Legal Structures for Social Transformation

Sometimes it feels like our work at Sustainable Economies Law Center makes a sudden leap forward, and I’d like to share how that just happened. In December, we hosted a launch party for two cooperatives we’ve been incubating for more the two years, the East Bay Permanent Real Estate Cooperative and People Power Solar Cooperative. Over 250 community members and 30 sponsoring organizations showed up to celebrate. By the end of the night, each cooperative signed up more than 80 members to buy shares, thereby raising seed capital for their first projects and spurring a lot of excitement and hope. 

Going beyond these outward signs of success, I’m even more proud to share what’s happening at a deeper level with the cooperatives: A culmination of best practices, cultural shifts, and innovative structural elements that make these cooperatives microcosms of social transformation and powerful platforms for movement-building and systems change. I’ll try to summarize it here, though I suspect we’ll be spending coming years unpacking it, discussing it, and helping it spread. 

First, I’d suggest that you click to open the easy-to-read cartoon Bylaws of EB PREC and of People Power, since much of the unique legal DNA of the two cooperatives is expressed there. Here are seven elements that make the cooperatives powerful and how they show up in the Bylaws:

1. Movement cooperatives, not just consumer cooperatives:
Unlike conventional housing cooperatives or energy cooperatives, which are formed to provide housing or energy to their members as consumers, EB PREC and People Power could be described as movement cooperatives. They exist not only to provide housing and energy, but to build large membership bases and serve members’ collective goals to transform our systems for land ownership and control of energy. EB PREC and People Power envision building memberships of hundreds or even thousands of community members. (For both cooperatives, see the Bylaws sections on Becoming an Owner.)

2. Decentralized organizations designed to grow from the grassroots:
In the words of EB PREC’s Bylaws: 
”We want to spread power to as many people as possible through a decentralized structure where small groups of Owners are in the driver's seat of the Cooperative’s activities. We prioritize decentralized governance because it builds people power, creates resiliency, and fosters a strong sense of community ownership, activating people to protect and steward land in the long-term. The activities of the Cooperative will therefore be spread out among small semi-autonomous groups that will be accountable to the whole.” EB PREC and People Power are designed as backbone organizations, acting as conduits of financing and providers of technical and administrative support to many small groups organizing to acquire properties or build solar projects. The mandate to foster organizing from the ground up is embedded in the legal structure of both organizations. (See the Bylaws sections on “Spreading Power,” “Owner Groups,” and the “Governance Overview.”)

3. Self-managed staff collectives:
The day-to-day work of EB PREC and People Power is carried out by self-managed staff collectives. We view this as critical to building power for members and activating grassroots economic organizing, because self-management gives every staff person the power to take action in response to the needs, visions, and projects of the cooperatives’ members. Another way of saying it: Members express their power through and in close collaboration with the cooperative staff, so if staff don’t have power, then members don’t have power. The Law Center – through our own practice and support of dozens of other organizations – has developed expertise, resources, and regularly sold-out workshops on
worker self-governance, and we’ve embedded it in the legal structures of EB PREC and People Power. (See the sections on the trusteeship role of the cooperatives’ staff beginning on pages 29 of both Bylaws.) We believe that the deep intrinsic motivation of workers – even in real estate and solar companies – is a critical resource to tap for social change, and we can only tap it if we give power to all workers. 

4. Building collective power with community capital:
Anyone in California can buy a share of EB PREC or People Power for up to $1,000 per person, and the cooperatives have already raised $80,000 and $30,000 in shares, respectively. Each real estate and solar project will be partially or wholly financed by capital sourced from a broad base of community members. Importantly, community capital is not just a way to raise money; it’s a way to build power for the community. The cooperatives enable many people to pool their resources and use that collective power to leverage other capital to carry out projects in their own communities. The Law Center has worked for years to pave a legal path for everyday people to invest in their local economies, so we’re thrilled that this is coming to fruition. Learn more in this blog post, and see the financial sections beginning at page 39 in both Bylaws, as well as EB PREC’s section on “Becoming an Investor Owner,” and People Power’s section on “Becoming a General Owner."

5. Non-extractive financial structures:
EB PREC and People Power plan to build and hold critical assets for our communities, so it’s imperative that we create enforceable protections against profit extraction or other imbalances that could arise from excessive return on capital, excessive land prices, excessive pay to executives, or low wages to employees. The Bylaws apply floors and caps on financial benefits and compensation, balancing the benefits provided to their multiple stakeholders, including investors, workers, residents, and consumers. (See the Bylaws sections entitled “Non-Extractive Finances.”)

6. Legal structures for permanent community ownership:
EB PREC and People Power use a suite of protections against commodification of the organizations and their resources. Outside organizations and individuals hold board appointment power and veto power over attempts to change essential structural elements, sell land or other resources, or liquidate the organizations. EB PREC also has a mandate to protect land by giving other organizations, like land trusts and local Indigenous tribes, purchase options and rights of first refusal to prevent the land from re-entering the speculative market. The vision is for both organizations to be permanent title-holders of their community-owned resources. (See the Bylaws sections entitled “Permanent Community Stewardship,” “Vision Protectors,” “Appointed Directors,” and “Closing or Selling the Cooperative.”)

7. Participatory legal documents that deepen collective understanding:
Even while they contain complex and innovative legal components, the Bylaws are written in plain English, with cartoons, and other diagrams that make them understandable even to a high school student who test-read them for us. Bylaws like this enable high levels of stakeholder participation in their creation, which yields countless insights into the process of developing legal structures, and creates operating rules that are aligned with the culture and work happening on the ground. To refine these documents, we held many lively and engaging discussions with the cooperative staff. This process built a core of leaders with deep understanding of and buy-in to the complex legal structures we created. The process was emblematic of a broader goal of the Law Center: We want to bring law and policy down to earth so that everyday people can actively shape the operating rules of their own communities toward social transformation.

Thanks to our Partners and Collaborators: