Where Value Flows

A community that cannot say where its money goes will be governed by whoever does.

The rest of this guidebook is about governance, founding, and spread. This tool is about the thing that quietly decides everything: how value moves through your Community Company — what gets paid first, what gets capped, and who shares in what remains. Get this right and extraction has nowhere to hide. Get it wrong and the most beautiful charter in the world will slowly rot. Companion to Step 2 — Establishing Legal Agency and Personhood and Step 6 — Collective Governance of the Cosmic Superorganism.

The Idea: A Waterfall, Not a Pie

Most organizations split their income like a pie — everyone fights over slices, and whoever has the most power cuts first. A Community Company uses a waterfall instead: value fills one pool, and only when that pool is satisfied does it overflow into the next. The order is the values. What you pay first is what you actually believe.

Here is a local-scale waterfall. Adapt the names and thresholds to your place; keep the order and the principles.

Pool Filled before moving on
1 Keep the work alive Operating costs — rent, tools, materials, the things without which nothing happens.
2 The people who do the work A fair local living for contributors first — before any return to capital. Labour is sovereign; it is not the residual.
3 A cushion A reserve toward ~6 months of resilience, so one bad season cannot end you.
4 Return to any who lent Those who contributed money earn a capped return (a sensible ceiling — e.g. 7%), never control and never an unlimited claim. Capital is rented, not enthroned.
5 Repair and the Commons A share to regenerate what the work touched, to the shared Commons, and to the Legacy Pool — making founders whole for the unpaid hours and gifts they put in at the start.
6 Share the surplus What remains is shared among contributors and stakeholders by agreement — and a tenth flows inward to the wider federation you belong to (Voluntary Tithing), so the whole grows stronger.

The Principles That Make It Honest

These matter more than the exact pools:

  • Order before amount. Decide the sequence first. The sequence encodes your values more truthfully than any percentage.
  • Capital is capped and subordinate. Money that helped is honoured and repaid with a fair, limited return — and then it stops. It never converts into ownership or control. (This is the sovereignty of labour and the subordinate nature of capital, made structural — see Capital Subordinate To Purpose.)
  • The Asset Lock holds. No member, founder, or funder ever extracts more than the return of what they put in plus honest compensation for honest work. The Company cannot be bought, sold, or cashed out. Wealth stays in service of the Driver. (Record this in your Charter, Section 7.)
  • Everything is visible. Every member can see the state of every pool, always. Transparency is not a courtesy here; it is the immune system.
  • Caps and floors, not maximums. The aim is not to maximize any single pool but to keep the whole body in health — a living floor for people, a ceiling on capital, a cushion against shocks.

The Legacy Pool — Don't Skip It

The most common way founding teams quietly poison themselves is by forgetting who gave what at the start. From day one, keep a simple Legacy Ledger: each founder's unpaid hours, money advanced, and gifts contributed, with a modest "to be made whole" figure they all consent to. No external audit — just honest mutual agreement. Pool 5 repays it later. People give freely at the beginning; recording it freely is what keeps the giving from curdling into resentment.

Founder Unpaid hours Money / assets advanced Agreed "make-whole"
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To run value through a waterfall like this is to learn the System by doing it: that capital serves and never rules, that the people come before the profit, that nothing is extracted from the Commons, and that what we build is held in trust for all generations. (For the lineage of thought behind it, see Before and Beyond Mondragon.)

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