New kinds of organizations

AuthorJanelle Orsi
ProfessionIs the Director of the national nonprofit Sustainable Economies Law Center, and she is a 'sharing lawyer' in private law practice in Oakland, CA
Pages151-257
151
CHAPTER FOUR
NEW KINDS OF
ORGANIZATIONS
By Jenny Kassan* and Janelle Orsi
PART 1: ORGANIZATIONS IN THE NEW ECONOM Y
The Mandate of Organizations in the New Economy
The last chapter began by saying t hat agreements are the building
blocks of a sharing economy. Organizat ions are essentially ag reements
entered into by groups of people to govern how they will work together.
Unlike simple agreements between t wo individuals, organizations a re
designed to endure even as people come and go from a group. In that
* Jenny Kassan is a n attorney at Katovich & Ka ssan Law Group, a law firm t hat serves
social enterpr ise. Her legal practice area s include small business st art-up and financi ng,
securitie s regulation , nonprofit law, and cooperatives . Jenny is CEO of Cutt ing Edge
Capital, a consu lting firm that helps sma ll businesses raise com munity capital and pio-
neers tools for a more inclus ive and values-driven economy.
Jenny earned a master ’s degree in City and Reg ional Planning from the Univer sity
of Californ ia at Berkeley and ear ned her J.D. from Yale Law School. She worked for
eleven years at the Unit y Council, a nonprofit commun ity development corporation in
Oakland, w here she served as staff attorne y and managed communit y economic devel-
opment projects includi ng the format ion and management of sever al social vent ures
designed to employ and create business ownership opportunities for low-income com-
munity re sidents.
Jenny is the president of Com munity Ventures, a nonprof it organization dedic ated to
promoting the ec onomic and social development of communit ies. She also co-founded
the Sustai nable Economies Law Center, a nonprofit that provides legal i nformation to
support susta inable economies. She currently s erves on the Board of Directors of Post
Carbon Inst itute, Sust ainable Busine ss Alli ance, HatchL ab, Inc., and Loc al Ecology
and Agric ulture Fremont (LEAF ).
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respect, organizations become institut ions in our communities, and
they will lay t he foundation for much of the sharing economy. The
more we move our economic activities into organizations designed with
equitable, social, and cooperative goals, t he more we can transform our
entire economy. The choices we make in structuring organ izations are
critical; the architecture of organ izations will, essentially, be the archi-
tecture of a new economy.
The current state of the world has served us w ith a heavy mandate:
we must change quickly, make use of very limited planetary resources,
and provide for seven billion people. Our nonprofits ca nnot afford to sit
around and wait for foundation grants to come through. Local enter-
prises cannot afford to die due to lack of cash flow or capitalization.
We cannot afford to waste resource s on endless layers of organizational
admi nistrat ion and bur eaucracy. We ca nnot conti nue to meet ou r needs
thr ough ever mor e concentr ated comme rcial ente rprises that igno re the
needs of their stakeholders. Our pattern s of work a nd consumption can-
not continue to diminish t he resources available to current and future
generations. The situation demands radically different ways of organiz-
ing our economic activ ities.
Organizations i n the new economy are, thus, driven at their core by
new purposes and new resources:
1. New purposes: Material incentives will drive most organiza-
tions, but the material may not always be money. Participants in
the sharing economy have diverse goals that likely do not include
making t he maximum amount of money in the shortest possible
amount of time. High on our list of new priorities and purposes
will tend to be creating rewarding livelihoods, prov iding for our-
selves and our communities, regenerating damaged ecosystem s
and natural resources, and nourishing our local and global econo-
mies. A “payoff” in any of these categories will create wealth of a
different kind and materially alter our world.
A core purpose of the shari ng economy is to provide. Many
provisions we currently obta in from commercial enterprises will
be obtained through cooperative arrangements. Instead of buy ing
a car from a dealer, we might buy into a neighborhood car-sharing
club. Instead of sending our children to a private day care, we
might form a cooperative childcare arrangement with other fam i-
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New Kinds of O rganizations | 153
lies. Instead of forming businesses and competing in a cut-throat
marketplace, we will act ively create collaborative arrangements
and marketplaces, like farmers markets, time banks, community-
supported enterprises, and producer cooperatives to ensure that
each entrepreneur can make a contr ibution and be sustained.
2. New resources: Organizat ions of a sharing economy will likely
be driven and “financed” less by money and more by people and
their needs, passions, concerns, t ime, and energy. Because these
are such precious resources, organ izations will necessarily mimic
many qualities of natu ral ecosystems: t hey will create a place for
and provide for an array of participants, they w ill work efficiently
within t he context of limited resources, a nd t hey will be unable to
afford to waste energy and resources. Money will almost always
be involved, in some way, with organizations in t he new econ-
omy; however, again mimicki ng ecosystems, money will more
likely be sourced from a broad cross-section of our communities,
and it will intentionally be recirculated with in such communities.
Designing Organizations for a Sharing Economy
Organizations w ill rise most fully to the needs of a shari ng economy by
integrating high levels of participation by and sharing w ith stakehold-
ers. Here is a framework for considering the various ways t hat rights and
responsibilities of an organ ization can be shared among its participants:
1. Sharing decisions: The best way to ensure that an organization
will make decisions t hat benefit its stakeholders is to give stake-
holders a legal right to participate in decision-maki ng.
2. Sharing information: High levels of transparency are essential
to the accountability of organizations and to the functioning of
organizations with highly part ic ipatory decision-making.
3. Sharing capitalization: I n conventional businesses, individu-
als and entities that provide capital to an entity tend to control
that entity and benefit from its profits. In a sharing economy, the
responsibility of capitalizing an organization (and the rewards,
rights, and risks t hat flow from it) will ideally be spread among
the stakeholders.
4. Sharing prof its/benefits: The profits, products, and/or non-
monetary benefits that are generated by the activities of an
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