I've just seen this, too.

1.  You're absolutely right to ask for donations. Your Arts Council 
funding is bound to be challenged in the near future. Put me down for a 
tenner.
2.  By what mechanism are you going to take the donations? Is there some 
less-capitalist but equally-useful alternative to PayPal? I've just 
added PayPal to my own site, but not without a qualm.
3.  I like the idea of a cooperative, although it's difficult to imagine 
how you could be much more cooperative than you are already. There are 
different kinds of co-op, though, aren't there? The Co-op Supermarket is 
owned by its customers, and although there are good things about it it 
doesn't seem to treat its employees all that well, and organisationally 
it seems like a bit of a shambles. (My local supermarket is a Co-Op. I 
shop there every day and know quite a lot of the people who work there, 
so I've got some idea what I'm talking about.) John Lewis/Waitrose, on 
the other hand, is owned by its employees, and perhaps as a consequence 
it seems like a more go-ahead organisation. My general conclusion from 
this is that the better form of co-operative seems to be ownership by 
the people who are doing the producing (as is the case with the London 
Symphony Orchestra), rather than ownership by the people who consume the 
products. But even having said this I'm sure there must be all sorts of 
nitty-gritty issues to be resolved as regards how a co-operative 
organisation should be run.

- Edward
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