How Do I Fix Error In Folder Sharing In Outlook 2013?

We are using Office 365 with Microsoft Outlook 2013 with information stored in the cloud.
From what I understand I should be able to share my contacts with anyone. When I Click on Share Folder I get the following error.
"Folder sharing is not available with the following entries because of permission settings on your network. Your organizations policy does not allow you to share with this recipient."

Is there some setting on out Windows 2008 Server that I need to change? Can this error be fixed?

Thank you...
Rick
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David Johnson, CD, MVPConnect With a Mentor OwnerCommented:
are you trying to share within the organization or outside of the organization?
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