BUFFALO MOUNTAIN FOOD CO-OP
EXPLANATION FOR PROPOSED BYLAWS
Bylaws describe the rights and responsibilities of the organization: in our case the members-owners and board of directors of the BMF Coop. They are not intended to describe the operations of the organization, since the operations are more subject to change.
The proposed changes in the bylaws are intended to provide for clarity and simplicity. In general, we’ve cleaned up grammar and spelling, and deleted, revised, reorganized and/or consolidated sections. We have not changed the basic rules governing the coop in any fundamental way.
In reviewing and reflecting on the proposed changes we suggest you view both versions of the bylaws – current and proposed – side by side. We this will help you compare and contrast and identify any questions you may have.
SECTION I ORGANIZATION
We’ve simplified this section by eliminating Location (not necessary for bylaws), relocating Duration (moved to Article V – Dissolution in proposed bylaws), and restating Purpose as Ownership and Purpose (replaced with simpler statement, and moved the details of the current version to the ends policy & membership handbook).
SECTION II: MEMBERSHIP
We clarified this section so that it describes more clearly the rules governing membership rights and responsibilities, including eligibility, nondiscrimination, admission, rights, responsibilities, termination, return of equity, unclaimed property and non-transferability.
We have relegated some of the rules governing membership (classes of members, rights of non-members, members of other coops, special arrangements – senior citizens, non-profit organizations, members of other coops) to the collective, in keeping with the operational management of the coop. The board will continue to review the collective’s decision regarding these issues, and advise when necessary.
NOTE RE. SENIOR MEMBERSHIP AND DISCOUNT
- The current bylaws state: Those qualifying as Senior Citizens are entitled to free membership and working member prices.
The proposed bylaws leave this decision to the collective.
NOTE RE. MEMBERSHIP FEES & PROPOSED EQUITY SYSTEM
We are proposing to replace membership fees with an equity system. The following is an explanation for why we believe this is a prudent way to proceed.
- Buffalo Mountain Co-op is owned by its members. As things stand now, every member is required to pay an annual membership fee, with the amount set by the Co-op Board. The Board would like the member-owners to approve a switch from an annual membership fee to an equity system. The Board would determine the amount of a full equity share (at nearby co-ops it ranges from $75 at St. J Coop to $180 at Hunger Mountain). This amount can be paid in full at any time, or with annual payments equal to what owner-members now pay as a membership fee.
- The Board believes that an equity system offers benefits for both individual member-owners and for the Co-op as a whole:
- As things stand now, membership fees are considered income for the Co-op, and are fully taxable. With an equity system, the Co-op could still receive $12.00 per year from members, but none of it would be taxable. In 2012, Buffalo Mountain collected over $16,000 in membership fees, representing nearly half of our taxable net income for the year. The tax savings from an equity system could be devoted to such things as a “rainy day” fund, higher employee compensation, lower food prices, donations to local causes, or capital improvements to the Co-op building.
- With an annual membership fee, members must pay the fee every year as long as they remain members of the Co-op. With an equity system, members would be required to make at least a minimum contribution towards their equity requirement; once they accumulate a full equity share no further payment would be necessary. While the Board has not determined how much a full equity share would be, we have agreed that the minimum annual share purchase would remain $12.00 per household adult, so members would not need to pay any more per year than they are now. While the Board may change the amount of a full equity share depending on the Co-op’s needs, the same is true of the annual membership fee, which can go up or down depending on the Co-op’s financial health.
- With an annual membership fee, owner-members who leave the area or decide for other reasons not to remain a member of the Co-op cannot get back any of the membership fees they paid over the years. With an equity system, a departing member can make a formal request to the Board to have their equity returned to them. Whether or not the Board does so would depend on the Co-op’s financial health and needs for the future. (Some Co-ops return equity to departing members so long as a new member joins, thereby replacing the equity that has been paid out.) But because of IRS regulations, the Co-op cannot institute a blanket policy stating that equity will be returned to departing members in every case: this would turn the equity contribution into a loan rather than equity, and the tax advantage of an equity system would disappear.
- Finally, an annual membership fee does a poor job of communicating to members the sense that we all own the Co-op. Other businesses (e.g. Sam’s Club, Costco) provide discounts to “members” who pay a fee, but those members do not own the business: they have no say in its governance nor any stake in its success. An equity share would represent a tangible share of our Co-op, making ownership of Buffalo Mountain Co-op more real.
ARTICLE III: MEMBER MEETINGS
We clarified this section so that it describes more clearly the rules governing member meetings, especially with respect to annual meeting, special meetings, notice of meetings, voting and quorum.
The Powers of General Members is stated in Section II: 2.5 Member Rights
ARTICLE IV & V: BOARD OF DIRECTORS & OFFICERS
We consolidated these two sections into one section, and clarified this section so that it describes more clearly the rules governing board of directors, especially directors, powers and duties, terms and elections, officers and elections, vacancies, termination, meetings, decision-making process, actions without a meeting, quorum, conflicts of interest, indemnification.
We deleted sections regarding Closed Meetings and Executive Committee.
NEW ARTICLE V: DISSOLUTION
We added this section, describing more clearly the rules governing the dissolution of the organization.
ARTICLE VI: STAFF – STORE MANAGERS AND BOOKKEEPER/TREASURER
We’ve deleted this section because it addresses operational matters. We address it in within in Policy Governance. This level of detail does not belong in the bylaws.
NEW ARTICLE VI: BYLAWS
We added this section, describing more clearly the rules governing amendments to the bylaws.
Please share your thoughts with the Board regarding these changes