Replies to This Discussion

Permalink Reply by Doug Haynes on November 4, 2013 at 5:48am

If they consider that exciting news I shudder to think of how boring the person who wrote that press release's life is...

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Permalink Reply by Tricolor on November 4, 2013 at 6:16am

I'd think there's a lot of value in the IGo brand that Enterprise CarShare just isn't going to match.  Really bad move by someone at Enterprise who probably went through some 'singular brand identity' seminar.  Next up they'll try to merge it with their own PeopleSoft implementation.

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Permalink Reply by Kevin C Dormant on November 4, 2013 at 6:22am

nail + head = +1

Tricolor said:

I'd think there's a lot of value in the IGo brand that Enterprise CarShare just isn't going to match.  Really bad move by someone at Enterprise who probably went through some 'singular brand identity' seminar.  Next up they'll try to merge it with their own PeopleSoft implementation.

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Permalink Reply by Anne Alt on November 4, 2013 at 8:17am

Yes!!!

Kevin C said:

nail + head = +1

Tricolor said:

I'd think there's a lot of value in the IGo brand that Enterprise CarShare just isn't going to match.  Really bad move by someone at Enterprise who probably went through some 'singular brand identity' seminar.  Next up they'll try to merge it with their own PeopleSoft implementation.

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Permalink Reply by Tom Dworzanski on November 4, 2013 at 11:13am

I think it's shameful to use section 501(c) to build a company only to sell it to a for-profit corporation. It should be criminal.

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Permalink Reply by Tom Dworzanski on November 4, 2013 at 1:04pm

The problem is we subsidized them as taxpayers and as society to a very large degree and our massive subsidy was sold without any compensation to those who bore the burden of it (us). Now I'm not saying igo should remain a nonprofit as car sharing should no longer be considered a charitable cause given the established market, but what I am saying is the company should have been sold at open auction to establish a fair price and 100% of the proceeds from the sale should have been taxed to pay back our investment.

h' $550 said:

Not seeing the problem here. It's not like CNT paid out dividends to shareholders with the proceeds from the sale.
 
Tom Dworzanski said:

I think it's shameful to use section 501(c) to build a company only to sell it to a for-profit corporation. It should be criminal.

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Permalink Reply by Eli on November 4, 2013 at 1:10pm

CNT/I-GO solicited and accepted donations (from people who certainly did not expect that money to go toward the future enrichment of Enterprise Holdings, Inc.) and accepted a tax-exempt status that is intended for charitable organizations working toward goals the benefit the public good, not as an incubator for startups so that they can avoid taxes until they are established and then cash in. It's surprising to me that this is legal and there is no doubt in my mind that it is ethically and morally indefensible.

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Permalink Reply by Tom Dworzanski on November 4, 2013 at 1:35pm

No, that was not the goal.

In whole 501(c)(3) states (in full) that it provides tax exempt status to the following:

Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

Now, I'm not a lawyer; I'm a finance guy and a programmer. So I'm not here to argue the law (the lawyers can do that). To me this is about morality (as I think I made clear by my first statement).

h' $550 said:

Tom, what was the ultimate goal of that alleged subsidy?  Was that goal not met by facilitating the advent of the car sharing model in the private sector?
 
Tom Dworzanski said:

The problem is we subsidized them as taxpayers and as society to a very large degree and our massive subsidy was sold without any compensation to those who bore the burden of it (us). Now I'm not saying igo should remain a nonprofit as car sharing should no longer be considered a charitable cause given the established market, but what I am saying is the company should have been sold at open auction to establish a fair price and 100% of the proceeds from the sale should have been taxed to pay back our investment.

h' $550 said:

Not seeing the problem here. It's not like CNT paid out dividends to shareholders with the proceeds from the sale.
 
Tom Dworzanski said:

I think it's shameful to use section 501(c) to build a company only to sell it to a for-profit corporation. It should be criminal.

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Permalink Reply by payton on November 4, 2013 at 4:00pm

Note that the sale was just of the operations: car-sharing is a capital intensive business, and I-Go just wasn't able to offer the same scale. Non-profits just aren't very good at such businesses, anyhow. The 501c3 is still around, and will use the proceeds to continue CNT's work on transportation alternatives -- the same ends, just different means.

http://www.cnt.org/2013/05/28/a-message-from-cnts-ceo-kathryn-tholin/

http://www.cnt.org/2013/06/26/celebrating-35-years-igo-carsharing/

http://www.theatlanticcities.com/commute/2013/05/what-happens-when-...

I've seen other instances where a 501c3 has gone bust: its assets are sold and the proceeds are disbursed to another 501c3. CNT has also spun out other for-profit ventures in the past, most notably the Greener Cleaner. It was founded as a "think-and-do tank" many years before we had some of the choices that we have now (e.g., B-Corps) for for-profit organizations that have social/environmental missions, and I don't see anything wrong with that.

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Permalink Reply by Tom Dworzanski on November 4, 2013 at 5:07pm

I'm sorry you like to take my comments so personally; I hope you can figure that out.

I never judged iGo as a service or business. I am a member and use it often. I love iGo. I was criticizing the transaction only.

I already outlined a facility for selling charitably-created assets to for-profit enterprises in a previous comment. They should have to publicly auction iGo to the highest bidder with all (100% less costs of the transaction) the proceeds being taxed. I wouldn't mind covenants being added like "if you buy it, you have to continue to run it as a car sharing service for at least 5 years" (as opposed to just liquidating the cars and computers), or even "you cannot be a major competitor in the specific market already" (to keep ZipCar from having a monopoly). I prefer taxing the proceeds at 100% to having a government entity run the auction because I prefer the charity (or now- "charity," if you will) set the terms (within reason) as opposed to some bureaucrat or judge, who has no experience with the business.

I don't think taxing the buyer (Enterprise or others) directly would make sense because such taxes would not achieve any additional proceeds to society (the company would just figure the tax into the transaction and pay less). Also, taxing the buyer would add complexity and taking over (being the buyer of) a business like iGo should be encouraged.

As for your assumption about the desperate nature of the situation, I think the fact that a sophisticated corporation sees value in the business necessarily suggests the situation is not drastic. I don't know (or care) about whether or not CNT profited. The fact is they had something valuable that belonged to all of us and were able to sell it without compensating us in any way. Also, even if they did compensate us, without a public bidding process, a fair price cannot be guaranteed.

I will admit, back then we didn't have the JOBS Act or the ability to finance ideas like this as we do today so I would agree that at the time 501(c)(3) was probably appropriate. It might even be appropriate today -- I don't know. But again, my criticism isn't about iGo, how/why it started, or why it exists. It's about the transaction (or any transaction) where a charity is sold to a for-profit entity.

h' $550 said:

Tom, I'd really enjoy a level-headed discussion about this without your usual condescention.

Are you up to the challenge?

The purpose of setting up the car sharing program was to help foster a cleaner and safer  city by making it possible for more people to avoid car ownership.
I know the people behind it and have no doubt their intentions were pure, and I doubt that they ever imagined a scenario in which they would entrust stewardship of the program to an established for-profit corporation.

My assumption was that the sale to Enterprise was akin to grasping at the only chance they had to salvage a program that they no longer had the resources to effectively manage themselves.  Do any of you have evidence that CNT profited from the sale?

No, that was not the goal.

In whole 501(c)(3) states (in full) that it provides tax exempt status to the following:

Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

Now, I'm not a lawyer; I'm a finance guy and a programmer. So I'm not here to argue the law (the lawyers can do that). To me this is about morality (as I think I made clear by my first statement).

h' $550 said:

Tom, what was the ultimate goal of that alleged subsidy?  Was that goal not met by facilitating the advent of the car sharing model in the private sector?
 
Tom Dworzanski said:

The problem is we subsidized them as taxpayers and as society to a very large degree and our massive subsidy was sold without any compensation to those who bore the burden of it (us). Now I'm not saying igo should remain a nonprofit as car sharing should no longer be considered a charitable cause given the established market, but what I am saying is the company should have been sold at open auction to establish a fair price and 100% of the proceeds from the sale should have been taxed to pay back our investment.

h' $550 said:

Not seeing the problem here. It's not like CNT paid out dividends to shareholders with the proceeds from the sale.
 
Tom Dworzanski said:

I think it's shameful to use section 501(c) to build a company only to sell it to a for-profit corporation. It should be criminal.

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Permalink Reply by Thedutchtouch on November 5, 2013 at 6:33pm

I think the real question here is... Will they pick you up?

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Permalink Reply by Julie Aberman (Hochstadter) on November 27, 2013 at 5:55am

That would be awesome. So would being able to pick up and drop off in different locations. That seems impossible, but a dream nonetheless.

Thedutchtouch said:

I think the real question here is... Will they pick you up?

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