Suppose there has been a non-profit group working together for a couple of years, members have come and gone and at each point in time current members have had equal votes on the decisions the group was making.
Now this group decides to become a corporate and start making money under the same brand/name that was made famous as a non-profit, now the question is, "how should the members distribute the share of this corporate?" (Is there a best practice available?)

Some options are:

  • Give current members equal shares from the net profit.
  • Give members shares based on their engagement duration. (older members gain more shares, if this is the chosen option should we consider the members who left the group but could come back later?)
  • Distribute shares based on members' impact on the group and the history of their efforts and its outcomes.

Two ways I have seen that have worked without getting messy later. And a third that is preferable to both if it's possible.

Equal or hierarchically based shares for all involved at the time.

Shares based on contribution to the product. This one is problematic and means you all need to come to agreement over what 'contribution' means. You will get people who did bugger all but think they made a useful contribution, others who will want more just because of who they are.

Lastly start again with a new brand and just the people who can actually make it all work. Thereby sidestepping the whole issue and keeping the starting group as small and efficient as possible. Many people in non profits are not at all suitable in a corporation, there is a whole different level of work and accountability involved quite often. This would actually be my avenue of choice.

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The fairest and simplest to impliment and in line with best practice for coops is just equal shares for those employed at the transition date.

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  • About being "fair", the member who has spent years working in this group expects to have a bigger share than the guy who joined couple of months ago. – Silverfox Nov 18 '16 at 20:39
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    @Silverfox that's how coops do it - how do you work out who has added value some one could have been there for 10 years and done very little. – Neuromancer Nov 18 '16 at 20:45

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