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Philanthropy

ReCoding Good: Part 2

From the Field Series: An ongoing report of the Philanthropy, Policy, and Technology Project, which explores the use of private resources for public good.

ReCoding Good

From the Field Series: An ongoing report of the Philanthropy, Policy, and Technology Project, which explores the use of private resources for public good.

What do sharing and giving have to do with each other? This was the broad question behind the first charrette of the #ReCodeGood series. A dozen participants from sharing enterprises, the university, and philanthropy met at Stanford on January 24 to think about the intersections between sharing and giving. Participants included co-host Neal Gorenflo (Shareable); Dan Hoffer (Couchsurfing); Rob Reich (Stanford); Ilyse Hogue (formerly of MoveOn); Marvin Brown (University of San Francisco); Shelby Clark (RelayRides); Paula Goldman (Omidyar Network), Tamara Straus (SSIR); Sheila Bapat (CodeForAmerica), and Lucy Bernholz (Stanford).

The sharing economy includes a variety of enterprises that gives people access to goods without buying them (e.g., carsharing, bikesharing, couchsurfing, and peer-to-peer lending). These enterprises are organized in a variety of ways, from nonprofits to venture-funded startup businesses. In San Francisco alone, there are three carsharing organizations. ZipCar is a private company with a national footprint. City CarShare is a nonprofit based in the Bay Area. RelayRides, the newest of the three, is a venture capital-backed startup with services in San Francisco and Boston.

Two overarching themes about the sharing economy emerged. First, the sharing economy contributes to three kinds of public goods in the near term: environmental benefits, financial benefits, and community or quality of life benefits. In the longer term, the role of trust may actually set the stage for a fourth benefit: civic engagement.

Second, sharing enterprises are about more than consumer goods. They represent a different mode of production, consumption, and governance, one that mimics widespread behavior on the Internet—posting, commenting, remixing, and mashing together ideas. It’s a flatter, less hierarchical set of actions, often driven by a desire to contribute and improve something (think Wikipedia) rather than for direct monetary compensation.  Although sharing pre-dates the Internet, many of the practices of shared governance, reciprocity, and reputational currency have thrived in the open source software movement, as well as the more common practices of photo or video posting.

Several key ideas—and many new questions—emerged about intersections between nonprofit policy and the sharing economy.

Organizational and structural change

Nonprofits, for-profits, and peer models are all providing sharing services. The organizational structure matters when it comes to raising capital but does not determine public benefit production.

Also, as I mentioned above, sharing enterprises (regardless of organizational form—nonprofit, commercial, or hybrid) generally produce three kinds of benefits: environmental, financial, and quality of life/community. Many sharing organizations are explicitly designed to reduce the user’s impact on the environment. Others save people money. For example, some (carsharing) can demonstrate that the funds saved cycle back into local economies so that the financial benefits reach beyond just users. Sharing companies also create affinity. People are proud of their affiliation with the service and with other users. Many sharing services are specifically focused on neighborhoods, while others build global communities of travelers.

Other observations led to more questions. We now have a range of organizational structural types—nonprofit corporations, benefit corporations, commercial corporations—do we need still other alternatives?

Given the way commercial and nonprofit capital markets work, lots of people see scaling as easier to do in commercial structures. Some public benefits definitely correlate to scale. For example, more carsharing equals more emission savings. Are there general insights about sharing and scaling that matter to public good creation?

If there were common measures of public benefits, then what kind of organizational structure produces results might become irrelevant. If the outcome is the same, does it matter whether or not it is achieved through nonprofits or for-profits? And is this equally true for different kinds of benefits, for example environmental benefits or civic engagement? A key option to consider from this conversation warrants additional attention. We’ve organized these as research questions:

• What, if any, common measures of environmental, financial, or community benefit are sharing services collecting and reporting? How does this compare to nonprofit measures?
• What would a system of public benefit outcomes (not organizational inputs) look like? What would be better/worse about such a system?

Both sharing enterprises and nonprofits seem to be looking to market structures for scale, more so than to the public sector. This is a shift for philanthropic practice. What is gained and what is lost if the market is seen as the most likely “exit strategy” for ventures started philanthropically?

Finally, we realized that we don’t have good measures of the sharing economy as a whole, nor of its nonprofit, hybrid, or commercial components. Sizing the marketplace and its pieces is critical information for donors or investors and can inform decisions about which type of capital is most useful. The key research questions here are:

• How large is the sharing economy as a whole?
• How large is its nonprofit subset?
• In what areas of service is the nonprofit subset concentrated?

Trust as a key currency in public benefit

Trust and transparency, often thought of as keystones to nonprofits, are critical to sharing services (regardless of their organizational form), and trust and membership are developing into new currencies, both metaphorically and literally—reputational APIs (programming interfaces that allow applications to share user reputation data with each other), for example, serve as  “credit score proxies” across sharing sites.

From lifestyle to civic engagement

Sharing communities depend on and build trust among members. Like-minded members of sharing services might be mobilized to take action on bigger issues. People who share cars and bikes, for example, might be active on public transit or housing policy. The question is can these sharing communities represent a new force for advocacy?

If so, how can we extend the sharing economy to civic engagement? Is there a responsibility to stimulate civic engagement as a matter of course in these new models? We need to look at a web of involvement that creates trust (through peer-to-peer engagement) and financial equity. The trust and engagement evident in sharing, if extended to the civic realm, would allow us to own our democracy the way we own our economy

The type of civic engagement where people create together (online or in person) reweaves the social fabric and can build the collective capacity that can be used in a variety of ways—economic or civic. Two research questions emerged here:

• Are there implications for nonprofit governance from sharing enterprise governance models?
• Do sharing enterprises offer a new organizational model for accountability and trust in digital age?

Reaching poor communities

Most sharing businesses currently serve middle class or affluent, educated, and tech-enabled populations. How do you bring their benefits to low-income communities? What are barriers to entry for low-income individuals?

There were two points made here. First, can we design the systems so that the middle class are early adopters and serve as vanguard for behavior change? Second, can we capture some of the benefits of these trusted communities and put it to use for civic engagement and policy change that will benefit the poor? For example, can carsharing communities be activated to carry public transit proposals that benefit poor neighborhoods? The key question here is whether sharing enterprises are useful across income classes? What is their potential beyond middle class communities?

Relevant policy domains

A purpose of the ReCoding Good charrette is to inform the emerging policy map of the social economy. This discussion identified several key policy domains that matter. These will be added to the working list of policy issues and research question that the ReCoding Good project is addressing. They will be “brought forward” to the next charrettes as we develop a conceptual frame built from common themes.

• Corporate codes—enterprise structures
• Tax code definition of charitable purpose, public goods
• Property laws
• Organizational governance—horizontal accountability instead of hierarchical.
• Lots of laws in place that make growing alternative businesses hard—for example insurance rules hold back carsharing and labor laws prevent us from volunteering for businesses.
• Should we think about policies that reward public benefit on the back end (as an activity or outcome) rather than on the front end (through organizational form and nonprofit tax exemptions)?

The next three charrettes, scheduled for March, April, and May, will look at the effects of Citizens United on the nonprofit sector, the implications of digital public goods, and impact investing, respectively. Each charrette generates a new list of questions and regulatory domains, all of which we are weaving together as we consider the policies of the new social economy.

All materials from and information about the project can be found at ReCoding Good and Stanford PACS. We invite you to join our email list, talk with us on Twitter  (#ReCodeGood), and to share your thoughts with us.

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COMMENTS

  • BY Paula Goldman, Omidyar Network

    ON February 13, 2012 10:48 PM

    This was a rich, provocative discussion. 

    I’ve been thinking a lot about the question you posed about using policy to reward the creation of public benefit as an organizational output rather than just as an input.  This question hits the nail on the head.  And it’s one that applies not just to the sharing economy—but to a whole host of solutions to public problems that are being addressed through private means and private organizational forms. 

    It was always true that non-profits had no monopoly on creating public good. But it is now clearer than ever that policy focused only on the non-profit sector as a source of public benefit is outdated. I look forward to your continued explorations—and specific recommendations for additional ways in which policy can incent private resources to create public benefit.

    Thanks for organizing this charrette (and for introducing me to the concept of a charrette!)

  • BY Lucy Bernholz

    ON February 14, 2012 01:48 PM

    Paula

    Thanks for participating. The many new ways that we are organizing ourselves to create shared public goods is stretching the bounds of what we’ve known in a number of new ways. Not all of the new will be good, and not all of the old needs to be tossed out - but it certainly bears thinking about “why we do the things we do.” As I watch the “metrics movements” gain quality and the continuous organizational innovation brought about by market models and technology I think we have an incredible opportunity to question some very old assumptions.

    Much of what we’ve come to see as public goods are now “delivered” by a hybrid economy of players - health care, education, art and culture,  even philanthropic products. I’m less and less convinced that attributing the “public good” tag and it’s privileges (and responsibilities) to the organization actually fits anymore.

    The #recodegood project is set up to look at exactly these kinds of questions - thanks for joining us and I hope readers will chime in as well.

    Lucy

  • BY Jennifer Cobb

    ON February 16, 2012 12:52 PM

    Interesting post, but I find this statement troubling—“The organizational structure matters when it comes to raising capital but does not determine public benefit production.” I am going to assume you are talking only about the production of social goods from physical goods and services. I can sort of buy the argument in this context—if the outcome is more cars shared or more goods reused, then perhaps the organizational structure might not make that big a difference.  But in the virtual sharing economy, the structure makes a huge difference. As has been widely discussed, when we share on FB, the company harvests that information to resell to others and the secondary gain to them, and the subsequent power they wield as a result, skews the picture significantly in ways that mitigates the aggregate public benefit. If you only care about sharing in and of itself as a social good, then maybe you can argue that the incentives of the organization enabling the sharing don’t matter.  But in the digital world, that is a troubling point of view.  There is a big difference between open source and for profit digital organizations in terms of the products they create and how those products/services are managed and disseminated.

  • BY Steve Wright

    ON February 27, 2012 06:41 PM

    Lucy, The comments on Trust and Transparency resonate very deeply with me and the idea of reputation API’s is new to me but very exciting.  I would love to learn more.

    Relative to sharing economies and the poor, I think it is important to point out that, out of necessity, the poor are actually much better than the financially endowed at sharing. A ROSCA (rotating savings and credit association) is used frequently by the poor where several members deposit a a small sum every meeting and one member takes the whole pool. Simpler examples of course exist like communally owned motor bikes.  It is interesting how the terms formal and informal get used in this context.  Most of what the poor do is often considered “informal”.

  • BY steve wright

    ON February 28, 2012 08:23 AM

    Great post.  the part about trust and transparency resonated deeply with me.  Particularly: ” trust and membership are developing into new currencies”.  I am eager to learn more about “reputation API’s”.  that is really exciting and the comparison to credit scores is great.


    I do have a bone to pick on the “Reaching Poor Communities” section.  It seems to me that to the extent that sharing as an activity was “invented” it was invented by the poor. Rotating Savings and Credit Associations (RoSCA: http://en.wikipedia.org/wiki/Rotating_Savings_and_Credit_Association) were created out of necessity as a way to save money by the poor.  Additionally, things like sharing a motorbike or car in a poor community are common.  The labels of “formal” or “informal” in this context often have a condescending aspect.  The systems this blog points out are formal in that they have documented rules and transparency to build trust over distance and between strangers.  The informal systems of the poor work because there sit on top of an existing platform of trust.  I wonder what would happen if we tried “natural” and “unnatural” or “organic” and ” manufactured”.  Ron Eglash’s African Fractals (http://homepages.rpi.edu/~eglash/eglash.dir/afractal/afractal.htm) talk really pointed me to the idea that original community has a natural or organic aspect to it’s unity and connectedness.  I guess the point is that sharing economies have early, early adopters.

    As always,Lucy, thank you for your thought provoking synthesis of our industry.

  • BY Lucy Bernholz

    ON March 12, 2012 03:53 PM

    Jennifer

    Thanks for raising the points you raise about form/sharing/public good and digital environments. This is precisely where the conversation is going in April when we turn our attentiont to digital public goods. My sloppy writing reflects incomplete thinking - form may well still matter - but not necessarily in the ways we have thought about this in the past.

    Thanks

    Lucy

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