Getting enough vehicles is one of the major challenges of starting a carshare. Leasing vehicles rather than buying them allows the CSO to get more vehicles on the street for less money up front, but whether you intend to lease or purchase vehicles the amount of money needed is significant. Commercial leasing or finance companies are reluctant to deal with start ups without a personal guarantee from one of the owners - and most owners don't want to be on the hook for payments on 25-50 vehicles.
Cooperatives figured out a long time ago that their members could be a source of capital and structured their membership shares accordingly. Non-profit and for-profit carshares have approached this challenge several different ways. Those that charge a member security deposit may spend ("invest") part of this pot of money in leasing or purchasing vehicles. This, of course, has a potential downside in being able to repay these deposits if the company does not succeed. A better solution for such groups is to require a "membership share" investment to provide the capital needed. For CSOs with low or no membership entry fees, the required funds must come from investors, requiring even more capital than otherwise.
However, there's ready source of lease/financing from a source that's very interested in your CSOs success, and it's one that's quite safe from the investors' perspective. That source is your more prosperous members and friends of your organization - but with a twist: they buy and own the vehicles and lease them to you, by setting up a mini leasing or finance company - probably an LLC, since they're the cheapest and easiest to set up in most states. Should something happen to the CSO, the owners are secured by holding title to vehicle. So, the worst that might happen is they get to drive a new car.
The CSO can facilitate this process by hiring a lawyer to develop a standard set of articles of incorporation and lease/finance documents to simplify the process for your friendly LLC companies. Such LLCs could be set up to finance vehicles or lease them at preferential or market rates. The CSO provides the insurance and maintenance on the vehicles. Larger CSOs might use a variant of this idea by tapping a potential investor who's skeptical of investing in the CSO itself but would be willing to lease or finance the vehicles.
A question that inevitably comes up is what happens in the case of an accident - can the LLC owners be sued? The answer is, of course, yes, anyone can get sued for anything. But, it seems to me, that the likelihood of the lawsuit against the vehicle owner going anywhere is very small since they would have to show that they were involved or aware of some sort negligence that caused the accident and lawsuit, such as improper maintanence of the vehicle. (Disclosure: I'm not a lawyer. Talk to yours before doing anything like this and tell me what they say.)
In a future article I'll describe the next step beyond this - incorporating privately-owned vehicles into your fleet.
