Social Knowledge and the Civil Economy

''"Co-intelligence is the capacity to call forth the wisdom and resources of the whole and its members to enhance the long term vitality of the whole and its members." Collectively, a community has more - and more diverse - information, perspective, and resources than any individual has. A wise community, a wise leader, and a wise democracy will use that rich diversity creatively and interactively. The diversity will then be mutually enhancing rather than mutually problematic. The appropriate role of the state is to create enabling conditions for that to happen at all levels and in all sectors and facets of society.''

- Tom Atlee

= Executive Summary = The realization of a social knowledge economy in Ecuador is a unique and complex undertaking that incorporates a wide range of issues and relationships that, in practice, involve all the economic sectors of the country: the public sector, the private sector – in particular small and medium enterprises – and the civil economy (popular and solidarity economy).

This series of documents examines the relation between the implementation of a social knowledge economy in Ecuador and the role that the civil economy plays in this process. The reports outline key issues and dynamics that need to be understood and addressed and in particular, the policy implications related to the social infrastructure and institutions needed to make a social knowledge economy a reality in the political economy of the country.

The present document examines the current legislation governing the popular and solidarity economy in Ecuador and offers an analysis of key issues that serve to restrict the growth and development of civil economy associations and the wider civil economy as whole. It also presents a series of preliminary recommendations on how the legislation might be changed to address this core issue.

There is no question that the long-term success of the Plan for Good Living, and the implementation of a social knowledge economy, will rely heavily on the strength and development of a civil economy in Ecuador that is strong, autonomous, democratic, innovative, and capable of playing the central role that is assigned to it both by the constitution and the Good Living Plan itself.

The civil economy is the social and economic space that most reflects the values and principles of the socialist and civic ideals of the government and the source of those civil institutions that will, in the long run, defend and advance those ideals. Lest anyone forget, it was Ecuador’s civil society that gave birth to the Citizen Revolution, not the state. In the end, it will also be civil society and the vitality of its institutions that will safeguard its ideals.

For this reason, Ecuador’s public policy and legislation must serve as a vital political and legal resource for building the values, skills, and institutions that enable the civil economy to flourish and to provide the indispensible social foundations that will ultimately serve to transform the political economy of the country. In our view, progressive public policy and legislation with respect to the civil economy will serve as the primary mechanism for creating a new social contract and social praxis that reflects the complementary aims and purposes of the state on the one hand and the collective values of civil society on the other.

For this to succeed, state policy and legislation must recognize the civil economy as a vital sector with social and economic principles, values, relations, and institutions that are unique to itself. The recommendations that are presented in this report are rooted in this perspective and serve to acknowledge and strengthen these principles.

Even more, the policy recommendations aim to facilitate the development and maturation of the civil economy so that it is capable of becoming a full partner with the state in the realization of Buen Vivir as a political project and the creation of a social knowledge economy as a key means of transitioning to an economic model founded on the values of democracy, free and open access to knowledge, social and economic equity, and the utilization of the economy for the pursuit of the common good.

= Key Principles = The principle premise of this perspective is that a strong and autonomous civil economy is essential to the long-term viability and success of establishing a social knowledge economy.

The second premise of a progressive public policy with respect to the civil economy is the clear distinction between the prerogatives of the state on the one hand and of civil society on the other.

The third premise is that there is a fundamental complementarity based on the pursuit of the common good, between the roles of the state on the one hand and that of civil society and the civil economy on the other.

A healthy, open, and democratic society is founded on the recognition and acceptance of this essential distinction between the civic principle on the one hand and the governmental principle on the other. Both social dimensions represent essential attributes of a healthy, and functioning body politic with recognition of distinctive roles – governmental and civic –which aim at the pursuit and protection of a collective social well being that entails essential principles of pluralism, openness and transparency, democratic agency, and solidarity for the common good.

As stated in the Good Living Plan:

''Changing the productive structure and democratizing the State would not be emancipating if top priority were not given to strengthening the society. The goal is to promote the construction of a society that will deepen the quality of its democracy and broaden its opportunities to alter conditions of social and material equality. It is necessary to empower society rather than the market – as it happened before with neoliberalism –. It must also empower society over the State, such as in “real socialism”. Empowering society is promoting the development of freedoms and capacities to reflect critically and cooperatively, for each individual, each people and each collective. ''

A social knowledge economy is based on these same principles and seeks to make knowledge a social good, an open and freely accessible commons for the pursuit of these civic goals.

= Civil Society = In its broadest and most accepted sense, civil society is the social impulse to free and democratic association, to the creation of community, and to the operations of social life, which includes politics. Modern conceptions of civil society also distinguish it from the state and from the operations of the private sector. Some writers also stress a distinction from the family as well.

Historically, civil society was the arena for organizing the governance, material activities, and intellectual, moral, and cultural aspects of communities. And whereas the state represents the “politics of domination”, civil society represents the “politics of consent”. This alone radically and fundamentally distinguishes the nature, purpose, and operations of the state from those of civil society.

Within civil society, a huge portion of civic activities are carried out by organizations created to provide goods and services through collaboration, by people acting together to realize mutual aims. They constitute that sector which is composed of non-profit and voluntary organizations, service groups, and cultural organizations such as choral societies, charities, trade unions, and co-operatives. This economic aspect within civil society has also been described as the third sector, the civil economy and the popular/solidarity economy. While the term civil economy is used most often in these documents, it is interchangeable with the other usages.

= Ecuadorian Context = The relation of the state to civil society in Ecuador is both complex and contentious. While the Ecuadorian constitution explicitly recognizes and guarantees the legitimacy and autonomy of civil society and its institutions, the application of these principles is uneven and sometimes runs counter to both the spirit and the letter of the constitution. In addition, while there are a high number of civil society organizations (CSOs) in Ecuador, the level of civic engagement and citizen participation in the formation and implementation of public policy is low.

The primary issue that has emerged then, is the need to resolve this contradiction between policy and practice, vision and reality, with respect to the legitimacy, autonomy and agency of civil society vis-a-vis the role and practice of the Ecuadorian state.

As stated in the Constitution, all organizations in society are recognized to be an expression of popular sovereignty, and may therefore carry out processes of self –determination, and influence decisions, public policy and exercise social control of public bodies at all levels of government (Article 96). These organizations may be structured in any manner to enforce the popular power and its expression. They must adhere to internal democratic practices, and ensure the accountability of the organization (Article 96).

The Constitution also creates the “Council of Citizen Participation and Social Control” as a fourth branch of the State that is in charge of designating authorities such as the General Attorney, the General Prosecutor, the members of the Judicial Administrative Council, among others. The constitution provides that all the candidates will be nominated by CSOs and the citizens.

In addition, the Constitution contains specific articles relating to the protection of human and civic rights. These include:

Article 66.13: Freedom of association - The State recognizes and guarantees the people the right to associate, meet and speak freely and voluntarily.

Article 66.19: The right to personal data protection, which includes the access and the decision about the information and data related, and its protection. The data gathering, filing, processing, distribution, and spreading shall require the owner's authorization or a legal mandate.

Article 66.6: Freedom of expression - The State recognizes and guarantees the people the right to the free development of personality, with no more limitations than the rights of others, and the right to think and express one's thoughts freely and in all its forms and manifestations.

Moreover, the provisions of the Plan for Good Living reflect this constitutional recognition of the role and value of civil society, and in particular the popular and solidarity economy, as essential to the aims of a social knowledge economy and the pursuit of Buen Vivir as the guiding framework for Ecuador’s political economy.

''Socialism for Good Living questions the dominant pattern of hegemonic accumulation, i.e., neoliberal models of production, growth and distribution. We propose a transition toward a society in which life is the supreme asset. This demands a deep democracy and the constant involvement of its citizens in the country’s public affairs. It is based on the pursuit of the common good and individual happiness, rather than excessive accumulation and consumption. ''

''A democratic, participatory government requires the active participation of citizens and strong social movements working in open networks to address both local and national issues. Participatory democracy aims for a sort of equality that enables reciprocity among its members.''

''The structural transformations proposed for the 2013–2017 period will be possible only if, at the same time, power relations are being transformed, because constructing Good Living is an eminently political process that demands not only a more radical political democracy, but also a socio-economic democracy. …The objective is to democratize State-society relations. ''

In reference to deepening the democratic culture of State and society, the Plan specifies the following policies:

''To consolidate democratic governance and construct the people’s power. ''

Policies:

1.9 To consolidate citizen participation in public policy-making and State-society relations.

1.12 To encourage social self-organization, associative life and construction of active citizenship valuing the common good.

''1.13 To strengthen mechanisms of societal oversight, transparency of public administration and prevention of and the fight against corruption. ''

''To foster social and territorial equity, cohesion, inclusion and equity in diversity. ''

2.4 To democratize the means of production, generate equitable conditions and opportunities and foster territorial cohesion.

How then, do these principles relate to the concrete development, through public policy and legislation, of the social infrastructure that will both embody them and sustain them in the future?

To begin with, there is no comprehensive law in Ecuador regarding community service organizations (CSOs). The basis of the sector's legal treatment is the Civil Code, effective since 1861. The Civil Code also provides the President of the Republic the authority to establish and dissolve CSOs. Thus, CSOs are governed by Executive Decrees, which have been issued to address issues of operations, organization, and oversight of civil organizations.

The Presidential Decree No. 982 was signed by President Rafael Correa Delgado on March 25, 2008, and substantially revises the Regulations' provisions governing CSOs. It provides additional requirements, controls, and causes for dissolution of CSOs. A second Presidential Decree No. 19, which was passed on June 4, 2013 provides for additional regulations and controls.

These constraints on the formation, operation, and reporting of NGOs and CSOs in Ecuador underscore an ongoing tension between the stated objectives of the serving government and its practices with respect to recognition of the freedom and autonomy of civil society organizations. In turn, these tensions have been exacerbated by a history of weak regulatory controls and practices among some civil society associations that contravene the governing principles and purposes of these associations. This is one source of the state’s concern with respect to the role of civil society as an autonomous social and political space, over and against the legitimate requirements of state control and oversight for purposes of public accountability and the public interest.

Since the passage of Decree 982, civil society organizations have lobbied for changes to the laws and regulations governing their activities. Their primary concerns relate to the restrictions on freedom of association and expression.

Given these factors, and the clear recognition of the role and rights of civil society and the popular and solidarity economy as fundamental to the civic aims of the Constitution and the Good Living Plan, the following policies seem essential for translating these rights into concrete practices as embedded in both legislation and state practice.

Organic Code for the Popular and Solidarity Economy
In consideration of public policies that frame the relations between state and civil society, this document focuses primarily on those institutions and relations that compose the goods and services that are produced for collective or social benefit and animated by the principle of reciprocity and the social principles of mutuality and social solidarity. This is the field of activities that may be described as the civil – or popular and solidarity economy – as compared to the public economy of the state, based on the economic principle of redistribution, and the commercial, for-profit economy of the private sector, which is based on the economic principle of exchange of equivalents.

The institutional supports required for the support and expansion of civil society in general, and the civil economy in particular, cover a range of policies, legal frameworks, practices and relationships which obtain both within civil society as an autonomous and self perpetuating field and between civil society and the state. This latter connection is of primary importance for clarifying and designating the evolving roles and relationships between these two spheres as related to the advancement of an open, pluralistic, and democratic society.

The existence of a healthy, vibrant, and autonomous civil society and civil economy are central to this purpose and the establishment of a social knowledge economy is both sustained by, and sustaining of, a civic political economy that, through its institutions, shares its values and supports its aims.

Composition of Ecuador’s Civil Economy
One of the key achievements of the serving government has been the gathering of basic information concerning the character, composition, and size of the civil economy in Ecuador. This has been a result of painstaking efforts to analyze and define the nature of the civil economy, of documenting the number and size of popular/solidarity economy organizations, and of introducing new legislation to both support and regulate the sector.

From this effort, about 10,400 civil economy organizations (co-operatives, associations and community organizations) were documented. A preliminary diagnosis of the co-operative sector in Ecuador detected 3,260 co-operatives including savings and credit groups, transportation, housing, production, consumption and other co-operative services (946 credit unions, a central box and 2,313 non-financial cooperatives). The first three groups together account for 99% of co-operatives in the country. As for the voluntary sector, it was estimated that there are about 14,593 organizations that make up the community sector in the country, mainly represented by boxes and community banks.

It is important to stress that these figures remain tentative as the data still includes duplicate records, classification errors (e.g. integration organizations classified as credit unions, co-operatives classified as associations and vice versa, etc.) and inconsistencies in the financial information.

Trade unions, professional associations, cultural and sports associations, and religious forms of association, among others, whose corporate purpose is not the realization of economic activities, production of goods, or provision of services are not included in this data nor are they recognized as social economy organizations under the terms of the legislation.

The economic value and growth of the civil economy, in particular the co-operative sector, is worth stressing.

According to a study by the DGRV (Cruz, 2003), in 1999-2002, the current portfolio of credit unions experienced a growth of 384.73% compared to 49.94 % for the banks. This is a sign that these organizations overcame the crisis and outperformed the capitalist firms despite their smaller size in terms of assets. This fact is explained by factors such as diversification of the portfolio by avoiding concentration in a single economic activity, by avoiding high risk activities, and by remaining focused on the real needs of members to whom the credit union was accountable.

The durability of the co-operative form has also been demonstrated by the nearly twofold growth of co-operatives in the past decade, a development that predates the citizen revolution. This same phenomenon has been documented with the performance of co-operatives in general and at a global level, not only in Ecuador. Similar findings have also been confirmed in studies by H. Jacome (2004 and 2005).

In summary then, the importance of the popular and solidarity economy is evident not only as a social foundation for the political economy aims of the government as expressed in its Good Living Plan, but also as a source of economic value, stability in times of economic crisis, and the generation of essential goods and services that provide for the common welfare.

As such, and given the relatively recent efforts to document and understand its role in Ecuador, the civil economy warrants further careful study and ongoing support in the framing of public policy and legislative instruments that reflect the unique characteristics of this sector and reinforce its capacity to grow and to embody the social and economic values which are the basis of a social knowledge economy.

= Social Infrastructure and Institutional Supports = Based on the above analysis and perspective, the principle characteristics of the institutional supports required to support this social framework are:


 * 1) Institutional autonomy of civil society and its social organisms;
 * 2) Recognition and validation of civic space as primary and distinct from that of the state and the commercial sectors;
 * 3) De-linking of the “public” from exclusive association with the state;
 * 4) Creation of enabling civil institutions that can mediate between the state on the one hand and communities, families and individuals on the other;
 * 5) Establishment of financial policies and mechanisms that guarantee access to autonomous sources of civic capital to civil economy organizations;
 * 6) Establishment of civil institutions that are capable of relating social knowledge systems to the concrete needs and aspirations of civil society and civil economy organizations.

The following policy recommendations are founded on the principles outlined above, but remain preliminary and tentative pending further study and consultation with respect to the existing legislation for the regulation of the Popular and Solidarity Economy. Based on our current reading of the Act, and the issues that have been identified – both by stakeholders inside Ecuador and on the basis of international experience – the following changes are proposed both for policy and with respect to the Act:

General Policy Recommendations

 * 1) Freedom of political expression and association are fundamental attributes of a free, open, and democratic civil society. Civil economy organizations should not be constrained from exercising these rights as a consequence of their status as non-profits or social benefit associations. Recommendation: The dissolution of civil organizations by the state for reasons of legitimate political action should be removed.
 * 2) The law gives the government and the public nearly unrestricted access to the internal information of NGOs. Citizens may demand “accountability” – undefined -- from any NGO that carries out public interest activities – also undefined -- or public services, or that utilizes public resources. NGOs must also hand over to government officials any information related to their activities, and must make their premises available for inspection so long as the officials provide advance notice. Recommendation: Access to information pertaining to the internal operations and activities of a group should be restricted to cases of suspected criminal wrongdoing and only with the authority of a judicial warrant. The same should apply to the inspection of an organization’s premises.
 * 3) The constitution prohibits the collection and use of personal data without the consent of the individual. Recommendation: This principle should be applied to the Act and the requirement that civil economy organizations be required to register on a government database information the names, ID numbers, nationality, and addresses of every member should be removed.
 * 4) The constitution guarantees citizens the freedom to associate freely in pursuit of their collective interests. The law requires NGOs to accept any and all applicants as members thus nullifying a basic principle of freedom of assembly and the right of a group to determine the nature and composition of its civil community. As currently written, the law also undermines an association’s capacity for self-protection against infiltration by hostile interests including potentially, the state itself. Recommendation: This provision should be removed.
 * 5) Disincentives for the creation and incorporation of civil associations as legal entities should be minimized.

= Popular and Solidarity Economy Law = A number of policies that act as impediments to the free and open development of NGOs and CSOs as outlined above may be seen in the legislation governing the operation of co-operatives and the broader popular and solidarity economy. At the heart of the difficulties lies an excessive control by the state over the operations of civil economy enterprises that should be free and autonomous entities in the pursuit of their social and economic aims as recognized both by the Constitution and the Good Living Plan.

In addition, there are fundamental confusions and contradictions in the language of the legislation that invites misunderstanding on what defines social economy organizations and the social/solidarity economy as a whole.

Outlined below is a listing of some of the more problematic issues with respect to the legislation. At their foundation however, is the underlying question of what constitutes a proper role for government when it comes to the regulation and support of co-operatives, credit unions, and the kinds of associations that constitute the popular/solidarity economy.

As stated by International Labour Organization (ILO), and as borne out by the historical experience of co-operatives the world over, the basic principle that should characterize the relationship of the state to co-operatives is that of minimal involvement and intervention in matters of a co-op’s internal organization and operation.

In principle, the role of governments should be limited to establishing appropriate enabling policy and legislation that recognizes the nature and requirements of co-operatives, that registers co-operatives and grants them legal status, that compiles useful data on the co-op economy and its constituent sectors, and that supports the growth of the sector through appropriate public policies for social and economic development.

In its document, “ILO Guidelines for Co-operative Legislation” the ILO states, “In order to thrive co-operatives need a favourable socio-economic, political and administrative framework. The current development model is based on political and economic freedom. The state must ensure respect for human rights, including the rule of law, the freedom to choose one’s economic activity, free access to national and international markets, private property as well as a clear distinction between the public and the private sector based on the principle of subsidiarity.

Apart from exercising the functions of legislation, registration, deregistration, and general normative control, the state in a market economy must not interfere in the economic affairs of co-operatives.”

Based on this perspective, the following represents a listing of key issues that flow from the current legislation and which contravene the principle of a free and self-governing co-operative sector operating within the framework of legitimate governmental oversight and regulation.

= Key Issues = a) Definition of Social Economy Organizations

The characterization of social economy organizations in the legislation is inaccurate and confusing. It fails to provide a clear definition of what constitutes social economy organizations and what are their defining economic and social attributes. The legislation also cites as examples of social economy organizations enterprises that clearly fall outside the accepted scope of what may be termed social enterprises (e.g. the inclusion of small, private businesses that engage in commercial practices for purposes of self-subsistence). Such businesses properly belong in the private sector, regardless of how small they may be.

Moreover, the determining factor for the inclusion of an organization in the popular and solidarity economy is its size and the size of its revenue. These factors are irrelevant and if applied consistently would exclude any large social economy organization, as for example many NGOs and co-operatives. The key question is not whether a social economy organization makes a profit (surplus), but to what end this surplus is used. In addition, this view of social economy organizations arbitrarily and falsely excludes them from operating in the market. Clearly, many social economy organizations do trade in the market, as is the case with many co-operatives and social enterprises.

The objective of the legislation should be to facilitate the capacity of social economy organizations to operate as successful enterprises, to compete successfully with private companies, and to pursue their social and collective aims to the full extent possible.

Recommendation: The definition of social economy organizations in the legislation should be revised to reflect the essential attributes of these organizations as accepted by a growing international consensus.

“A social economy organization is one whose members are motivated by the principle of reciprocity for the pursuit of mutual economic or social goals, often through the social control of capital. The primary purpose of social economy organizations is the promotion of mutual collective benefit and service to the community.”

b) Organizations such as trade unions, professional and sports associations, religious organizations, cultural organizations, etc. are excluded from the social economy. There is no justifiable rationale for this and such exclusion contravenes the accepted definition of social and solidarity economy.

Recommendation: The legislation should be revised to include these types of organizations as legitimate constituents of the social and solidarity economy.

c) There exists a fundamental confusion with respect to the notion of profit and its relation to social economy organizations. For example, it is stated in FEATURES Art. 3 c) that there is an absence of profit motive in social economy organizations in relation to their members. This is false, as for example in the case of many co-operatives and other social enterprises.

Recommendation: this provision should be removed or revised to state that profit in a social economy organization is for the pursuit of social, not private, ends.

d) In VALUES Art. 4, a list of values such as honesty, justice, honesty, transparency, social responsibility etc. are attributed to social economy organizations. But are these values also required of other forms of commercial entities, such as private businesses or corporations?

Recommendation: Unless these values are also required of other types of organizations, such as business enterprises, this provision should be removed.

e) There appears to be a double standard with respect to the reporting and accountability requirements imposed on social economy organizations as compared to private businesses. Co-ops and other social economy organizations appear to be held to a much more stringent standard than private sector firms. Why this should be so is unclear.

Recommendation: That reporting and accountability requirements for social economy organizations should be minimized to those that are essential for the collection of useful sector-wide data and the proper oversight of activities as a check against unethical or criminal activity or the contravention of the purposes and principles defining these associations.

f) A key issue is the imposition by the Internal Revenue Service of arbitrary limits to the capital assets of social economy organizations. This constitutes an unwarranted interference in the internal financial affairs of an association.

Recommendation: That the imposition of limits to the capital assets of social economy organizations be removed.

g) In the global co-op movement it is generally accepted that all co-ops, being founded on identical principles, should be treated equally within the same legislation. Exceptions sometimes apply to financial co-operatives (credit unions) and housing co-ops because of the special nature of these services.

Recommendation: That with the exception of credit unions and housing co-ops, all other types of co-ops be treated in an equal manner. In those cases that warrant particular types of oversight, such oversight should be exercised not through the legislation but through specific state/sector agencies set up for this purpose and with a clear framework and timeframe for their mandate.

h) Undue powers of intervention in the affairs of co-operatives, including their dissolution, are granted to the Superintendent. In addition, the terms for a co-op’s dissolution are extremely vague and arbitrary and this constitutes an infringement on the freedom of co-operatives to operate as autonomous organizations. This kind of practice has been ended in most reforms of modern co-op law.

Recommendation: That the role of the Superintendent be revised to focus on the implementation of government policy with respect to co-operatives, to manage the overall regulation of the sector, to oversee the reporting and incorporation of co-ops, to oversee the collection and analysis of sector-wide data, to work with the sector to develop policies and practices that strengthen the sector, and to establish shared mechanisms for the review of co-operatives that engage in criminal activity or violate the accepted principles and practices of co-operatives.

i) In Chapter Four of the Legislation under Articles 55 and 59 – the requirements for allocation of capital gains and surplus for co-operatives – are too prescriptive and fail to take account of the particular social and economic contexts within which individual co-operatives have to operate. Moreover, these provisions are an infringement on the control rights of members to determine how best to financially manage their co-operative.

Recommendation: These provisions should be removed. Aside from the requirement to provide for an indivisible reserve, or for investment in common co-operative financial pools, other matters of allocating capital within a co-op should be left to its members.

k) In Section Three, dealing with Educational Co-operatives, it is unclear why teachers, as primary stakeholders in schools and the education system, should be prohibited from being members in an educational or school co-operatives.

Recommendation: That this provision be removed.

l) Co-operative Federation, Art. 82 – It is unclear why co-op federations must be national in scope or why a minimum of thirty or more co-ops is needed for their formation. This seems arbitrary and ignores the particular contingencies of different co-operative sectors and their specific needs.

Recommendation: That this provision be removed.

m) Chapter Seven – Dissolution and Liquidation –The terms for dissolution outlined in this section are extremely vague and easily subject to arbitrary interpretation and abuse.

Recommendation: That the terms for the dissolution and liquidation of co-operatives be clear and specific and restricted to matters of criminal behaviour. Moreover, an appeal process acceptable to both the government and the broader co-op sector should be established.

n) Part Three – National Council of the Popular and Solidarity Economy – There are issues with the conception and organization of the National Council. These are primarily due to the lack of meaningful representation from civil society and the popular/solidarity economy and the domination of the Council by government bodies.

Recommendation: The organizational structure and mandate of the National Council should be reviewed with the aim of establishing meaningful representation from the popular/solidarity economy.

p) Part Four – Superintendent of Popular and Solidarity Economy – The powers of this office are too broad and contravene fundamental principles of a free and autonomous popular and solidarity economy. This single element in the legislation is perhaps the one most in need of reflection and reform.

Recommendation: That the powers and role of the Superintendent be reviewed within a new framework of minimal intervention in the internal operations of social economy organizations. That this review take place as part of a broader review of the legislation ad public policy to be carried out in collaboration with the co-op sector and the broader social and solidarity economy.

q) Art. 150 – Criminal Liability – Is the absence of limited liability for Officers and Directors for decisions made in violation of the rules or gross negligence different from the liabilities for Officers and Directors in private businesses and corporations? If not, why not?

r) Multi-stakeholder Co-operatives

Multi-stakeholder co-operatives incorporate more than one class of member in their organizational structure. This form of co-operative organization has been extremely effective at combining the mutual and complementary interests of different classes of stakeholders in the common enterprise of the co-op and has been key in the development of new forms of service to their members. Currently, there are not provisions for the recognition of multi-stakeholder co-ops in the legislation.

Recommendation: That multi-stakeholder co-ops be recognized as a legitimate form of co-operative in the Act.

s) Investment Shares

The power of co-operatives to issue investment shares in addition to member shares has been an important new development in legislation governing co-operatives in many jurisdictions. This has been seen as an important additional source of needed capital for co-ops in addition to capital raised from traditional member shares and helps to address a historical problem of capital scarcity for co-operatives.

Recommendation: Provisions for enabling co-operatives to issue investment shares should be included in the legislation, along with clear protections for guaranteeing member control of the co-op through the placement of strict limits on the control rights of investors including limits on investor representation on a co-op’s board.

t) Public Sector and Indigenous Co-operatives

There is no provision in the Act recognizing the ability of public authorities, including regions and municipalities, to join or form a co-operative. Neither is this freedom recognized for self-governing indigenous groups.

Recommendation: That public bodies, including municipalities, be recognized as having the freedom to form, or join, co-operatives.

Recommendation: That self-governing groups such as those representing indigenous populations, be recognized as having the freedom to form, or join, co-operatives.

u) Community Service Co-operatives

Community service co-operatives, also known as social co-operatives or solidarity co-operatives, are special types of co-operative whose primary purpose is the promotion of social inclusion and the provision of community or social services to the community, in addition to co-op members. Because of their unique social mandate and the social benefits that accrue from their work, legislation has often conferred particular tax benefits and subsidies as an important component of their operations. These benefits are linked to the fulfillment on the part of the social co-ops of specific social inclusion provisions relating to the training and employment of marginal and vulnerable groups.

Recommendation: That the legislation recognizes the specific typography of social/solidarity co-ops as a distinct form of co-operative with an explicit community service mandate and with accompanying tax and public subsidies designed to promote and support their social mandate.

Economía Civil y Economía Social del Conocimiento