Agreements and Policies #4

by Raven

4:  Money, Money, Money, Money!

Your commune can be as communist as you like; but if you live in the United States, you will have to deal with the capitalist system, and that means, your community will need money.

My suggestion is that after you figure out your labor system, you work on your potential community’s financial system.  No matter what kind of community you start, you will have food to buy and bills to pay.  If you are starting a non-income-sharing community (a co-op house or cohousing community, for example), you will still need to figure out how everyone will share expenses.  Who is going to pay the bills?  How will they be paid back?  Does everyone pay the same for everything?  (Examples of people paying different amounts include paying different amounts on the rent or mortgage depending on the size of each person’s room or apartment and creating a sliding scale for expenses depending on each person’s income.)  Is there a certain date everyone needs to pay by?

In an income sharing situation, things are both easier and harder.   They are easier because all income generally goes to a specific location and one or two people are responsible for paying for everything (and usually these are folks who like thinking about money).  It’s harder because it requires a certain degree of trust and some coordination (the more people, the more coordination is needed).

The first thing you need to know about setting up an income sharing system is the difference between income and assets.  Income is any money coming to anyone in the community after they join the community (as well as any money going to the community as a whole).  Assets are things (including money) owned by folks before they joined the community.  An example is if someone has (say) a million dollars in the bank (or actually any money in the bank) before they joined the community.  Unless they want to give money to the community, that money is theirs but they can’t touch it while they are in the community (because that would give them privilege over others who don’t have as much).  However, any interest that they get on that money once they’ve joined the community is income and should be communal and treated as any other source of income.

Income in a commune generally comes from one of two places, either income from individuals which is pooled together or income from a community business, and sometimes both. Most of the older communes get all their money from their businesses (East Wind’s nut butters and sandals, Acorn’s seed business [SESE], and a large variety of Twin Oaks businesses, including hammocks, tofu, and SESE Seed Rax–and several more).  Starting communes usually pool their money together, sometimes while developing a cottage industry.  (Glomus, for example, had a combination of money from their farming business as well as what individuals made through other means or at least that was the situation while I was there.)

I think that it’s important to have at least two people (who are not a couple or close friends) who will manage and keep an eye on the money and to have a transparent system that anyone can look at.  Regular reports to the community are important as well.  One thing to note is that many people in communes don’t want to have to think about money, which is fine as long as there’s at least a couple of people who do (as above).  Unfortunately, I know of two really bad situations where there was just one person doing all the financial work and, in one case, that person embezzled a whole bunch of money before anyone noticed, in the other, the person handling the money became depressed and didn’t look at the cash flow for months and when they did, the commune was in such dire financial straits that it didn’t survive.  You really need to have more than one person in a community watching and handling the money.

All this is to say that once you have your labor situation figured out, it’s time to think about how you will handle money.  Set up a simple system that anyone can look at (spreadsheets or Quickbooks or some clear way of watching income and expenses), have a couple of people who will do the financial work, and do regular reports on how the community is doing financially.  If there are problems, this is a time to get the whole community involved because a group will have more ideas and resources than any individual.

A last piece of the money situation is how to deal with “unnecessary”/”luxury” expenses.  In a commune, everyone’s ‘needs’ are met (although there are often disagreements about what is a need and what is a luxury).  But it’s important to find ways that individuals can also get things they want that they don’t absolutely need.  Call it a stipend or allowance or mad money, it’s what I will talk about in my next post.