An anarchist's incorporation cookbook

Yesterday's news brought us an article from a group of anarchists about incorporation, and you may have noticed a bit of reluctance toward getting any more entangled with the government than is absolutely necessary.   Not surprising, that--that's part of the anarchist value system. 

But you don't have to be an anarchist to want to avoid dealing with the government when starting up a social enterprise.  Doing good can be challenging, but it has other words; paperwork can be messy, hard, expensive and--when you add the possibility of tax audits and attorney general investigations that come with getting on the radar screen--risky.    

So why bother?

Here are a few key advantages of incorporating.  Later next week we'll add some details regarding a few other options, such as forming a trust ("property with a purpose") or an unincorporated association.  

• Limited liability:   Forming a corporation means that insiders are not personally liable for the group's obligations.  In other words, your house is not on the line when the group gets sued for not honoring a contract or accidentally hurting someone.

• Contracting:  If you want the organization to open a bank account, to acquire property or to enter into other agreements, incorporation helps clarify the legal relationships and may even be required.

• Decision-making rules:  Corporate law is not just a bunch of requirements.  It also provides a set of standard decision-making rules.  You can change many of them in your bylaws to suit your organization's particular needs, but when disagreements arise it can be useful to have a set of procedures for resolving them ready-made out of the box.

• Funding:  Grantmakers & other venture funders are often more comfortable giving money to corporations--which are legally distinct from their members, directors and officers--than to individuals in an unincorporated association.