What Is a Cooperative?
A cooperative is an organization owned and governed by the people who use it — not by outside investors, and not by a small group of founders who hold concentrated equity.
The International Cooperative Alliance defines cooperatives through seven principles, all of which RegenHub adopts:
- Voluntary and Open Membership — open to all able and willing to accept the responsibilities
- Democratic Member Control — members set policy and make decisions
- Members' Economic Participation — surplus flows to contributors, not to capital alone
- Autonomy and Independence — self-help, controlled by members
- Education, Training, and Information — members and the public are informed
- Cooperation among Cooperatives — strength through connection
- Concern for Community — sustainable development beyond membership
In a conventional corporation, each new investor or employee receiving equity dilutes the stakes of everyone who came before. Power stratifies with capital. In a cooperative, everyone holds one vote regardless of their contribution level. Economic reality converges rather than diverges.
Why a Colorado LCA?
Colorado's Limited Cooperative Association statute (ULCAA, C.R.S. Title 7, Article 58) was specifically designed to solve a problem that older cooperative law couldn't handle: what if a cooperative needs outside capital, but doesn't want to surrender democratic governance to get it?
Traditional cooperative structures couldn't easily accept equity investment from people who weren't active members. Traditional corporations couldn't easily implement democratic governance or patronage-based distribution. The Colorado LCA bridges both.
How It Works
The Colorado LCA allows a cooperative to have multiple membership classes with different rights and obligations. Critically: investor members can provide capital without gaining voting rights. The cooperative can receive funding without losing its soul.
Patronage — the distribution of surplus to contributors — can be structured across multiple forms of contribution: labor, revenue generation, capital, and community-building. Not just money.
The Public Benefit designation adds an additional layer: the Board of Directors is legally required to balance financial performance against the cooperative's stated public benefit purpose. Directors cannot simply maximize profit — they must weigh it against the mission.
| Form | Who owns it? | Who governs? | Surplus flows to? | Outside investment? |
|---|---|---|---|---|
| LLC | Members / founders | Per operating agreement | Pro-rata to capital | Yes, dilutes control |
| C Corporation | Shareholders | Board elected by shares | Pro-rata to shares | Yes, dilutes control |
| Traditional Co-op | Members | One member, one vote | Patronage to contributors | Difficult |
| Colorado LCA (us) | Member-owners | One member, one vote | Patronage to contributors | Yes, without surrendering governance |
The statute was developed through the work of Linda Phillips and Jason Wiener, Colorado cooperative law specialists. It has since become a model for cooperatives that want to combine democratic ownership with capital access.
Membership Classes
RegenHub has four membership classes. Each class is designed for a different relationship with the cooperative. Only Class 1 holds voting rights.
Cooperative Member
Full participation rights: governance, patronage, and operations. The builders, organizers, and stewards of the cooperative's core work. One member, one vote.
Co-working Member
Patron member who participates primarily through use of the co-working space and community resources. Generates patronage through their economic relationship with the cooperative.
Community Participant
Access to programming and community events. The broadest ring of the community — people attending gatherings, learning sessions, and studio events.
Investor Member
Non-voting member who contributes capital to the cooperative. Provides funding without gaining governance control. The LCA form makes this structurally clean.
The Board retains authority under Colorado law to create additional membership classes as the cooperative's needs evolve.
What Is Patronage?
Patronage is the cooperative's mechanism for distributing surplus to the people who created it — based on what they contributed, not just how much they invested.
In a conventional corporation, profit distributions (dividends) are proportional to equity ownership. Own 10% of the shares, receive 10% of the dividend — regardless of how much work you did, how many customers you brought, or how deeply you're embedded in the community.
Patronage works differently. The cooperative tracks multiple forms of contribution over a period:
- Labor — the hours you worked, the skills you brought
- Revenue generation — business you sourced or facilitated
- Capital — financial contribution to the cooperative
- Community — relationships, mentorship, cultural stewardship
At the end of a period, surplus is allocated across these categories. Contributors receive patronage in proportion to their contribution in each category. This means that someone who contributes enormous labor but no capital still participates meaningfully in the cooperative's surplus — and vice versa.
The patronage system is being designed and is not yet operational. The infrastructure — partnership agreement provisions, accounting systems, and period-of-record — is being built now.
The Economic Memory System
The cooperative structures its economic return across three time horizons:
This structure is intentional. Short-term contributions are recognized in the current period. Long-term contributions compound over time. The cooperative rewards sustained participation, not just initial investment.
The Public Benefit Designation
RegenHub is organized as a Public Benefit Limited Cooperative Association — combining the Colorado LCA structure with the Public Benefit Corporation Act (C.R.S. Title 7, Article 101, Part 5).
This designation is not marketing. It is a legal obligation. The Board of Directors is required to:
- Balance the financial interests of members against the cooperative's stated public benefit purpose
- Consider the interests of materially affected stakeholders — not just members
- Publish an annual benefit report assessing performance against the public benefit purpose
The public benefit purpose cannot be removed without a two-thirds supermajority vote of all members — it is encoded in the Articles and protected against simple majority repeal.