Notes on incorporation, co-operation, and solidarity from a one year old co-op.
People are often curious about Hypha’s co-operative status. They ask: How did Hypha get started? How is a worker co-op different from a traditional partnership or corporation? What is it like to run a co-op?
Like other co-ops, we started Hypha as people seeking to satisfy common needs. Having volunteered together on grassroots projects for years, we were looking for stability. We saw how a legal entity would provide organizational scaffolding, allowing us to work on projects we cared about while paying ourselves in the process. It’d be a vehicle for us to do digital coaching, develop p2p and decentralized web (DWeb) apps, and manage IT in a more structured way.
As tech workers starting up in the shadow of big tech monopolies, we had (and still have) a distinct anti-capitalist streak. We wanted a democratic organization with participatory leadership that would care for our community. Drawn to co-operative values and principles we began exploring co-op models seriously. (Check out our playbook for the first planning retreat we held in 2018.)
The seven co-operative principles
- Open and Voluntary Membership.
- Democratic Member Control.
- Members’ Economic Participation.
- Autonomy and Independence.
- Education, Training, and Information.
- Cooperation Among Cooperatives.
- Concern for Community.
Incorporation in hard mode
At first, not all of us agreed that formally incorporating a co-op was worth the effort. Another option brought up was to simulate a co-op: adopt co-operative principles, but incorporate it as a traditional business (a service that startups have disrupted to be as easy as a mouse click). But we were wary of how the impact of small decisions we made, like simulating a co-op, would compound over time and distance us from co-operative ways of doing things. We thought about how we could keep co-operating even while facing efficiency pressures to “move fast.”
In September 2020, MEC, perhaps Canada’s most well known consumer co-op, sold itself to an American private investment firm, after a long and slow erosion of democracy within the organization. An act that caused its founders and members to feel “grief and betrayal.” Despite active organizing through petitions and legal challenges, its members were not able to halt the sale. What happened to MEC is a reminder that it’s not enough to call oneself a co-op. Co-operation is an active pursuit that takes work.
We settled on becoming a formal worker co-op, but soon learned that our mode of financing would affect how we thought about incorporation. Many Canadian co-ops raise equity and incorporate “with share capital.” This approach to incorporation is flexible, allowing a co-op to sell shares to members or other investors, take loans from banks, or charge member fees. After a close vote (4 vs. 3), we decided to take another approach. We incorporated as a non-profit, i.e., without share capital, limiting us to borrow through loans and raise funds through membership fees and potentially social finance bonds. To date, Hypha has been financed entirely by our own labour patronage, member loans, and a couple support grants given to us by CWCF.
Our (esoteric) choice of being a non-profit worker co-op, a forgotten cousin in the family of business entities, continues to present unique and amusing challenges. When we first went to file our incorporation papers, the Service Ontario representative helping us at the desk didn’t recognize the forms or believe an entity like ours was possible at all! Even now, accountants and other professionals tell us, “oh I work with non-profits” or “we do co-ops,” but that doesn’t transfer easily to questions we have as a non-share capital co-op (in our experience, non profit act intuitions have proven less applicable in most contexts). We’ve even drafted an explainer in our handbook to clarify our own understanding!
The memetic effect of principle six
Corporations seeking “business friendly” jurisdictions to skirt the laws should become co-ops in Ontario. In our experience, co-ops here seem to have little regulatory oversight and no one knows the rules with certainty. We were receiving a barrage of contradictory information from official online sources. So we approached folks from other co-ops for help, setting up a series of calls to learn more about their co-operative and how they decided to incorporate.
Our fellow co-operators, keepers of arcane regulatory knowledge, guided us through the incorporation process and development of bylaws. When we thanked them for their generosity, they’d shrug it off and say, “Principle 6.” Seeing the principle of “Co-operation Among Co-operatives” put into practice in everyday interactions was inspiring and reassured us that we were on the right course. It’s a phrase we love and have latched onto since.
We’re grateful to Fourth Pig, Anarres (RIP), Root Systems (RIP), Fiqus, Camba, FACTTIC, CWCF, and many others who’ve guided us along the way.
Building the solidarity economy
Participating in the co-op movement has been a respite from the broader individualizing and neoliberal society we’re trapped in. It has reaffirmed our belief that organizations who value solidarity, not private benefit, are more vital and resilient.
Our experience here isn’t unique. Disenfranchised from capitalist economies, a growing number of tech workers are joining the co-operative movement. New models, like platform co-operativism, have emerged as alternatives to the dominant extractive forms of tech businesses. Tech workers are taking collective action, demanding better pay, equitable workplaces, and asking corporations to take responsibility for the social harms inflicted by technological practices.
This co-operative moment couldn’t have come sooner. As we rebuild our economy in the wake of COVID-19–and during this false calm that precedes reckoning with our looming climate crisis—we need interdependent, community-oriented, democratic, and ecologically-conscious organizations to take back our economy and ensure we have a just recovery for all. We’re excited to stand with others working to that end.
This is the inaugural post of Hypha’s new blog, Dripline. Through Dripline, we’re hoping to share our experiences and reflections as we learn and build technologies together. It’s also an invitation to our friends and neighbours: come help us build the solidarity economy. Principle 6.
We’re excited to hear from you! Reach out if there are topics you want to discuss or you think we should cover in future posts. Our email is: dripline@hypha.coop