Empowering non-organizations (2): Pockets

Posted on Friday, 16 May, 2008 by


Pockets for communities paying their way, can we think of transparent ways? (by guano on flick, cc)

It takes energy to stay organized, even as an individual. So each organization spends some of its energy just to stay organized; each organization has dual objective of reaching its objective and staying organized. Therefor, for some causes, the potential benefit of organizing, does not outweigh the transaction cost involved: these causes or opportunities do not get an organization together.

Now with the collapse of costs for I, C and T, and especially also with the tools getting more usable for non-geeks, transaction costs have come down. Organizations that formerly were impossible, are now feasible.

(Again, Clay Shirky worded it very nicely; he uses the term Coasean floor. The Coasean ceiling is when a firm grows too large, transaction costs get too high; it breaks up. Under the Coasean floor are the other end of impossible organizations, those that create too little value to pay any transaction cost. As the Coasean floor is dropping, some of these formerly impossible organization now rise above the floor.)

As soon as these “non-organizations” are up and above, when the people in the group realize they are a group, they begin to see new potentials. However, working on the potentials costs energy, and before they know it the transaction costs rises and makes the organization sink back under the Coasean floor; many non-organizations dissolve again or will forever hoover around the floor level.

Despite of that, some of these ultra-lights manage to grow legs for getting places, and soon after they need pockets to pay their way. Many of them struggle, as there is no model for their group.

How can different organization models contribute to collaborative interaction?

One step is to enable communities or other “non-organizations” simple collective money management. Move from a ultra-light to light: get pockets.

Pockets might have the following characteristics:

  • online bank account in the name of a group
  • international transfers simplified, not location bound
  • “stashes” or otherwise rules: eg only spending on books and travel
  • monopolies made impossible; agreed authority levels
  • almost real-time report to wider community about what is happening to their money; visible and understandable
  • rules to be agreed by quorum of members, account blockable by certain (even all?) members
  • contribution rules can be set by community, eg gifts, fixed contributions, etc.
  • One option should be not strict yes/no membership, but “participation based contributions” on a semi-voluntary basis:“Based on your involvement the past month, our “xyz Group” agreements (as collectively decided dd…) suggest that 50 Euro might be a suitable amount to contribute this month.”
  • visuals! where does our money come from (who is (not) contributing?) and what do we spend it on?
  • almost like a petty cash: based on “flows” of money, not collecting it

Risks could be made manageable by:

  • never allow having more than a certain maximum amount, which is fairly low, e.g. 1000 euro. Compare to Just In Time stock management: In case of an event, when lots of money is needed, it is better to have very frequent direct debits (even daily) from contributors, instead of a large amount stored.
  • Members at all time control their own contributions AND can block the collective account

Related blog posts are here:
John D Smith, Learning Alliances: “Pockets and Legs on Facebook Groups”
and mine just below: “Empowering Non-organizations: Legs and Pockets”, also published here.