> For the complete documentation index, see [llms.txt](https://docs.contributionism.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.contributionism.io/introduction-and-scope/a-simple-worked-example.md).

# A simple worked example

A small example can illustrate how contribution-linked rights might operate.

This example is deliberately simplified. It demonstrates the distinction between payment, temporary financial participation and governance. It is not a complete legal or accounting model.

## **Starting the organisation**

Alice starts a design organisation in year one. She receives an agreed salary for her work. In addition, the organisation records a temporary right for her to participate in future surplus distributions. For simplicity, a full year of eligible work creates **100 contribution units**.

Each annual allocation remains active during the year in which it is issued and the following two years. Units issued in year one therefore expire at the end of year three. The units are contractual participation measures in this example. They are not assumed to be ordinary legal shares.

## **A second contributor joins**

Bob joins at the beginning of year two. Alice and Bob both complete a full year of eligible work and each receives 100 additional contribution units. Alice now has 200 active units:

* 100 from year one.
* 100 from year two.

Bob has 100 active units from year two. If the organisation makes a distributable surplus payment at the end of year two, the agreed formula allocates two thirds to Alive and one third to Bob. This reflects the organisation’s chosen method of recognising recent historical contributions. It does not claim that Alice necessarily created exactly twice as much economic value as Bob. An organisation could use a different allocation method, including differentiated contribution values or equal shared benefits.

## **Alice leaves**

Alice leaves at the end of year two. Bob continues working through subsequent years.

Alice stops receiving new contribution units, but her existing units remain active until their original expiry dates.

| **Year-end**                         | **Alice’s active units** | **Bob’s active units** |
| ------------------------------------ | ------------------------ | ---------------------- |
| Year 1                               | 100                      | 0                      |
| Year 2                               | 200                      | 100                    |
| Year 3, before year-one units expire | 200                      | 200                    |
| Year 4, before year-two units expire | 100                      | 300                    |
| Year 5                               | 0                        | 300                    |

The table assumes distributions occur immediately before the relevant year-end expiry and that Bob continues receiving 100 units each year. Alice can therefore continue benefiting from her historical work for a limited period after leaving. Her original contributions do not create a claim on every future year of the organisation’s success.

## **Governance is handled separately**

The organisation uses one eligible active worker, one vote for ordinary governance decisions. Alice participates while she is an active worker. After leaving, she no longer votes on ordinary operational decisions.

However, the organisation cannot simply cancel her remaining financial entitlements. Those rights are protected by the original agreement and applicable law. This illustrates an important distinction:

> ***Protecting a historical financial claim does not necessarily require giving its holder continuing control over daily operations.***

More consequential changes affecting outstanding rights could require additional consent or another protective process.

## **An investor provides capital**

Suppose an investor lends the organisation £20,000 under an agreement providing total scheduled repayments of £24,000.

The investor’s compensation is the agreed repayment, subject to the organisation’s ability to pay and the terms of the contract. The investor does not automatically receive a perpetual share of future profits.

The agreement might also contain protective conditions, such as restrictions on taking additional debt or selling essential assets. These protections need not give the investor authority over every organisational decision.

The example assumes the investor’s agreed financial return is represented by the loan rather than by labour participation units. Whether particular capital arrangements should also participate in surplus distributions is a design question that the organisation must settle explicitly.

## **What happens if there is no surplus?**

Contribution units do not guarantee that a surplus will exist. If the organisation cannot lawfully and sustainably make a distribution, no payment is made under that contingent participation mechanism.

This is different from an earned salary or a loan repayment that has become legally due. Those obligations cannot simply be treated as optional surplus distributions. Likewise, the expiry of Alice’s future participation units would not automatically cancel a payment that is still owed to her.

## **What the example demonstrates**

The arrangement separates four things that are often bundled together:

1. Payment for current work.
2. Compensation rights to benefit from future success.
3. Protection of financial commitments.
4. Authority over organisational decisions.

It also demonstrates the intended balance between historical and recent contributions.

Historical contributors retain agreed benefits for a meaningful period. New contributors acquire rights through their own participation. No original allocation automatically creates unlimited financial participation or perpetual control.