Re: getting money up front and non-profit legal structure
From: David Heimann (
Date: Sun, 14 Feb 2010 15:22:02 -0800 (PST)


In our development era (Jamaica Plain Cohousing), we began with member capital contributions similar to what Kristen is talking about. However, as the initial phase moved into full-fledged land acquisition, design, permitting, marketing/recruiting, and other various activities that needed to happen before we could obtain a construction loan, we added member loans (i.e., loans from members, similar to capital contributions in terms of risk, but with a very high interest rate in compensation), and indeed external loans, some of which were of short enough duration that they needed to be paid back with later loans (but which got us through some very critical periods). We never took on external investment capital nor worked with a development partner.

In other words, in addition to internal contributins and loans we did take on external loans that needed to be paid back, but never gave up a percentage of our ownership.

        Hope that helps.

David Heimann
JP Cohousing

From: Kristen Simmons <simmonskristen [at]>
Subject: [C-L]_ getting money up front and non-profit legal structure
To: cohousing-l [at]
        <ae8bfc1f1002111303x56cbeac4hd47f4aa09869d736 [at]>
Content-Type: text/plain; charset=ISO-8859-1

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!

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