Inside Gratipay

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Operating Agreement

Gratipay, LLC is a worker-owned cooperative, organized under and subject to the laws of the Commonwealth of Pennsylvania in the United States of America. In this document, “Gratipay,” “the company,” and “the cooperative” refer to Gratipay, LLC. This is the operating agreement that defines how the members of Gratipay govern the cooperative, and it constitutes the entire agreement between Gratipay and its members.

Basic Definitions

A cooperative is a democratically governed, for-profit company. Non-cooperative companies weight power by equity, one vote per share. Cooperatives distribute power according to the fundamental equality of all natural persons (also called “individuals” in this document), “one member, one vote.” Gratipay subscribes to the principles and values of the cooperative movement, and intends for this operating agreement to be consistent with those values.

An LLC is a Limited Liability Company, a flexible legal structure that protects its owners from legal liability, while avoiding the double-taxation that comes with other corporate structures.

Not all LLCs are cooperatives, and not all cooperatives are LLCs, but an LLC can be a good choice for structuring a cooperative. An LLC is an especially compelling choice for Gratipay because of the diverse international composition of our expected membership (which is easier handled with an LLC than with other structures), and because Gratipay was already structured as a single-member LLC before it evolved into a cooperative.


Gratipay members are individuals. They share in both the work of the cooperative and its profits and loses (they are “active” members), as opposed to only sharing in the profits and losses without sharing in the work (they are not “passive” members). Gratipay is member-managed, not manager-managed. Gratipay members are owners, not employees. Members may bind the company.

Gratipay decides to invite new members through a vote of the existing membership. In general, the way to earn an invitation is to collaborate in our work for a long time. Once invited, the individual must provide an SSN or ITIN and consent to this operating agreement in order to become a member of Gratipay. Gratipay does not require members to make a capital contribution.

Members may remove themselves from Gratipay for any reason at any time. Gratipay may remove a member against their will for any reason at any time, by a vote of the remaining membership. Gratipay automatically and immediately removes a member (no vote required) if they:

Gratipay may reinvite any individual at any time, but a proposal to reinvite someone must clearly indicate the circumstances of any and all previous removals.

Members may not sell or transfer their membership.

Gratipay maintains membership records on


Gratipay makes decisions in online channels, primarily GitHub. Most decisions are by general consent. That is, a member announces an intention and waits for an amount of time proportional to the importance of the decision. If no-one objects then the matter is decided. If another member objects then the members involved work out a consensus. If they can't work it out then Gratipay votes.

Gratipay calls votes by general consent. By default, votes are open for 72 hours and require a majority to pass. The quorum is:

Members cast votes using comments and/or reactions on GitHub issues. Any member may count the vote and publish their count. Those members who publish a count within 24 hours after voting closes decide together on the final count.

The following decisions require a vote with a seven day voting period and a majority in favor to pass:

The following decisions require a vote with a 14-day voting period and at least 75% in favor to pass:

In the case of a vote to decide whether to call a vote, the period is 24 hours and a majority decides it.

Gratipay software is open source. In the case of irreconcilable conflict, members in the minority have the option to fork.

Gratipay maintains a record of it decisions in GitHub issues.


Gratipay restricts access in various ways to its various systems (e.g.: web hosting infrastructure, databases, and upstream payment processor dashboards and APIs). For each system, Gratipay invites members to have access to the system by a vote of 100% of the subset of members who already have access to the system. The usual quorum rules apply, scoped to this subset.

Any member with control over access to a subsystem may withdraw access from any other member at any time for any reason.

Gratipay maintains a record of each member's access in their onboarding ticket.


Gratipay makes guaranteed payments to its members using a “take-what-you-want” (“twyw”) system integrated into the website. Gratipay does not distribute profits apart from guaranteed payments.

Gratipay does not accept capital contributions from members. If any member wants to let Gratipay use their money, they may loan it to Gratipay on mutually agreeable terms.

Gratipay's fiscal year is January 1 through December 31.

Gratipay allocates profits and losses at the end of the year based on the amount of money each member otherwise takes in guaranteed payments during the year. For example, if there are two members, and during the year one takes $150,000 in guaranteed payments and the other $75,000, then if there is $36,000 in undistributed profit at the end of the year, Gratipay allocates $24,000 to the first and $8,000 to the second.

The United States' Internal Revenue Service (IRS) taxes Gratipay as a partnership. Each year, between January 1 and March 15, Gratipay files a Form 1065 with the IRS, and sends a Schedule K-1 to each member showing their income through Gratipay for the year. Members are responsible for paying all taxes on their income through Gratipay, including any quarterly taxes. Member income through Gratipay includes both the distributions of guaranteed payments that members take for themselves, and the year-end profit/loss allocations that stay within Gratipay and are not distributed to members. For example, if a member takes $75,000 in guaranteed payments during the year, and is allocated $8,000 in profit at the end of the year, then their taxable income through Gratipay for the year is $83,000.

Members are entitled to a spending allowance of an equal share of the money in Gratipay's primary operating account, computed for each month based on the account balance and the number of members at the end of the previous month. Members have no allowance in their first month. For example, if at the end of April the account balance is $10,000 and the number of members is eight, then each member is authorized to spend up to $1,250 in May. Members are entitled to a debit card linked to Gratipay's primary operating account.

All expenses are authorized by one or more members, and authorized expenses go against each member's monthly allowance. By default, the member who makes the payment authorizes the expense. Even when a single member pays an expense, multiple members may co-authorize the expense, with the expense counting against each member's total monthly allowance in equal proportion by default. So, for example, if payment of an invoice for $150 is authorized by three members, the remaining monthly allowance for each decreases by $50.

Gratipay maintains financial records on GitHub.

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