A well-intentioned platform can still drift toward extracting more value from its community over time. The Town Works is structured to make that harder — the mechanisms are below.
- Legal entity
- To be formed — see below
- Structure under consideration
- Benefit corporation (leading option)
- Current service fee
- 6% of commerce — reviewed, not a fixed ceiling
- Fee & surplus policy
- Member-advisory — see stewardship below
- Roadmap priorities
- Member vote — advisory for 3 months, then binding
- Financial statements
- Not yet published — pre-launch
Benefit corporation vs. nonprofit
The Town Works facilitates ordinary economic transactions — payments, contracts, eventually financing — that fit comfortably inside a mission-locked commercial corporation. A California benefit corporation carries expanded obligations around pursuing and reporting public benefit, which is the direction we currently lean for the operating entity. A companion nonprofit foundation, funding access and community reserves through philanthropy rather than transaction fees, is a plausible later addition — not a day-one requirement.
The extraction-rate KPI
We intend to publish, monthly, what share of neighborhood commerce facilitated through The Town Works stayed with participants and their community versus what was absorbed by payment rails, coverage reserves, and our own operations. That number — not growth or take rate — is the one we're organized around. See the cost model for how it's calculated.
Annually, we’ll also publish two numbers next to each other: the service take rate (currently 6%) and what it actually cost to run The Town Works that year, as a percentage of commerce. When the fee brings in more than actual costs, the difference goes to the operating reserve or surplus above — not somewhere unaccounted for. When costs run ahead of the fee (likely in the early years), pay-it-forward support and existing reserves cover the gap, and the fee itself doesn’t need to move every time a hosting bill goes up.
What this is — and isn’t
- No employment
- The Town Works doesn't employ anyone who uses it, and doesn't treat any participant as its employee or independent contractor. Whatever work happens, happens directly between neighbors.
- No 1099s or tax filing, on our part
- The Town Works doesn't prepare, file, or manage 1099s. Once real payments are live, our payment processor (Stripe) will — as any payment processor does — independently issue 1099-Ks to providers who cross IRS thresholds, per its own regulatory obligation.
- No TIN/EIN collection
- The Town Works doesn't ask for or store Social Security numbers, TINs, or EINs. If you enable paid transactions, Stripe collects what it needs directly, for its own account-verification requirements — never passed through us.
- No legal advice
- The work agreement is a standard form provided for convenience, not advice customized to your situation. For anything high-value or complicated, get your own counsel before you sign.
- Coverage is a form agreement
- Both the community reserve and catastrophic coverage run on published, standard terms — the same for everyone who opts in (or attests out) — not negotiated case by case. See /costs#coverage for what each one covers.
Stewardship of the fee, not a ceiling on it
6% is closer to a typical real-estate commission than to a typical marketplace take rate — deliberately. It’s not pegged to the literal marginal cost of one transaction: early on it likely won’t cover costs; at real scale it may generate more than the marginal cost of processing a given job. We won’t promise a number we can’t back up — we don’t yet know what insurance, fraud prevention, compliance, support, or some future feature will actually cost. What’s durable instead: fees stay as low as reasonably practical while supporting a durable, well-maintained service, and any material change gets explained publicly, not just posted as a new number. The current fee is published on /costs.
What it’s meant to cover, in five buckets that behave very differently as this grows:
Technology
Database, hosting, storage, email, SMS, auth, monitoring, security tooling — usually the smallest bucket early on.
Financial operations
Payout costs, refunds, chargebacks, fraud losses, reconciliation, tax reporting, bookkeeping — separate from the card-processing cost you see itemized at checkout.
Trust & community operations
Support, moderation, disputed transactions, claims review, appeals, member governance — likely the biggest bucket eventually. Most transactions take no labor; one bad dispute can take hours.
Institutional overhead
Accounting, filings, legal review, insurance, banking, board administration, compliance — a public-benefit institution handling money and trust should spend more on this, not less.
People
Development, operations, support, bookkeeping, community organizing, claims review, governance administration — this is a real cost even when it’s currently donated, not an unfortunate overhead line. See below.
Right now, that’s mostly core infrastructure — identity, agreements, payments, the coverage reserve, in-platform messaging, and a docs-grounded member assistant. Bigger bets — a mobile app, matchmaking, and more — go through the same member roadmap vote as everything else on the list.
Labor is a real cost
A platform that only works because someone quietly donates 20 hours a week has an undisclosed operating subsidy and a continuity problem, not a sustainable cost structure. The Town Works may compensate employees, contractors, officers, and others who perform necessary work. Compensation is reasonable for the work performed, transparently accounted for, and governed so no one determines their own pay without independent review — the same standard the IRS and California expect of nonprofit officer compensation, which we intend to meet regardless of which legal structure we end up in. Once this platform demands real ongoing time, that time gets paid for out of operating funds.
Four separate pots of money
Kept separate, so the public numbers stay easy to understand:
- Provider funds
- Money belonging to providers, awaiting settlement — never revenue.
- Community coverage funds
- Restricted to the published community-reserve purpose — never general operating revenue.
- Operating funds
- Service fees plus unrestricted pay-it-forward support.
- Operating reserve
- Accumulated surplus retained for continuity — see below.
Operating reserve
The target is roughly 6–12 months of ordinary fixed operating expenses and foreseeable liabilities — leaning toward the high end while revenue is uncertain, payment holds are possible, and one bad quarter shouldn’t be able to make the platform disappear. Once resources materially exceed that target plus documented near-term needs, the excess becomes mission-available surplus.
Where surplus goes
Revenue pays, in order: current operating expenses; reasonable compensation for necessary work; required risk buffers; the 6–12 month reserve; maintenance and improvement; then expansion. What’s left — mission-available surplus — is meant for things like:
- lowering or subsidizing fees for people with limited income
- replicating The Town Works in other communities
- grants to local entrepreneurs and neighbors
- zero-interest loans for equipment or working capital
- open-sourcing the model so others can run it
- community coverage and emergency-support programs
At least half of surplus above the reserve target goes to something on that list, or another publicly disclosed mission-aligned use — not distributable profit. When a job settles off-platform entirely (no fee changes hands at all), the completion screen will offer an entirely optional contribution — preset amounts or a custom one, no guilt language, nothing about the experience degraded for declining (not live yet). Like pay-it-forward contributions generally, it funds the same unrestricted operating pot, clearly labeled as general support rather than a charitable donation unless The Town Works later qualifies as tax-exempt.
Longer-term, we don’t expect one flat rate to be the whole business model forever. A plausible future shape: the standard 6% for ordinary neighborhood use, a reduced or free rate for qualifying low-income, volunteer, or mutual-aid work, and separately negotiated pricing for institutions — a municipality, nonprofit, property manager, or employer using coordination, reporting, or compliance tooling that an individual neighbor never touches. Done well, that kind of institutional use can help cross-subsidize the ordinary 6%, not the other way around. None of this is built yet; it’s the direction, not a commitment.
Member decision-making
Any authenticated member who has completed at least one transaction gets one vote on roadmap priorities — which near-term features and spending get built next — including proposing new ones on /status. Votes happen quarterly and results are published the same way cost and community data already are.
For The Town Works’ first three months of operation, these roadmap votes are advisory — we’ll take them seriously but retain final say while the mechanism is new. After that, they become binding on the platform. We’re publishing this timeline as our intended policy, not a settled legal mechanism — like the coverage reserve on /costs, what “binding” actually means for a young company needs real legal structure in place first.
The fee itself, reserve targets, and how surplus gets allocated are different — members get meaningful input (an annual priorities discussion, comment on major changes before they happen), but that input stays advisory rather than a binding vote. Day-to-day operations, individual expenditures, staffing, and security stay the board and management’s ordinary responsibility, the way they do at any organization — a platform can’t run well if every $47 subscription renewal needs a quorum.
What we intend to publish
Two different cadences for two different questions. Monthly answers “is the community actually benefiting?” — activity, not money. Quarterly answers “is the money being handled responsibly?” As the platform becomes operational, The Town Works intends to publish both.
Monthly — operational & community
- transaction volume and total project value
- projects completed
- share of completed jobs settled through the platform vs. off-platform
- provider earnings facilitated
- repeat relationships and new connections
- geographic activity
- disputes opened and resolved
- average ratings
- volunteer or no-cost work recorded
- dollars kept circulating locally
Quarterly — financial
- The Town Works’ operating fees collected
- payment-processing costs
- community-reserve contributions, balances, and claims paid
- reserve administrative costs
- actual operating expenses by category (the five buckets above)
- compensation totals paid for necessary work
- operating reserve balance against its target
- mission-available surplus and where it was directed
- significant changes to fee policy
- material governance decisions affecting participant economics
Legal structure
- Legal entity
- Not yet formed
- Entity type
- California benefit corporation (leading option) or nonprofit public benefit corporation — undecided
- Principal location
- Oakland, California
If The Town Works receives federal or state tax-exempt status, that status will be stated here only after it has actually been granted.
