the edge of the mission
• too much unrelated profit causes trouble
• vs. "pasture" non-profit (non-profit owns LLC); profit is imputed to non-profit; unanticipated unrelated tax liabilities
• C corp stops that; C corp can allocate profits as it wants, including donations
• C corp can employ people, and lease them to the non-profit
• provide a range of services to other orgs
• equity of C corp has perpetual interest that accrues to benefit of non-profit, not one or a few people
• no estate tax
• no one person owning everything and then selling it all
• all the non-profit values can be expressed in the for-profit world
  • demonstrates values to other for-profit companies

"C corps often don't pay taxes"

• the problem isn't the entity, it's that rich people avoid taxes however they can
• exploiting bugs in international relations
• another problem that isn't the entity is focus on short term profitability
• can do sharing and generosity, rather than extractive search for personal wealth

in sum:

• tax matters
• expression of values
• sustainability, generational, benefit to people

Q: how about a franchise model?

• values preserved by franchisor
• compatible with C corp
• "soft franchising"
  • could be licensing agreement
  • could include revenue sharing

Other orgs

• Global Regeneration CoLab

Other Notes

• the Zeiss organization is a favorite example of steward ownership
• someone says "social franchising" for bottom-of-pyramid... https://www.dummies.com/business/start-a-business/3-types-franchising/
• the next chapter after "the nature of the firm" and "coase's penguin"
• nothing can be sustained without the social and moral values to sustain it
  • pure democracy = stupid mob can take over
• discernment by the “weighty quakers” - “sense of the meeting" - “weighty OGMers”
  • Weighty Friends and Quaker Pharisees

References

• fee simple absolute (Wikipedia)
• Global Regeneration CoLab

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