Last updated 4 months ago
Public Benefits Organizations: Improving legal foundations for Cardano organizations
Problem
Decentralized autonomous organizations lack a clear regulatory framework for integrating and balancing the interests of owners, workers, and the public.
Total to date
This is the total amount allocated to Public Benefits Organizations: Improving legal foundations for Cardano organizations.
About this idea
[GENERAL] Name and surname of main applicant
Photrek, LLC[GENERAL] Are you delivering this project as an individual or as an entity (whether formally incorporated or not)
Entity (Incorporated)[GENERAL] Please specify how many months you expect your project to last (from 2-12 months)
9[GENERAL] Please indicate if your proposal has been auto-translated into English from another language
No[GENERAL] Summarize your solution to the problem (200-character limit including spaces)
A framework for incorporating DAOs as benefits corporations using Sociocratic Pluralism for off-chain and on-chain governance to integrate decision making across diverse parties and steer effectively.
[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?
No[GENERAL] If YES, please describe what the dependency is and why you believe it is essential for your project’s delivery. If NO, please write “No dependencies.”
No dependencies.
[GENERAL] Will your project’s output/s be fully open source?
Yes[GENERAL] Please provide here more information on the open source status of your project outputs
Project will be fully open source.
Photrek utilizes a GNU GPL 3.0 license for software development projects, which requires users of the software to maintain their code as open source.
[METADATA] Horizons
DAO[SOLUTION] Please describe your proposed solution
Photrek will develop legal solutions for the management of decentralized organizations which creates mechanisms for the owners, workers, and public to contribute to an organizations' strategic decision-making. Photrek will review the benefits corporation legal frameworks [1], [2] to determine the appropriate structure for forming a sociocratic board of directors whose members are composed of investing partners via an investors circle, working partners via sociocratic representation, and the public via a plural voting election. The purpose of this structure is to improve the ability of the organization to make effective decisions that steer working partners toward contributing their peak capabilities.
Sociocracy [3], [4], [5], diagrammed in Figure 1, is an organizational method based on circle members deliberating strategy and policy solutions until they arrive at a consent decision. The solutions then become the basis for running an efficient system that builds measurably stronger teamwork among participants [6]. In contrast to consensus, there are no votes, rather reasoned objections are reviewed and resolved until good-enough-for-now solutions are determined with time limits and opportunities for correcting course. Circles are interlinked via a leader appointed by a parent circle who is responsible for the circles’ aim and a delegate representative selected by the subcircle who is responsible for reporting on progress to the parent circle. The double-linking provides feedback loops in which independent measurements of performance guide future decisions. Through a combination of strategic consent and tactical autonomy, the organization can achieve effective results while assuring dispersed decision-making.
The legal challenge is that for-profit legislation is focused on making the owners of an organization the exclusive decision-makers for strategic, board-level policies. Gerard Endenburg, the Netherlands entrepreneur who invented sociocracy, overcame these shortcomings, by creating a separate non-profit foundation that held the majority shares of the for-profit organization. In recent years, the introduction of benefits corporations open the possibility of creating a for-profit sociocratic organization following the regulations of public benefit. Photrek will examine several benefits corporation jurisdictions and evaluate their relative receptivity to applying sociocratic principles to the management of a decentralized organization.
[1] S. Munch, “Improving the benefit corporation: How traditional governance mechanisms can enhance the innovative new business form,” Nw. JL & Soc. Pol’y, vol. 7, p. 170, 2012.
[2] R. K. Mitchell, G. R. Weaver, B. R. Agle, A. D. Bailey, and J. Carlson, “Stakeholder Agency and Social Welfare: Pluralism and Decision Making in the Multi-Objective Corporation,” AMR, vol. 41, no. 2, pp. 252–275, Apr. 2016, doi: 10.5465/amr.2013.0486.
[3] J. A. Buck and S. Villines, We the People: Consenting to a Deeper Democracy. Sociocracy.Info Press, 2017. Accessed: Jul. 11, 2024. [Online]. Available: https://www.amazon.com/We-People-Consenting-Deeper-Democracy/dp/0979282705
[4] J. A. Buck and G. Endenburg, “The creative forces of self-organization,” Sociocratic Center, Rotterdam, The Netherlands, Tech. Rep, 2012, Accessed: Apr. 07, 2024. [Online]. Available: http://www.habitatreimagined.com/wp-content/uploads/2011/03/Creative-Forces-of-Self-Organization1-4.pdf
[5] K. Nelson, E. Hansen, N. Battle, S. Macurdy, and N. Tran, “Sociocratic Pluralism governance for blockchain ecosystems,” Jul. 30, 2024, Rochester, NY: 4911180. Accessed: Aug. 07, 2024. [Online]. Available: https://papers.ssrn.com/abstract=4911180
[6] A. Bauernfeind, “Measuring instrument - data prove effectiveness,” Institute for Participatory Social Research, Apr. 2021. Accessed: Oct. 15, 2024. [Online]. Available: https://www.printfriendly.com/p/g/Xh8XDu
[IMPACT] Please define the positive impact your project will have on the wider Cardano community
Photrek’s Public Benefits Organizations proposal will provide a significant impact by improving the legal foundations of organizations working within the Cardano ecosystem. The Cardano community is committed to building decentralized organizations both for the management of the ecosystem and for groups within the ecosystem. Nevertheless, the legal and practical implications of decentralization are a difficult emerging area of social and corporate organization.
Photrek has defined and implemented a practical approach to off-chain management using the principles of sociocracy. What’s needed for Photrek and other entities is a clear legal framework to scale these solutions to larger organizations that are required to follow clear regulations. The Benefits Corporation legislation provides the flexibility needed that many organizations within Cardano can benefit from.
Photrek will complete the legal research, prototype a design for its own organization, and provide that knowledge as a service to the broader Cardano Community.
[CAPABILITY & FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?
Photrek is a profitable business with a well-established leadership team utilizing sociocratic management methods. Our Sociocratic Operating Agreement describes how the circles make decisions and interlink with each other. Our Master Service Agreement describes the role of working partners as independent contractors with portable benefits and the right to participate in the sociocratic management of Photrek.
Photrek is collaborating with John Buck, author of We the People: Consenting to a Deeper Democracy, Michael Haber, Assistant Professor at Brooklyn Law School, and Kendrick Ladd, Juris Doctor and former federal regulatory investigator, to clarify how the Benefits Corporation legal framework can improve the regulation of corporations within the Cardano Ecosystem.
[PROJECT MILESTONES] What are the key milestones you need to achieve in order to complete your project successfully?
Project Launch, 1 month, ₳ 15,000
Milestone Output:
- Detailed definition of the milestones and statements of work for developing the legal framework for a Cardano benefits organization.
- Preliminary review of the US Benefits Corporation legislation for Delaware, Massachusetts, Wyoming, and New Hampshire.
Acceptance Criteria:
- Milestones accepted by Cardano Catalyst and task breakdown set up for working partners and independent contractors.
- Report providing analysis of legislation related formation of a sociocratic pluralism board of directors.
Evidence of Completion:
- Approved milestones and contractor task lists.
- Public release of report on legislation related to a sociocratic pluralism board of directors.
Roadmap for Sociocratic Pluralism Benefits Corporation, 2 months, ₳ 20,000
Milestone Output:
- Clarification of the legal boundaries in which a board of directors for a Benefits Corporation can utilize sociocratic rather than shareholder voting for its formation and operation.
- Guidance on whether plural voting can contribute to corporate management in a way that complements sociocratic and multidimensional decision-making.
Acceptance Criteria:
- Draft report specifying legal boundaries of applying sociocracy to a Benefits Corporation.
- Draft report proving guidance on applicability of plural voting for a Benefits Corporation.
Evidence of Completion:
- Public release of draft report on Sociocratic Pluralism for Benefits Corporation
Legal analysis for SPBC, 3 months, ₳ 30,000
Milestone Output:
- Detailed comparison of at least 2 jurisdictions for Benefits Corporations regarding the use of sociocracy and plural voting in the formation of a board of directors and the management of the corporation.
Acceptance Criteria:
- Completed legal report on the application of Sociocratic Pluralism to a Benefits Corporation
Evidence of Completion:
- Release to the public of the legal report on Sociocratic Pluralism for Benefits Corporations.
Prototype implementation for Photrek, 2 months, ₳ 20,000
Milestone Output:
- Go, no go decision as to whether to transition Photrek to a Benefits Corporation using Sociocratic Pluralism.
- Written justification for decision whether to transition to benefits corporation.
Acceptance Criteria:
- Decision on Sociocratic Pluralism Benefits Corporation for Photrek with detailed explanation of decision, including input from the Advisory and Leadership Circles.
Evidence of Completion:
- Report on design for Photrek.
- Go, no-go decision by Advisory and Leadership Circles.
- Explanation of decision.
Benefits Corp Final Report, 1 month, ₳ 15,000
Milestone Output:
- Final report on recommendations regarding the use of Sociocratic Pluralism Benefits Organization for organizations within the Cardano ecosystem.
Acceptance Criteria:
- Report includes:
- Comparison of at least 2 jurisdictions for Benefits Corporations
- Legal boundaries regarding use of sociocracy and plural voting for benefits corps.
- Design for Photrek’s transition and explanation of go, no-go decision.
- Recommendations for other organizations within the Cardano ecosystem.
Evidence of Completion:
- Submission of report for public review.
- Video close-out report.
[RESOURCES] Who is in the project team and what are their roles?
Photrek Team
Administration
Juana Attieh, Project Lead
Advisors
Kenric Nelson, Ph. D. President, Photrek, LLC
John Buck, Advisor
Michael Haber, Legal Advisor
Kendrick Ladd, Legal Advisor
Juana Attieh, Product Lead at Photrek. She plays an active role in decentralized governance, contributing as a member of the Membership and Community Committee, and providing her expertise as an advisory board member and board observer for Intersect. Juana is a co-founder of the Cardano MENA community and Off-chain Toronto, she also serves as CSO at AMLOK.tech. She leads the Applications Circle for the LALKUL dRep, focusing on advancing decentralized decision-making. Her work reflects a passion for community-led infrastructures and governance, aimed at creating sustainable, decentralized societies.
Dr. Kenric Nelson is the Founder and President of Photrek, LLC which is developing novel approaches to Complex Decision Systems, including risk-aware machine intelligence, particularly for environmental risks, and governance policies for decentralized communities. He served on the Cardano Catalyst Circle governance council and is leading a revitalization of Sociocracy for All’s
John Buck, co-author of We the People: Consenting to a Deeper Democracy, has decades of experience developing sociocratic organizations. He has prototyped legal frameworks for for-profit sociocratic corporations. Buck will work closely with Photrek to research benefits corporations and to identify legal assistance that can contribute to the design effort.
Michael Haber is an Assistant Professor of Law at Brooklyn Law School in New York and the Director of the Community Development and Movement Infrastructure Clinic. He has studied and written about the use of sociocratic governance structures in corporate and nonprofit entities.
Kendrick Ladd, a retired Army Officer and former federal regulatory investigator, is pending admission to the Wyoming Bar. He holds a J.D. from the University of New Hampshire Franklin Pierce School of Law and B.S. in American Legal Studies from the U.S. Military Academy at West Point. Utilizing Wyoming's forward-thinking approach to digital asset law, Kendrick intends to offer tailored legal solutions for emerging blockchain businesses.
[BUDGET & COSTS] Please provide a cost breakdown of the proposed work and resources
[VALUE FOR MONEY] How does the cost of the project represent value for money for the Cardano ecosystem?
Photrek has been delivering high-quality projects for the Cardano ecosystem, from fund 4 to 12, with a strong commitment to fair compensation and efficient resource management. Our estimated Day-Person cost is $1,000, reflecting the value we place on skilled team members and our dedication to meeting the highest standards. Our rates are based on self-employment in the US & Canada. The rates take into account the employment overheads of the resources contracted. Furthermore, for collaborators who commit to multiple projects over a year, we provide a working partner contract that includes portable benefits. This has strengthened our sociocratic commitment to building a strong, capable team. The amounts are calculated for each milestone based on the hours to complete. For example, the chart for engineering and scientific salaries in the Commonwealth of Massachusetts is provided here.
Photrek will develop a procedure for organizations within the Cardano ecosystem to establish a legal foundation for decentralized management of the off-chain processes needed to ensure success of the on-chain autonomy. A prototype demonstration will be completed transitioning Photrek from an LLC to an Benefits Corporation. A service will be established to guide other organizations in establishing themselves as Benefits Corporations utilizing Sociocratic Pluralism methodologies.
Legal procedures which break ground in establishing new principles can be quite expensive. Photrek has established relationships with academic partners (professor of Brooklyn Law School) and non-profit educators (Sociocracy for All) that have a mission to complete research and education advancing the legal foundations for organizational reform. By partnering with these educational institutions, Photrek is able to complete the research, analysis, and prototyping at a competitive rate.
The project builds upon Photrek’s experience as a sociocratic organization; thus much of the essential work is already completed. Catalyst is investing in establishing the legal foundations for a formal board of directors for a benefits corporation to utilize the sociocratic pluralism principles. Photrek uses working partner and independent contractor contracts to negotiate competitive pricing that supports a team with exceptional capabilities and a long-term commitment to improving the Cardano ecosystem.
