Salesforce is continually adding functionality to new Releases. Some of these Release features are automatically enabled, but generally any that have to do with security and the sharing model are included, but require the customer to enable the feature.
Such was the case with the “Enhanced Sharing for Reports and Dashboards”. If your Org was created before Summer ’13, you REALLY need to get this enabled, assess your Org, and make updates to your folder sharing model.
The older function allowed only sharing to be done in read only or read/write modes. The new enhanced version allows much more granular sharing to be done:
Viewer: View, refresh, run.
Editor: Viewer plus edit, move, save, and delete.
Manager: Editor plus share and rename folder.
So enable this in your Orgs. Be a diligent system administrator or power user. Here is how to do it:
From Setup, enter Folder Sharing in the Quick Find box, then select Folder Sharing. Enable.