Cooperative Constructs
Part A
Several years ago, Dick and Barbara Harris were asked to attend an organizational meeting for a newly forming neighborhood babysitting cooperative. The idea was simple. Concerned and caring parents would join together in the cooperative and exchange babysitting services. Although they were not particularly interested in committing to trading babysitting favors, as their children were quickly approaching the age where babysitting services would be unnecessary, Dick and Barbara felt socially obligated to attend the meeting with their two children. Eight other families came to the meeting.
After a brief period of social exchange, Dick and Barbara listened, over the din of children playing, as the organizer, a certified public accountant, explained how the formal accounting for exchanged sitting services would take place. Using specially marked, yet ordinary, poker chips as currency, members of the cooperative would receive an endowment of chips with various colors corresponding to sixty, thirty, and fifteen minutes. When babysitting services were received, "payment" was required, rounded to the nearest fifteen minutes, in poker chips.
Conveniently, no family would need to keep records of whom or how much they owed. With the creation of babysitting currency and some serious remarks about screening other families before allowing them to join, the cooperative was launched-although Dick and Barbara declined to join. Reflecting on some bad previous experiences with not-for-profit organizations, the couple debated, on the drive home, what could be done to satisfy their concerns. Dick was wondering how the members could formally barter services among themselves without organizing as a formal barter exchange and recognizing the receipt of poker chips as income. Barbara was more concerned about babysitting for, or by, parents with whom she had only a passing acquaintance. Even if the barter arrangement were shielded from taxation (an item also not discussed), they both contemplated who would be liable in the event of mishaps.
A. What type of an organization is necessary for the babysitting cooperative?
B. Is there potential for liability for members other than those directly involved?
C. What are the nontax differences between exchanging poker chips and charging $4 per hour?
D. What is the difference between exchanging poker chips and charging $4 per hour from the perspective of the IRS?
E. Assuming you had appropriately aged children, would you be willing to join the cooperative?
F. What, if any, are the intellectual property issues in an isolated cooperative?
Part B
The organizers of Dick and Barbara's cooperative had great success and many inquiries from other neighborhoods on how to organize and operate. After the organizers had helped several other groups form, the time commitment grew to the point that they decided to establish a consulting practice, Cooperative Constructs, and charge fees for providing advice and materials to startup cooperatives. Based on its extensive experiences, Cooperative Constructs had accumulated many stories and experiences and some legal documents. After the practice contracted a videographer to tape one of its organization sessions, a startup package with video and boilerplate agreement documents was ready for distribution.
A. Discuss different organizational structures for Cooperative Constructs and the (dis)advantages of each structure.
B. Identify Cooperative Constructs' intellectual property.
C. What intellectual property protection is appropriate for Cooperative Constructs' materials, organization name, and approach?