Solution 2: Start a Small Carsharing Club or Program
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While sharing a car with your neighbor can be a wonderfully convenient and cost-saving arrangement, there are plenty of reasons to grow your carsharing arrangement or start a carsharing group instead:
- Save money. Bringing in more sharers reduces your costs even more.
- Increased availability of cars. Bringing in more cars and more sharers can increase the likelihood that a car will be available when needed.
- Access to fuel efficient vehicles. Even if you own a car, you could still use a shared electric vehicle for your around-town errands.
- Spread affordable and green transportation alternatives. If carsharing were more widely available, many people who have been thinking of giving up their cars could take that plunge.
Large carsharing programs have already spread to 40 major cities in North America, but have yet to break onto the scene in many smaller towns and cities. If you live in a city that already has an established carsharing program, your best option may be to join that program. (See "Join an Existing Carsharing Program," below.) The larger car sharing programs—such as City CarShare and Zipcar—benefit from economies of scale. They have hundreds or thousands of members, centralized administration, automated reservation and billing systems, and other technologies that make the system efficient and keep costs low.
Small carsharing clubs (of five to 30 members) can benefit from their size, too. A small group can keep things simple, do without the fancy automated systems, and let members do the administrative work.
There's a lot to think about when you start a carsharing group. We can't give you all the information you'll need, but we'll summarize the steps and the decisions you have to make. Fortunately, in smaller towns and cities, grassroots organizations are already paving the way for carsharing by developing the necessary organizational models, car access technologies, and so on. You won't have to reinvent the wheel if you start a carsharing club; you'll be able to draw on the experience and knowledge of existing carsharing organizations, large and small. You can also check out the resources available from City CarShare, which offers guidance to start-up carsharing programs, including a manual on starting carsharing in your community: www.citycarshare.org.
Forming an Ownership Organization
The major difference between sharing with a neighbor and forming a carsharing club is in how you own the cars and distribute liability. If you plan to share a car with more than a few people, liability becomes a concern, and nobody should be expected to bear the risk for the whole group. In addition, without an intermediate entity, title to the car would have to change every time a member joined or left.
As discussed in Chapter 3, forming an intermediate entity, such as an LLC or nonprofit organization, solves many concerns about liability and ownership. The entity owns and insures the vehicles and administers the sharing program. If one member gets in an accident, the entity's insurance is the main source of compensation; other members of the carshare generally won't be liable. As members come and go, title to the car remains in the name of the entity.
The intermediate entity may take a variety of forms, including a nonprofit organization, for-profit business, or cooperative. There are benefits and disadvantages to each. Forming a nonprofit and obtaining tax-exempt status is a lengthy process, yet it can help you get grants, donations, and even free parking. At the same time, forming a for-profit company, such as an LLC, can encourage people to invest money. Creating a cooperative allows you to raise capital by selling shares to members.
Another option is to find an existing organization to sponsor your carsharing program, which spares you the trouble of forming a new entity. Suitable sponsors might include your local transit agency, an urban development organization, or an environmental organization. For example, the Center for Neighborhood Technologies, a nonprofit that promotes sustainable communities, sponsors I-GO (www.igocars.org), a large carsharing program with more than 200 cars in Chicago.
Starting the carsharing club under the umbrella of an existing nonprofit or government agency can save you a great deal of administrative legwork.
Most carsharing organizations require only that members have a driver's license and a decent driving history. Your insurance company will likely require you to check driving histories because a member with a poor driving record could raise insurance premiums for everyone. You could either check the driving history of prospective members or require them to submit a copy of their record with their application.
Where to Keep the Cars
Figuring our where to put the cars can be an initial challenge. If your carsharing club is composed primarily of neighbors, you could probably just designate one person's driveway or park on the street, if available. If members are more spread out, you should park shared cars in a location served by public transportation so people can get to and from the car easily if they don't live nearby. Here are some options:
- Find a nonprofit or business that will donate a designated parking spot for you in its lot.
- Ask a local bus or train station to give you free parking.
- Ask your city to create designated on-street parking for carsharing organizations.
- Use someone's private driveway, either free or for a small monthly rent.
- Contract with an existing business to oversee use of a specific car. For example, you could work out a deal with the local video rental store to park the car in its lot, and even have its staff check the car in and out.
Procedures for Using Cars
There will be procedural issues to work out for your carshare club, including:
- Reserving the car. If your group is small, you could just schedule use of the car with an online calendar to which all members have access. Larger groups typically use online reservation software. Carsharing nonprofits are usually generous about sharing software they develop, so ask around.
- Access to the car. If your carsharing club is small, you could just give each member a key (though in newer cars, keys are expensive). For larger groups, here are some options (see www.carsharing.net for information on businesses that provide these devices and more):
- Keep the car key in a coded lock box where the car is parked and give members the code.
- Install a numerical entry system on the car. This can cost $500 or so. You could put a lockbox in the car and keep the ignition key in that box, or install a numerical ignition system as well.
- If your shared car is kept at an apartment complex with 24-hour staffing, drivers can pick up and drop off keys with the staff.
- Keep the car parked at a store or other business with long hours. Come up with an agreement with that business to provide the key to members upon request.
- Procedures for drivers. Decide whether you'll ask drivers to do anything once they're in the car. Some carsharing programs keep a defects list in the car and ask drivers to inspect the car and note any new defects. You should also come up with procedures for drivers to follow if the car breaks down.
- Fueling the car. Most carsharing clubs require drivers to return the car with at least a quarter or half tank of gas. Here are some options for having drivers fuel the car:
- Keep a credit card in the car to be used only for gas.
- Create an account with a local gas station (often the station nearest to the car's parking spot).
- Have drivers fill the tank and submit receipts for a credit to their carsharing account.
- Have drivers fill the tank completely at the end of every trip, so they pay for the exact amount of gas that they used.
Funding Your Group
Your group will need to raise money to buy its car(s). There are many options: grants, individual donations, investments, member contributions, and so on. The type of funding available will depend on whether you start a nonprofit or for-profit group.
Many carsharing groups have gotten started by partnering with local transit agencies, city governments, or other entities that would benefit from the presence of a carsharing program. Through these partnerships, carsharing organizations have obtained grants, free parking, assistance with marketing, and other benefits.
Pricing and Cost Sharing
There are all kinds of ways to arrange for pricing or cost sharing for your carsharing club. If your group is small, you could create a group account into which everyone pays a fixed amount each month and have everyone pay for their own gas. However, if your group is larger, you'll probably want to charge members based on how much they use the car(s). Here are some considerations:
- Should you charge per mile, per hour, or some combination of the two? For example, you might charge $3 per hour and $0.30 per mile. Or you could charge $6 per hour and allow up to 10 miles for that hour, then charge for any additional miles driven.
- Will you have discounted rates for non-peak hours, such as the middle of the night?
- Should you also include monthly fees? Initial membership fees? A security deposit? Some carshares keep these fees low to make it cost-effective for infrequent users to join.
- Should you have different plans based on how often people use the cars? For example, frequent users could pay a higher monthly fee and lower mileage and hourly rates; infrequent users could pay a low monthly fee, but higher mileage and hourly rates.
- What if members need a car for a day-long trip? Should reduced rates apply?
- Will you charge penalty fees for late return of the car, late cancellation, failure to fill the gas tank, losing a key, and so on?
Insurance and Loss
You should expect to pay somewhere between $150 and $300 per month per vehicle for insurance. Your rates will vary based on the age and driving history of your members, where the car is parked, how it is used, and a variety of other factors. We strongly recommend obtaining a high limit of liability, such as $1,000,000 per accident. This will protect the whole club from folding if one member causes an accident.
You may have to shop around for insurance, and it could help to talk to other carsharing programs to find friendly insurance companies. Some companies will be unfamiliar with carsharing groups. Others might treat you like any other nonprofit or business that insures a company car or fleet of vehicles. Your insurance company will likely require you to provide and update a list of members and their driving histories.
You should also decide what to do if a car is involved in an accident. For example, if a member is at fault in an accident, you may want to have the member pay the insurance deductible (or pay for any repairs that are less than the insurance deductible), as well as any costs that are not covered by insurance.
Other Questions to Consider
Here are some other issues your group may want to discuss:
- What kinds of cars should we have? Any stick-shifts? Hybrids? Electric vehicles? Trucks or vans?
- Can someone other than a member drive the car if a member needs a ride and is not physically able to drive for some reason?
- What are members' responsibilities with regard to checking fluids, tire pressure, and so on?
- At what point might it make sense to purchase an additional car?
- What rules do members want to have about using the cars? No food? No pets? No smoking? Keep cars locked to prevent theft? No hazardous materials?
- What if a member damages the car's interior, by spilling coffee, for example?
- What should a member do if a car breaks down? Some groups authorize members to make repairs only up to a certain cost ($200 or $300); the member must get permission from the group for more costly repairs.
- Under what circumstances will you terminate a membership?
- Will you offer membership to businesses as well?
- Will you try to grow membership? If so, how will you market the group or do outreach to the public?
In addition to the formal paperwork you may need to file with the government to create an intermediate entity (for example, articles of incorporation or a 501(c)(3) tax exemption application), your group may want to create some documents that you'll use over and over, such as:
- contract or agreement for new members to sign
- membership application
- member procedure handbook
- price list
- mileage log for drivers to complete at the end of each drive, and
- other documents to be kept in the car (such as instructions on what to do if there's an accident).
For help getting started, contact an existing carshare organization to find out what documents it uses and whether you can adapt them for your own group.