Here's a new proposed Foreign Partner Contract for countries that form a nonprofit expressly to promote the CGB project. See what you think.
Sam Cooley and I agree that in Sweden (or any country whose primary language is not English) a good first step is to translate the core pages of the website and core printed publicity materials.
Post edited 4:44 am – November 4, 2009 by niklashogberg
Hi!
I was so inspired by the meeting with you Sam today, so I created this proposal for the foundation's aims – translated from Swedish by Google, so the language might be a little funny here and there…
The Foundation's purpose
The Foundation's purpose is to promote sound banking ethics as the foundation (base/platform) for a sustainable society that benefits everyone.
Good banking ethics is banking that operates within the framework of the planet's ecological limits, and thus contributes to building a sustainable society. A "good bank" serves all sectors of society – public and private – rather than bank owners' private profit. In all activities, it contributes to reverse unsustainable financial flows so that local communities and economies are stimulated and more people will have more financial flexibility. The profit goes to non-profit activities, both locally and globally. A good bank is characterized by transparency and democratic influence. Banks without profit can be operated by the State or by private actors.
Focus of activity
The activity aims:
1) To educate and raise awareness on the problems that arise through private profit-driven banking, as well as the possibility of publicly-owned banks – by state or by communities – where activities are subject to environmental laws and profit is directed back the community for the benefit of living local economies and democracies.
2) To promote the establishment and spreading of banking activities, or the equivalent, that stimulate local economies and democracies, and spread prosperity to the many. This includes the possibility that, if the need is identified and the necessary resources exist, the Foundation can contribute to the formation of a bank driven by these principles, either through a subsidiary, or in partnership with another actor. The Foundation shall not perform banking business within its own organization.
3) To interact with other partners/players/actors in Sweden and globally, operating in the same spirit and in accordance with the guidelines set out in these Statutes and other founding documents.
Objective 1 and 2 focus primarily on Sweden, secondarly on the Nordic and Baltic States and in third place worldwide. Objective 3 Priority cooperation without geographical considerations.
Post edited 11:35 pm – November 2, 2009 by wspademan
Do you mean that the member's democratic influence, including voting and meeting processes etc (or whatever it consists of), is regulated in The Depositors Association Covenant? Do you have a link to this?
Yes and no. Most of the process will be described online and the covenant will merely refer to the process. Neither the formal description of the process nor the covenant has been written yet.
With this solution, I guess it might not be necessary with a formal member organization… It might be enough to have a non-profit foundation as the organizational platform, even if the foundation in itself is not a democratic form (since it can be dedicated to empower local democracy and economy)… What do you say?
Agreed.
Another thing… What if the computer-based system collapse? How to prepare for more difficult times – which hopefully might not occur – including the possible need of maintaining local economies without the Internet infrastructure? I guess this involves education about the basics in local economics, for instance. This guestion might seem far-fetched, but in order to chose a specific structure to build on, I think it's good to look at the wider picture…
Yes, I agree. Some third world self-help microfinance models are very similar to the common good bank model. For example Oxfam's Savings for Change program creates democratic local banks that not only don't require computers, they don't even use written records! The ommon good bank model does not yet have any well-developed fall-back system for technological communities in case of system-wide computer failure (which would include internet failure). I am creating a new forum topic for that here: Fallback for Technological Failure.
What about taking out 13 G (regarding research stage) and making a new paragraph of it, before the current paragraph 13?
Good idea. Done.
- Regarding 28 B… Still, given the culture I live in, it feels a little bit dishonoring to terminate the contract for any reason or for no reason at all upon 14 days' notice. It feels a little "American"… 30 days would be a better way of honoring the mutual relationship…
I see your point. But this is a dilemma. If a contractor or partner abuses the common good bank name or logo by doing something illegal or unethical, then we really want to be able to terminate the contract immediately, not just in 7, 14 or 30 days. (I'm not worried about YOU, by the way, but we want this contract to work in other countries and situations too.) So I am revising the proposed contract to give any two parties the right to terminate immediately (or with any amount of notice). I haven't gotten the wording right yet, but will upload a revised version soon.
Regarding the contract draft… It works much better with the section "Long-term commitment" included! Now it begins to feel like an "opening for action".
I still have two questions:
- What about taking out 13 G (regarding research stage) and making a new paragraph of it, before the current paragraph 13? For me, it's difficult to take any action before I have done the necessary research regarding what will be needed to have a long-term future for the work… This might be a specific need for new countries and is not as relevant within the U.S.?
- Regarding 28 B… Still, given the culture I live in, it feels a little bit dishonoring to terminate the contract for any reason or for no reason at all upon 14 days' notice. It feels a little "American"… 30 days would be a better way of honoring the mutual relationship…
Do you mean that the member's democratic influence, including voting and meeting processes etc (or whatever it consists of), is regulated in The Depositors Association Covenant? Do you have a link to this?
With this solution, I guess it might not be necessary with a formal member organization… It might be enough to have a non-profit foundation as the organizational platform, even if the foundation in itself is not a democratic form (since it can be dedicated to empower local democracy and economy)… What do you say?
Another thing… What if the computer-based system collapse? How to prepare for more difficult times – which hopefully might not occur - including the possible need of maintaining local economies without the Internet infrastructure? I guess this involves education about the basics in local economics, for instance. This guestion might seem far-fetched, but in order to chose a specific structure to build on, I think it's good to look at the wider picture…
Yes, it seems unlikely that JAK would want to support the CGB project, but it's probably worth asking. Maybe there are other organizations in Sweden that promote sustainability or microfinance or that fight world hunger — and maybe one might take this on. Starting a new organization can be a lot of work, but getting an existing organization to consider a new project can be a lot of frustration. Do whatever works best and easiest.
Regarding "stock-based…". This might be about a language/translation problem. You are talking about "shares", which sometimes is translated into Sweden as "stocks". So I'm not really promoting a stock-based corporation in the way it seems to show up for you, at least not in the pre-national bank stage. I'm just looking for a simple way of allowing "members" to have "shares", to have it be democratic. So when depositors have a share in the central CGB, the thought would be that they have a corresponding share in the Swedish non-profit company that later on would turn into a national bank… Regarding profit, it would be fully used for community projects or sharity, as in the US.
Actually I am using "shares" to mean shares of stock. CGB members will be depositors and will own stock in the bank. Until there is a Swedish national CGB, members will own stock in the central CGB. This is necessary in order to keep the CGB's capital ratio up to the required minimum. In the US model, the Depositor's Association will not be a formal organization. It will have no employees, no officers, no meetings, no income and no expenses. Any assets it needs will be owned by the nonprofit. (So, as you suggest, it is in effect merged with the nonprofit.) The Depositors Association will be merely a contractual relationship among the member depositors and the CGB.
What do you say about this solution? In short: Stage 1) Establishment/research process; Stage 2) launch foundation + association (empowerment respective participatory structure); Stage 3; launch national bank…
Sounds perfect.
…I thought you mentioned that according to the regulations, only shareholders can be members..? How do you solve that?
The Depositors Association Covenant (the contract that people sign to become members rather than simply depositors) requires members to own stock. We simply make it much more attractive to be a member than no to be. A Common Good Account is a members-only account at the CGB. CGBs will offer standard (non-member) deposit accounts too (as required by law), but we do not expect very many people to use them.
- Can a depositor influence the work of the national bank, or just the community division?
As much as possible, the national bank will be just a structure that gives power to community divisions, so there will be little reason to influence it. However, there will be a democratic way for all depositors together to change the national bank's rules. The details of that have not yet been spelled out. Some things will not be allowed to change (such as dedication to the common good).
- Is there any relationship between grants and shares? That is, will the grants be turned into shares when the bank opens?
No. No relationship.
If a Swedish person wants to buy a share in CGB, what would that look like? If he or she buys shares in the "central" CGB, this has to be transferred in some way to the Swedish national CGB when/if we move into that stage of the development.
Swedish members will buy stock in the central CGB when they sign the covenant. When the Swedish national CGB opens (The founding of the Swedish CGB must first be approved by a large majority of Swedish CGB members), all residents of Sweden will become members of the Swedish CGB and their membership in the central CGB will end. They will automatically sell their stock back to the central CGB will automatically buy that same amount of stock in the Swedish CGB instead. This must all be written into the CGB's articles of organization and into the Depositors Association Covenant.
Post edited 9:16 pm – October 30, 2009 by wspademan
Well, there does exist a Swedish nonprofit that "educates the public about the problems with the traditional banking system and the possibilities with publicly owned banks where the profit/interest is brought back into circulation through grants to community projects and charity."
But this nonprofit – JAK – already has its own banking system. Not the same as CGB, but a system where the "profit part" of the interest is taken away (instead of given to community/charity projects). It has a quite slow growth, I think CGB's expansion potential is much greater.
2. You write "nonprofit company" and "cooperative", but then it sounds like you are envisioning shareholders and profits, so I am not clear on what you mean there. I think you will want to avoid creating a stock-based corporation (other than eventually the Swedish National CGB), since that would entail an overwhelming amount of additional paperwork (reporting to government agencies) as it grows. One function of our nonprofit is the ability to accept tax-exempt donations and grants.
Regarding "stock-based…". This might be about a language/translation problem. You are talking about "shares", which sometimes is translated into Sweden as "stocks". So I'm not really promoting a stock-based corporation in the way it seems to show up for you, at least not in the pre-national bank stage. I'm just looking for a simple way of allowing "members" to have "shares", to have it be democratic. So when depositors have a share in the central CGB, the thought would be that they have a corresponding share in the Swedish non-profit company that later on would turn into a national bank… Regarding profit, it would be fully used for community projects or sharity, as in the US.
3. The common good bank plan includes an important third organization, which has no employees: the Depositors Association. In the U.S. effort, we very carefully separated the banking functions (which are highly regulated) from the Depositors Association functions. The Depositors Association can be and SHOULD be almost entirely automated. Part of the beauty of common good banks is that they require almost no overhead. We do not want to create another big beaucracy. We merely want to empower communities to help themselves and others.
I understand and agree on simplicity and empowerment. What is the exact function of Depositors Association? To provide an organizational structure for the local democratic participation of depositors? This is one of the functions I have seen for the Swedish "platform" in my thinking. On the same platform I have also placed the second function, corresponding to "Society to benefit all" in terms of empowering the communiy structures (with courses, materials etc…). I thought I could use a cooperative company form to cover both of functions, but I guess that it cannot receive tax-deductable grants… Maybe it would be better to launch two organizations at the same time: The empowerment function in form of a non-profit foundation (that is partner to CGB and can receive grants) and the organizational structure in form of a (invisible/automated) non-profit democratic association tied to the foundation. Then there are two of three legs/functions launched, if we want a structure that mirrors the one in the US. If we reach the stage of a national CGB, the foundation can own the bank in its turn, or collaborate with another part… This could be one of the aims of the foundation.
What do you say about this solution? In short: Stage 1) Establishment/research process; Stage 2) launch foundation + association (empowerment respective participatory structure); Stage 3; launch national bank…
4. You ask
"Here I have one question, whether members in the company would be only shareholders or both shareholders and depositors..?"
I assume you mean members in CGB. In general they will be both.
Yes, but I thought you mentioned that according to the regulations, only shareholders can be members..? How do you solve that?
More questions:
- Can a depositor influence the work of the national bank, or just the community division?
- Is there any relationship between grants and shares? That is, will the grants be turned into shares when the bank opens? If a Swedish person wants to buy a share in CGB, what would that look like? If he or she buys shares in the "central" CGB, this has to be transferred in some way to the Swedish national CGB when/if we move into that stage of the development.
Post edited 10:02 pm – October 28, 2009 by wspademan
Niklas, This sounds good. Essentially you want to create (or recruit) in Sweden an organization that will do what our nonprofit arm (Society to Benefit Everyone) does here in the U.S.: promote, set up, and support community divisions before and after the first CGB is established. Plus you want it to create an independent (but cooperating) Swedish National CGB much later on.
1. You may be right that it is best to create a new nonprofit, rather than recruiting an existing one. However, there are probably already some Swedish nonprofits that
"educate the public about the problems with the traditional banking system and the possibilities with publicly owned banks where the profit/interest is brought back into circulation through grants to community projects and charity."
So if one of them wants to take on the CGB project, that might be easier than creating a new organization.
2. You write "nonprofit company" and "cooperative", but then it sounds like you are envisioning shareholders and profits, so I am not clear on what you mean there. I think you will want to avoid creating a stock-based corporation (other than eventually the Swedish National CGB), since that would entail an overwhelming amount of additional paperwork (reporting to government agencies) as it grows. One function of our nonprofit is the ability to accept tax-exempt donations and grants.
3. The common good bank plan includes an important third organization, which has no employees: the Depositors Association. In the U.S. effort, we very carefully separated the banking functions (which are highly regulated) from the Depositors Association functions. The Depositors Association can be and SHOULD be almost entirely automated. Part of the beauty of common good banks is that they require almost no overhead. We do not want to create another big beaucracy. We merely want to empower communities to help themselves and others.
4. You ask
"Here I have one question, whether members in the company would be only shareholders or both shareholders and depositors..?"
I assume you mean members in CGB. In general they will be both.
Post edited 9:18 pm – October 28, 2009 by wspademan
I keep thinking about the partner NGO… Do you really think it works to bring in another organisation as the key player in a country? Maybe it's best to start a whole new NGO – I would say a foundation – with two purposes; 1) promotion, fundraising and ongoing support of CGB communities, 2) when the time is right, initiate a national CGB (or co-operate with someone else to do it). As I have told you, GoodCause is a foundation that starts non-profit companies, so I know a foundation can do it. And a foundation is good when you know the exact purpose from the beginning. I guess it still can promote local democratic processes even if a foundation in itself isn't democratic.
Every time I think of it, I seem to get to the conclusion that some kind of national platform is needed – something that you seem to think too. And is it really a good idea then to try to enroll an existing organisation as a partner? It might work in the communities, but for a country..? Maybe you are lucky sometimes to find the perfect partner, where CGB totally fits into the purposes – like they just were waiting for something like CGB to come around and they are prepared to take it on fully… Then it might be ok. But then again, if not it's much better to start something new with its sole aim of being a partner with CGB… Since it's quite a big job to launch a whole context in a new country with its unique culture, language etc.
One thing is important: To never have a national organisation being top managed from the U.S. That just doesnt work, I have experienced it before. It's the old paradigm, not a partnership with co-creation. If there are clear guiding principles and a clear organizational structure, it will still work to deliver according to the contract.
Here I summarize my reflections so far, regarding establishment of CGB in a new country, like Sweden in this case…
In order to support community activities, I think that some kind of national organizational platform would be required. This will preferably be a non-profit company that is started with the sole purpose of being a contract-based partner to CGB. There will be two stages in the work:
1) Establishment of the company.
2) Service to the establishment and maintenance of community divisions connected to the central CGB (which takes care of the banking activities in stage 2).
3) Transformation into a national CGB bank performing the bank activities.
The regulations of the company would be a mirror of CGB's regulations (except for the banking activities in stage 2). That is, for instance, one person-one vote, and all profit channeled to non-profit projects (50% local). The best form for this company seems to be a cooperative company (ekonomisk förening), which can be transformed into a stock-based corporation in stage 3.
The aims of the company would direct the following areas, as a suggestion:
1) To educate the public about the problems with the traditional banking system and the possibilities with publicly owned banks where the profit/interest is brought back into circulation through grants to community projects and charity.
2) To promote CGB in Sweden through inviting shareholders and depositors, as well as working towards the establishment of a national CGB, either through transformation of the existing company or through mutually benefiting collaboration with another national partner (for instance a partner that can provide capital, good reputition, a slim central organization etc, while CGB can provide a structure for fast enrollment, committed depositors and establishment in local communities).
3) To organize and support CGB's shareholders and depositors in Sweden to get involved in community work, as long as CGB isn't established as a bank in Sweden. Here I have one question, whether members in the company would be only shareholders or both shareholders and depositors..?
This form of company could be started quite quickly, without the need of a specific bank permission. Perhaps the authorities would require the lowest form of banking control, since the company would mediate customers to CGB (at least if the company recieves commission for this). The company might even be authorized to use the word "bank" in its name, thanks to the close collaboration with CGB.
Great comments! I agree with you on all counts. In fact, your #5 addresses a mistake we have been making here in the U.S. I will get to work incorporating that point of view into our policies and practices as well as revising the proposed international contract accordingly.
1) Don't get the "partner" part. Who would that be?
The partner could be any respected Swedish or international nonprofit organization. It could be an organization that you start or one that already exists. The intent is that people will make contributions to an organization, rather than to you personally and rather than sending money to us here in the U.S.
2) … Paragraph 27b, to terminate cooperation with just seven days notice feel a little short to me..?
How about 14?
4) … Is there any step needed to have the system work with the Swedish currency (krona)?
No extra step is needed to work with krona or any other currency.
1) Don't get the "partner" part. Who would that be?
2) One detail… Paragraph 27b, to terminate cooperation with just seven days notice feel a little short to me..?
3) I like the dispute resolution paragraph… It points to new thinking, to a certain spirit..:-)
4) For me there is still something missing in the whole approach for a new country… Maybe there should be a new paragraph before 13 called "National Establishment", which includes certain goals that need to be reached. Some of this is covered in 13g, and that should be moved to the new paragraph so that it clearly belongs to the stage before promotion. The main purpose of the new paragraph is to create a clear opening for action, to be able to stand on a legal platform in the country (even if it's just to have checked that it's ok to have a local community branch of an American bank), before I start promoting in a community. To do research with authorities etc… Is there any step needed to have the system work with the Swedish currency (krona)? Because it's no use to raise money or promote before this is solved.
5) There should also be a paragraph after 13 that speaks to the long-term commitment of the organizer, what that looks like when the first bank has opened. Otherwise there is just a lot of "doing" for the short-term preparatory stage, but not so much about the "being" required. If I just do fundraising and promoting until the bank opens and then nothing… I can't step into that space, it's to small in a way, it doesn't reflect the full commitment behind the actions. For me, a Community organizer from the beginning needs to stand for the sustainable future for the bank in the community. Or if he/she doesn't want to step into that next step phase after 13, there should still be a commitment to make sure that the space is filled with someone else who takes over the "torch". Because if I have brought the project this far, there is a certain responsibility to care for its extension into the future.
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