getting money up front and non-profit legal structure
From: Kristen Simmons (
Date: Thu, 11 Feb 2010 13:03:43 -0800 (PST)
This is not my area of expertise, but here goes. Please keep in mind
that what worked in Massachusetts may not work elsewhere. (States can
have very different laws about this stuff.)

Stonybrook Cohousing does not have any "investors". It only has
members who have joined on to the LLC operating agreement. The
agreement does contain information about the risk of the project.
Because of the LLC legal structure, individual member risk is limited.
The roughly 30 page agreement was drawn up by the group's attorney,
and all members were encouraged to have it reviewed by their own legal
counsel (although the group tried to use plain english as much as

This legal structure seems to be pretty common for forming groups. And
most, to my knowledge, do not seek funds from outside investors who
would need to be given a specific rate of return, at least not until
it's time for the construction loan. And that's a different can of

Group members put in the up-front money for the project, which becomes
part of their down payment on their home. We had money saved and/or
borrowed from family or others. And the earliest group members took a
heck of a risk. Later members don't have to take that risk.

Because groups are building housing for themselves, it's not seen as a
"non-profit" by the government, although most groups make no profit
what so ever. Both Diana Leafe Christian and Chris Scott Hanson
address these issues in their books about cohousing.

Good luck!

If they would have lost money, they would have been liable.  Even if they did
not get the return they expected, or were unhappy living in their house because
their condition or circumstance changed.  There are people in prison right now
for doing just what is described below.

The difference is whether or not they are (preferably) accredited investors who
have a history of accepting risk.  I would not do it without securitizing it
unless every member had done something previously with me in the same vein.

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