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 through the Stanford Center on Philanthropy and Civil Society’s Digital Civil Society Lab. We invite you to subscribe to our email list, talk with us on Twitter (#ReCodeGood), and join us in person whenever you can.