[Lapg] The Sustainable Economies Law Center Wants to Help You Share By Bernice Yeung

Sat Jul 10 07:17:37 PDT 2010

The Sustainable Economies Law Center Wants to Help You Share 
Janelle Orsi's Sustainable Economies Law Center 
seeks to promote a more humane economy.
By Bernice Yeung
http://www.eastbayexpress.com/ebx/the-sustainable-economies-law-center-wants-to-help-you-share/Content?oid=1878987

Berkeley attorney Janelle Orsi is the co-founder 
of the Sustainable Economies Law Center (SELC), 
which aims to help social enterprises, 
worker-owned co-ops, and other mission-oriented 
enterprises sort through legal red tape. The 
co-author of The Sharing Solution, published by 
Nolo in 2009, Orsi also has a private legal 
practice focused on mediation and helping people 
share housing, cars, land, and other commodities. 
We talked to Orsi about the legal gray areas that 
social entrepreneurs can find themselves in, and 
what SELC is doing about them.

What is sustainable economies law? Why did you create a center on this topic?
Jenny Kassan and I founded SELC so we could start 
to enable a different kind of economy. [Editor's 
Note: Jenny Kassan is a contributor to this 
publication.] The economy that we envisioned is 
not so much based on traditional buying and 
selling and the owning of things, but more on new 
kinds of transactions like sharing and barter, 
exchange, cooperative ownership, systems of 
borrowing, and lending of goods. These are things 
that - because people are not used to doing them 
and they're not a part of our normal livelihoods 
- the legal system is not set up for them, and 
there are a realm of unanswered questions.

What is SELC currently working on?
We now have four law-student interns with us all 
summer and we are doing a few different things. 
We're creating a library of resources for urban 
agriculture, and answering common legal questions 
for people doing urban ag - for example, how to 
get land, how to overcome zoning barriers, how to 
deal with liability issues and insurance, whether 
there can be property tax incentives for growing 
in urban areas, how you can sell food you grow in 
your yard, how a for-profit urban farm can use 
volunteer labor because they often do but it 
often violates labor law. We've taken on a few 
clients, and a handful of organizations that do 
urban farming have come in for consultations.

What other issues does SELC work on?
We have five programs. Another program involves 
helping set up worker-owned cooperatives. We also 
have a program called Community-Supported 
Entrepreneurship that deals with questions like, 
"How can a small, local business finance 
themselves using local resources rather than 
venture capitalism or angel investors?" We are 
creating a FAQ about how to raise money 
creatively for a small business, and we are 
looking into ways that businesses can raise money 
using gift certificates, or through a 
subscription to a farmer's season of harvest, to 
use an urban ag example.

One thing that Jenny and the interns did is write 
a letter to the Securities and Exchange 
Commission requesting an exemption from 
securities laws for investments under $100. So 
say I wanted to start a coffee shop and I need 
$20,000 to get it going, I could put the word out 
on the Internet or through friends to get 200 
people to invest $100. If the SEC responds 
positively to our letter and allows small 
businesses to get small investments, it could 
revolutionize how businesses raise money. And the 
people who provide the funding would become 
investors and own a piece of the business; they 
would have some equity in it. Right now, there 
are very few exceptions that allow people to 
raise money in that way and in order to do it, 
you have to go through a huge compliance hurdle 
that involves lots of disclosures, and which 
costs a lot of money.

The fourth program deals with local currencies 
and barter. We're creating a how-to guide to 
bartering because there are two legal issues. One 
is tax issues, and knowing when you are and are 
not obligated to pay taxes on a barter 
transaction. We're trying to develop guidelines 
for that. The other legal issue is employment 
laws. If, for example, you work in exchange for 
food, then under typical labor and employment 
laws, you are technically considered an employee, 
even if you do it voluntarily. The farm owner 
could be on the hook for not following employment 
laws.

We are also dealing with a gigantic question 
around local currencies and how to regulate them. 
We have a client, Davis Dollars, where they've 
printed local currency for the city of Davis, and 
they've gotten businesses on board with accepting 
it. This gives people an incentive to spend 
locally and they make the local currency cheaper 
than cash, so $10 Davis Dollars costs $9.50. They 
are putting more money in circulation in a small 
way. There are different legal issues - whether 
the administrators qualify for tax exemption 
because they would like to be a nonprofit, and 
whether this organization is technically a bank 
and should be regulated like a bank. We are doing 
a survey of how currencies around the world are 
structured and how they comply with regulations. 
We haven't really found a good model yet for a 
local currency system. This is a huge area that 
needs a lot of attention.
Our fifth program relates to housing. We call it 
the Shared, Sustainable, and Slow Housing 
program, and we want to create more resources to 
help develop affordable housing and create shared 
housing arrangements. Hopefully, we can create a 
resource library on shared housing.

What should businesses doing this kind of work know that they might not?
Most social entrepreneurs are going to run up 
against interesting legal questions because they 
are engaged in an activity that puts them in a 
legal gray area, such as the gray area between 
who is the employer and who is the employee when 
you're running a worker-owned co-op. There are a 
whole list of gray areas for social enterprises 
because it falls into this area of being a 
nonprofit and a for-profit. In many cases, people 
will be okay because everyone is happy, and no 
one tries to bring a lawsuit. But we do want 
people to do it legally and to be comfortable 
doing it, and to not run into problems later on.

Is there a reason you are doing this work now?
It feels like there's an explosion of people who 
are interested in doing these things, partially 
because of the economy and because people are 
realizing how much we are destroying the planet, 
and those things are coming together, causing 
people to look at alternatives. Urban ag is 
booming - you see it in the news constantly - and 
then it feels like the local currencies and 
barter is starting to grow. And there's the whole 
movement around social enterprise, and new, 
creative business types have been created to deal 
with the big barrier related to financing.

What is your ultimate goal?
We want to create tools that will enable a more 
sustainable and just and sharing alternative 
economy, and to get those resources out there so 
that anybody and anyone can tap into these 
resources and get their questions answered 
quickly. We'd also like to be more of a voice in 
the policy-making realm, and identify how policy 
could be more friendly to things like urban ag 
and shared housing.

What makes you personally interested in looking at these issues?
It occurred to me that sharing is such a powerful 
thing because we have this wealth of resources of 
housing, skills, cars, food, household goods. 
It's just that the way resources are distributed 
and used is very inefficient. So sharing makes 
sense. I formed my law practice to enable people 
to share, and lot of what I do is help people 
decide what kind of organization to form, if they 
want to create one, to do that. I also help them 
formalize agreements to, for example, share 
ownership of a house, and do it without violating 
the law.

Originally, I wanted to work with youth and 
become a juvenile defender, and I thought I would 
fight for youth one at a time and keep them out 
of the system. And then I realized that working 
in the community to provide stable housing, work 
opportunities, learning opportunities, creating 
organizations and alternative economic options is 
what is actually going to keep them out of 
juvenile hall.

		Daily Journal
California Lawyer Article
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July 01, 2010
	 Profits with a Purpose		 by Bernice Yeung

Last year, an alternative-energy advocate 
approached Oakland lawyer Jenny Kassan with an 
interesting predicament. The client had sought 
out Kassan because her legal specialty is what 
she calls "sustainable economies," an approach 
that helps social entrepreneurs and 
mission-oriented community groups wade through 
transactional and regulatory laws that were not 
designed with them in mind.

This particular client wanted to equip a local 
school with solar panels that would eventually be 
donated to the institution. But the solar 
enthusiast could neither afford to install the 
panels himself nor solicit investments from the 
public without running afoul of securities laws.

To get around this hitch, Kassan, who works in 
the Katovich Law Group, devised a solution that 
lets donors join a club that supports solar power 
for the school, instead of having to invest in a 
company. "It's a different model of how to bring 
money into a project up front," Kassan says. In 
return for their contributions, the members 
receive benefits such as discount coupons from 
local green businesses.

This kind of creative approach to the law is the 
idea behind the Oaklandñbased Sustainable 
Economies Law Center (SELC), which Kassan 
co-founded in December with Berkeley sole 
practitioner Janelle Orsi.

Last month, the SELC brought in its first class 
of law student interns to research and help 
businesses address the legal barriers associated 
with altruistic collaborative enterprises. 
Examples of such efforts include land sharing for 
community gardens; business cooperatives; and 
community-owned assets like solar panels. These 
kinds of enterprises appear to be increasing, 
trade groups say, because sharing resources is 
both economical and environmentally sound.

The SELC could see its niche grow in relevance 
with the passage of two bills before the 
California Legislature. This spring, legislation 
was introduced (AB 1871) that would amend 
insurance laws to make it easier for people to 
lend their vehicles to car-sharing pools.

Another bill (SB 1463) would create 
"flexible-purpose corporations," which would 
allow businesses to codify their intent to pursue 
social or environmental good while also turning a 
profit.

For example, existing California corporations 
could adopt the new model to formalize their 
social mission and emphasize purpose over 
profits. "A corporate board has a fiduciary duty 
to shareholders, and generally, what is seen as 
in the best interest of the company is maximizing 
profits," explains Susan MacCormac, a partner 
with Morrison & Foerster who helped create the 
model. "This would allow what is in the best 
interest of a corporation to be broadly defined. 
It would give companies broader discretion." And 
if a socially conscious business is sold, its 
charitable way of doing business can be preserved.

Organizations that may have been founded as 
nonprofits could use the new structure to gain 
access to capital markets. And nonprofits that 
happen to be drawing too much revenue could 
convert to a flexible-purpose corporation to 
eliminate potential tax and legal complications.

The SELC has been following the legislation, and 
Kassan expects that the center will help 
businesses and nonprofits convert to 
flexible-purpose entities if the bill passes (a 
hearing on the legislation is slated for the 
fall).

Until then, co-founder Orsi says, the 
organization will continue to look for creative 
legal work-arounds when counseling 
collaboration-oriented clients.

"There are so many legal barriers to something as 
simple as sharing a car," says Orsi, who is also 
co-author of The Sharing Solution (Nolo, 2009). 
"There are barriers to people sharing yard space 
in order to grow food. So I decided to break down 
those barriers and sort those issues out."
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