Item

Comment

Purpose… to develop, disseminate and implement new concepts of organization that result in more equitable sharing of power and wealth, improved health, and greater compatibility with the human spirit and biosphere.

[Section 1.01]

The second half of the Purpose (after “that result”) speaks to the vision of the world we hope to help create, while the first half describes something we feel that we must do together in order to realize that vision. It does not intend to outline all of the things that must be done — just the one common element that binds this particular community together as worthy of pursuit.

Each and every part of the Chaordic Commons will abide by the following principles…

[Section 1.02]

The Principles are the “DNA” found in each and every “cell” of the Commons, no matter how it grows and evolves. (I am not going to try to outline the subtleties of the principles in this memo.)

First and foremost, the Constitution must be interpreted consistent with Purpose and Principles.

[Section 17.17]

This makes Purpose and Principles the primary legal reference point for the Commons and its fiduciaries. All major aspects of the organization are tied to them — fiduciary responsibility [17.02]; eligibility for owning membership [4.01, 4.02]; rights of self-governance and self-organization, acceptable activities, and allowable organizational structure [7.01]; oversight rights and obligations [11.01.D]; ownership and use of common properties [14.01]; and connecting to “related organizations” [16.02].

…Owning Members…

[Articles III – XVIII]

The Constitution is an agreement among … Owning Members. This is what makes the Commons a commons — i.e., a place to share resources. There is membership, and there is ownership. Precisely what and how resources are shared is bound only by the Purpose and Principles, and any further agreements reached as a result of Owning Member self-governance.

Item

Comment

The Commons is incorporated in the State of Illinois as a nonprofit, membership corporation, and is recognized by the IRS as a 501(c)(3) charitable organization.

[Sections 4.05, 16.03]

The tax status of the Commons is not essential to its operation, but it does create a set of legal parameters of which Trustees need be mindful. For example, Illinois has some rather peculiar rules for nonprofits to follow, such as conditions and powers of subcommittees of a Board. Also, the IRS can be a stickler about unrelated business income (UBI), which can become an red flag any time a nonprofit earns more than 20% of its revenue.

There are Owning Members and Correspondent members. The former have nearly all of the explicit rights or obligations within the Commons. The latter are members in name only.

[Section 4.01, 4.04]

The primary rights of Owning Members are to “engage in activities” of the Commons [7.01], to select Council members within their Origin (does not necessarily require a “vote”) [10.02.E], and to cast votes regarding potential changes within the Constitution in certain cases [15.02, 15.04]. The formula that calculates the number of votes for an institutional Owning Member is not intuitively obvious [8.01].

Owning memberships cannot be sold or otherwise transferred.

[Section 17.03]

“Ownership” does not mean having a conventional equity stake in the financial assets of the Commons, it primarily refers to the rights of participation outlined above.

The Constitution is silent on the terms under which Owning Members develop or access common properties.

[Section 14.01]

Owning members are free to create, manage and maintain their own unique and diverse means of creating and sharing intellectual and other properties (as long as they consistent with purpose and principles).

The Council is the initial vehicle through which Owning Members govern themselves, and is made up of equal numbers of Owning Members from each of six general sectors of the economy (called “Origins”).

[Section 10.01, 3.02]

The Origins were selected to ensure a certain amount of diversity in the Council. Although thoughtfully selected, there is no magic to them, and the Constitution explicitly gives the Council the authority to change them with a 75% vote [11.02.A, 15.01.C].

All fiduciary responsibilities (except care) are owed to the Purpose and Principles, and to the whole of Terra Civitas (as narrowly defined in the Article II).

[Section 17.02]

This is an unusual clause, and is important for every Trustee to internalize its implications. Appreciation for the subtleties of the Purpose and Principles is a prerequisite for effective execution of Trustee duties. It is also clear that even though a Trustee may be elected from out of an owning member Origin, he or she is not a “representative” of that Origin in the usual sense, but is a steward for the whole.

The Council has a fairly limited set of responsibilities and authorities; consistent with the principle that decision-making should be made in the most local part.

[Article XI]

Besides a few “housekeeping” chores regarding the constitution, the primary responsibility of the Council is to exercise oversight regarding Purpose and Principles [11.01.D], and its primary authority is to establish operating procedures [11.02.C], which must also be consistent with Purpose and Principles.

Every section of the Constitution has a specific procedure by which it can be changed or amended.

[Article XV]

Some changes require simple votes of the Council [15.01], others require votes of both the Council and owning member [15.02], and still others can be made by the Owning Members acting alone [15.04].

There are a considerable number of “last resort” clauses in the Constitution, i.e., procedures for things that we all hope will never be exercised, but are only prudent to have explicitly stated.

Examples include selection of Trustees if there are very few Owning Members [10.02.E], and involuntary termination of membership [9.02]. There are, of course, also a fair number of sections of legal “boilerplate” that any corporation should have in their by-laws [e.g., most of Article XVII].

Item

Comment

Communities, Alliances and Leagues (C/A/Ls) are a special kind of institutional Owning Member that must subscribe to and operate in accordance with the Commons Purpose and Principles in conducting all of their activities.

[Section 4.02]

C/A/Ls are themselves chaordic organizations, which can nest inside each other or connect to each other, and which differ only by the how deeply that nesting goes [4.02.A-C]

C/A/Ls may adopt any purposes, principles, and operating or governance procedures that are consistent with the Purpose and Principles of the C/A/L (or commons) to which they connect.

[Section 7.01]

It is not expected that all C/A/Ls will have identical purposes or principle sets. The operative measure is whether they are “consistent.” This is a judgment call (unless they are identical), which must first be made when a C/A/L applies for owning membership, and then monitored over time.

Vest authority, perform functions and use resources in the smallest or most local part that includes all relevant and affected parties.

[Principle, Section 1.02.B.4]

Under any reasonable interpretation of this Principle, a C/A/L is a “part” of the Commons. Hence, once a C/A/L forms, the default assumption is that the Commons Council will no longer have jurisdiction on questions that only involve or affect members of that C/A/L, other than oversight.

C/A/Ls have an obligation to assure that all of their members (which are Derivative Owning Members in the Commons) adhere to Purpose and Principles in their conduct of Commons activities.

[Section 7.02]

“Oversight” is the only explicit constitutional obligation of Owning Members, and it is only an obligation of C/A/Ls (and fiduciaries), not of individuals or institutions.

Any Direct Owning Member of the Commons that becomes a member of a C/A/L automatically becomes a Derivative Owning Member of the Commons (i.e., is not longer “direct”).

[Section 4.03]

An Owning Member is “direct” only if he/she/it is not a member of a C/A/L. The constitution is silent on the question, but it is imaginable that eventually nearly all individual and institutional Owning Members will be Derivative rather than Direct, i.e., the only things left as Direct Owning Members will be C/A/Ls.

A Derivative Owning Member may choose one, and only one, Direct Member (C/A/L) through which to exercise his/her/its voting rights.

[Section 8.02]

The Constitution explicitly insures that an Owning Member is allowed to join more than one C/A/L [], but this rule assures there is not double counting of votes.

A C/A/L may determine it’s own methods for accumulating and casting the votes of Derivative Members.

[Section 8.01.C]

A C/A/L can do anything from merely “passing through” the accumulated votes, to casting them as a block based upon an agreed upon decision method.

The Commons can require a C/A/L to transfer the ownership of intellectual and other property to the Commons, but only under special circumstances. It has no similar right with Individual or Institutional Owning Members.

[Section 14.01]

It is only allowable with a 75% vote of the Council, and upon repayment of all development costs plus a fair market interest rate.

This may best be considered a “last resort” clause. Any use of this right that is perceived as unfair is likely to cause a mass exodus from the Commons.

Item

Comment

The Commons may enter into an especially close relationship with any entity(s) that adopts a set of “fundamental provisions” as part of its bylaws.

[Article II, Article XVI]

The fundamental provisions include the Purpose and Principles; the right to appoint two Trustees to the councils of each of the other Terra Civitas Commons; fiduciary duty of trustees; common properties; etc. [16.01].

No Terra Civitas Commons can alter the fundamental provision on its own, all Terra Civitas Commons must make the same changes at the same time [15.03.C].

The collection of all of the entities that adopt the fundamental provisions (including Chaordic Commons) is referred to as the Terra Civitas Commons.. Any one of these entities (including Chaordic Commons) is described as a Terra Civitas Commons.

[Article II]

This can be confusing. One way of keeping it straight is that when referring to the Terra Civitas Commons, the word “commons” is used in its plural form, otherwise it is used in its singular form.

There is no requirement that a Terra Civitas Commons actually names itself a “commons.”

The organizations that make up the Terra Civitas Commons , plus all of their owning members are collectively referred to as “Terra Civitas.”

[Article II]

This distinction is important since the fiduciary duty of loyalty for trustees of the Chaordic Commons is tied to Terra Civitas, not to one or more commons [17.02]

The Council(s) of all existing Terra Civitas Commons determine whether to establish or enter into relationship with a new Terra Civitas Commons.

[Section 15.03.B]

All of the commons operate in concert when dealing with questions about the fundamental provisions.

All Terra Civitas Commons agree to participate in a Coordinating Council that has only advisory capacity.

[Article XII]

The notion of a power-less central body is very much in keeping with chaordic principles.

Any or all Terra Civitas Commons may choose to enter into a joint staffing agreement.

[Article XIII]

This Article was included in anticipation of that need. It is not a requirement, nor core to the organizational concept. As a historical point of interest, it is how Visa operated in part. Special care would need to be taken if one or more of the other Terra Civitas Commons were incorporated as a for-profit.

Each Terra Civitas Commons owns a 100% undivided interest in all properties of each Commons, but this ownership is not saleable or otherwise transferable.

[Section 14.01]

For example, this would preclude sublicenses to other than direct or derivative members.

Once a second Terra Civitas Commons is established, the act of “taking” intellectual properties of C/A/Ls requires joint action of all Terra Civitas Commons.

[Section 14.01]

This is intended to make “taking” that much more difficult, and even more of a last resort.