January 31, 2022
Networks based on self-organizing principles have come a long way in recent years to becoming true alternatives to working in more traditional organizations —from locally based or online communities, coops, freelancer collectives, “Neo-Guilds” or DAOs. Yet when it comes to addressing questions of money, value and power, we still seem to be lagging behind.
I’ve observed this both as an active member of such networks (such as Ouishare, Enspiral, the Community Weavers Guild, the Genesis DAO), and as a supporter to many others. There has been and is a lot of experimentation under way on how to manage (financial) resources collectively and transparently, but more often than not, despite best intentions, groups fall back into traditional ways of budgeting and financial decision-making, or simply avoid dealing with money at all. This challenge is one of the topics of the course Thriving Networks . As part of this program, we look at four common challenges with financial decision making in networks that we’ve observed again and again. I’d like to share these here now, along with some examples of what groups have tried to address them.
When it comes to involvement in financial decisions in networks, there tends to be a large gap between intention and reality. A common challenge is that despite budget decisions theoretically being open for any network member to be involved in, most of the time we only see a tiny fraction choosing to participate. From having talked to many groups signing up for Cobudget wanting to create participatory and transparent financial decisions, I was often surprised to hear again and again that it was usually one or two people, often the passionate founders, doing all the budgeting. When asked why, they usually said that nobody else wanted the job.
Back when I would lead the annual budgeting process for the Ouishare network, I often heard statements like “We trust you, you’re doing a great job!”. This would frustrate me greatly, because while I appreciated the trust given to me by my peers, what I really wanted was more people to engage with the process and to not feel alone with what felt like important decisions. These experiences have given me the impression that despite the intention for more member involvement in network finances, the outcome is often less participation than even in most traditional organizations.
[Note: if you are involved in DAOs, you might be thinking that it’s different when all organization members have formal voting power. I have not reviewed stats of participation rates in DAOs in detail, but from my limited experience with DAOstack’s Genesis DAO experiment, it seems to me that the human challenge of making it easier for a group to engage with financial decisions remains, whether they are on chain or not. If there are DAOs out there with high participation rates, it’s probably because they are doing something else right.]
So why don’t people get involved? There are a LOT of possible reasons (including people’s personal beliefs about money), and they often are not the reasons you expect. I would recommend talking to your network members directly to understand what might be getting in the way.
4 years ago, the CoTech network shared they were achieving good turnouts and a high level of discussions on their financial decisions. At the time, they were using the collaborative decision making tool Loomio to make financial decisions about network costs. Here are some of the key characteristics:
One of the reasons many people don’t participate in financial decisions is because they feel overwhelmed by all the financial information— which is totally understandable! Most people are not used to looking at budgets, which can get complicated fast. It’s almost impossible to glance quickly at a budget spreadsheet and share an opinion, and we underestimate how much effort it takes to understand a spreadsheet we didn’t create ourselves.
Ouishare France has made several efforts to increase the financial literacy of members by hosting open sessions each year to explain how the budget works and what it means. By doing this year after year, people get more familiar with the process, and engaging with the annual budget becomes normalised. In addition, a public handbook with digestible financials was created, as part of which each local Ouishare community shared their budgets.
Core costs or fixed costs are costs that are considered to be crucial to the functioning of the network. It may seem trivial to decide on what these costs are, but it’s not. The decision about core costs is often a deep and potentially conflict-laden conversation in disguise: it’s about what the group stands for and what they value individually and collectively. There is no right answer as to what should be considered core costs, it’s a conscious choice a group needs to make. In addition to the challenge of agreeing on such critical questions, decisions about core costs tend to be especially drawn out because once an item becomes core cost, that budget line is no longer continuously questioned.
A few years ago there were passionate conversations about this topic in the Enspiral Network, framed around the question: “What does it mean to keep the lights on?” It started because there was disagreement on whether the role of Catalysts, who are a critical connective tissue of the network, should be included in the network’s core costs or not. Until that point, Catalysts were funded separately, with contributions from network members willing to contribute to a Catalyst fund. For some, keeping the lights on meant sustaining the Enspiral entity, so paying for accountancy fees, insurance and having emergency reserves. Others saw the most essential work in the network as care work, keeping the network connected, and hosting annual retreats. For them, without an annual gathering, there was no Enspiral.
The framing of the conversation about core costs in this way enabled a very rich conversation to unfold, leading to Enspiral’s financial working group making a proposal to members, to update their financial agreement to include Catalysts in the core costs. How a group has this conversation matters.
Of all the challenges, I find this one to be the most fascinating and frustrating: avoiding financial decisions completely. This manifests as money going unspent or not being brought into the network in the first place, because it feels too difficult to make a collective financial decision. Reasons may be the fear of an exhausting, drawn out decision-making process, uncovering tensions or personally feeling uncomfortable with making financial decisions. This can stem from a belief that if there is no money involved, then all the complicated dynamics this might unleash won’t happen either. Consequently, money is kept mostly outside of the network and activities are sustained through volunteer work. In mission focused not-for-profit networks, this money avoidance pattern seems to be especially common.
In Greaterthan we have been experimenting and supporting other networks with practices to talk openly about money and bring awareness to the personal stories and convictions about money that we all hold. This helps groups be more intentional about how they want to relate to money as a network. Some of these practices are the money game, money piles and happy money story.
It can also be useful if there is a clearly defined decision making process for money decisions that does not require reaching consensus. For instance in Enspiral, a portion of funds used to be allocated towards a practice called collaborative funding or cobudgeting. In this practice, the final decision to allocate funds sits with each individual who has money in their Cobudget account. This removes a lot of friction from financial decision making, because each individual allocates funds based on what they consider important, and no consensus is required. The final result is the outcome of many small actions. Read more in this article about how Enspiral’s cobudgeting practice has evolved. To see another version of this kind of process, read about the CoTech Networks CoTech fund.
In the end, addressing all of these challenges comes down to a group’s capacity to have difficult conversations. Frameworks, tools and protocols can help along the way, but they are not the solution — people and their capacity to face discomfort together, and move through disagreement are.
Are you part of a network and facing similar challenges? If you would like to dive deeper into this topic and learn alongside a cohort of network leaders, join one of our upcoming cohorts of Thriving Networks — How to create networks where money, value and resources are in flow.
And if you are curious to unpack your personal relationship to money, come to one of our Money Game Experiences (offered monthly)!
Thank to Kate Beecroft, who was my thinking partner in articulating the core idea of this article.
by Manel Heredero
This is the story of in99, a small legaltech startup, that put in place a process to recruit high-quality professionals without a HR department and without one-on-one interviews. Doing this is part of their journey towards what they call a “Distributed Future”, which includes, amongst other things, becoming a Remote First company.
This is a case study that looks at the evolution and insights from one of Greaterthan's internal, the ‘Happy Money Story’, a collaborative process for distributing budgets.
Read about how the marketing agency BlackwoodSeven experimented with Cobudget.