DAY 9: Community Finances or How To Never Pay Income Tax Again (PDC 2010 with Bill Mollison and Geoff Lawton)

September 29, 2010

Bill Mollison lecturing the PDC 2010
Today Bill and Geoff shared information about what may be the main questions we all have. How do we fund all these wonderful ideas we’ve learned. How do we navigate community and government structures; how do we organize people for action. It was not a topic we expected from a Permaculture course, but it’s a very important one. It stirred up questions and lengthy discussions, skeptical gazes and hopeful eyes.

Community Finances

There are two types of community economies: formal economy and informal economy.

Formal economy is your 9 to 5 jobs, monetary system. It’s the system based on the idea that wealth equals the ability to consume more. Formal economies collect taxes and are prone to power and corruption.

Informal economy is a lot bigger than formal one, but it is also more subtle. It’s what David Holmgren calls ‘invisible structures’. Informal economy within a community is based on favours, trading, tolerance to each other, understanding and compromise. Even in this class after one week we’ve already established informal economies. We trade favours and knowledge, we co-operate and learn to tolerate our differences.

Promissory Notes

Promissory note is like a gate-way into independent local economy. It’s piece of paper that states, “I [your organization name here] promise to deliver [product here] before [expiration date here].” It works like an interest-free load to jump-start your enterprise, and it also allows you to test your target audience for engagement, before you go ahead and invest lots of money into it.

Five secrets to successful promissory note campaign:

  1. Begin promissory note distribution to your friends and relatives, and then expand to larger community.
  2. Put a personal message on the back, something that will make people feel warm and fuzzy inside.
  3. Give a discount of 12-15% off retail price to create incentive for purchase.
  4. Make it in paper! There will be a large percentage of people who will misplace the note and will never claim it.
  5. Make promissory notes look attractive. Many people collection them and will never cash them in.

Never Pay Taxes or Buy Land Again

It’s actually very simple: create a trust. Well, two trusts, really. One is a charitable trust that is your Permaculture research institute, and the second is a trading trust that funds the first one. It’s that simple.

Trusts are not required to pay taxes, and you can now accept gifts and donations from governments and people in form of goods, services or land. There is a lot of land that is not suitable for monoculture crop production, and counsels would happily load it off to a Permaculture organisation because they simply don’t have the capacity to manage it. My own personal mantra is that “good things come to those who ask.”

I realize that this form of operation requires a very high level of personal ethic in order to avoid the temptation of power accumulation. But then again, same ethic applies to Permaculture way of being…and we are each individually responsible for arriving at it.

To learn more about trusts and funding, read Chapter 14 of Bill Mollison’s “Permaculture: A Designer’s Manual” book.

First Design Exercise

We are finally outside on the paddock designing our first landscape. The class is split into 7 groups (about 12 people each), and we are to come up with a design outcome for a client brief. We’ve got a funny one! We have a family of 8 immigrants from Slovenia, who are looking to build a house from local materials cheaply, and to have all of their energy, food and waste managed on site. They want to have goats, ducks, chooks and pigeons, and lots of fruit trees to make preserves. All this on a 1 acre plot of urban land.

The area we are working with is part of the Trinity College grounds; it’s the large open space in the middle of the campus. So far, it’s been a lot of fun imagining how this space will function and visualizing this immigrant family milking their goat :) . And the group dynamics are really interesting too…it’s only the first day, I am sure things will evolve as we go along. Great stuff!

Here are a few photos from today’s design session.

researching and strategizing as a group

researching and strategizing as a group

sketching ideas

sketching ideas

first draft of the design

first draft of the design

I am sure things will change a lot during the process, but it’s the journey that matters. Back with more tomorrow…

{ 4 comments… read them below or add one }

1 Tatyana November 5, 2010 at 4:40 pm

Absolutely agree with you!! The idea is not evade taxes on profits using clever “tricks”, but to keep all the resources within the system. Taxation is a tricky business. Yes it pays for schools and hospitals (in some countries), but it also pays for wars, undeserved bailouts and other things I would rather not support.

If you live and breath Permaculture (as Bill Mollison does, I think…), then you WILL end up giving all the profits from the trading trust to the charitable trust and report no income. Still, you are paying land taxes and goods purchased taxes, so you give to the system where it’s due.

And good solid advice is always helpful. Thank you for bringing up this point, it’s definitely important!

2 Darren (Green Change) November 5, 2010 at 3:43 pm

If you’re going to get into trusts, make sure you buy a good book and have a really good accountant/financial advisor/lawyer.

Saying that a trust isn’t required to pay income tax is a bit of a furphy. Trusts never make a profit (they MUST pass on all profit to beneficiaries every financial year), so of course there’s never any tax to pay. The beneficiaries, however, must declare the income and will pay tax on it.

Doing “clever” things with trusts as outlined in chapter 14 (e.g. having one trust be a beneficiary of another, and donating between trusts) requires that you know exactly what you’re doing. If you transfer money (or property) in the wrong way, or at the wrong time, you can cause yourself a lot of grief and end up with tax problems.

Not saying trusts aren’t useful tools, just that you need to have very good advice – and follow it!

3 Tatyana November 3, 2010 at 7:15 pm

Yeah! Wow, are you planning to buy land? It’s very exciting! My partner and I have the same plan, and we are preparing for it by practicing and learning about Permaculture.

4 Chiot's Run November 2, 2010 at 11:17 pm

Fascinating. I’ve read a few permaculture books and find the whole idea/process really interesting. Someday I’d love to see a real permaculture garden in action. I try to implement some of the ideas in my garden, must read more about it for my future farm!

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