New kinds of organizations

• Author: Janelle Orsi
• Profession: Is the Director of the national nonprofit Sustainable Economies Law Center, and she is a 'sharing lawyer' in private law practice in Oakland, CA
• Pages: 151-257

151

CHAPTER FOUR

NEW KINDS OF

ORGANIZATIONS

By Jenny Kassan* and Janelle Orsi

PART 1: ORGANIZATIONSINTHE NEW ECONOMY

The Mandate of Organizations in the New Economy

The last chapter began by saying that agreements are the building

blocks of a sharing economy. Organizations are essentially agreements

entered into by groups of people to govern how they will work together.

Unlike simple agreements between two individuals, organizations are

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,

securities regulation, nonprofit law, and cooperatives. Jenny is CEO of Cutting 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 California at Berkeley and earned 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 including the formation and management of several social ventures

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 Institute, Sustainable Business Alliance, HatchLab, Inc., and Local Ecology

and Agric ulture Fremont (LEAF ).

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respect, organizations become institutions in our communities, and

they will lay the foundation for much of the sharing economy. The

more we move our economic activities into organizations designed with

equitable, social, and cooperative goals, the more we can transform our

entire economy. The choices we make in structuring organizations are

critical; the architecture of organizations will, essentially, be the archi-

tecture of a new economy.

The current state of the world has served us with 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 resources 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 the resources available to current and future

generations. The situation demands radically different ways of organiz-

ing our economic activities.

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 the 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, providing for our-

selves and our communities, regenerating damaged ecosystems

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 obtain from commercial enterprises will

be obtained through cooperative arrangements. Instead of buying

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 contribution and be sustained.

2. New resources: Organizations of a sharing economy will likely

be driven and “financed” less by money and more by people and

their needs, passions, concerns, time, and energy. Because these

are such precious resources, organizations will necessarily mimic

many qualities of natural ecosystems: they will create a place for

and provide for an array of participants, they will work efficiently

within the 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 mimicking ecosystems, money will more

likely be sourced from a broad cross-section of our communities,

and it will intentionally be recirculated within 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 with 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-making.

2. Sharing information: High levels of transparency are essential

to the accountability of organizations and to the functioning of

organizations with highly part icipatory decision-making.

3. Sharing capitalization: In 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 that flow from it) will ideally be spread among

the stakeholders.

4. Sharing profits/benefits: The profits, products, and/or non-

monetary benefits that are generated by the activities of an

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