How to build a sustainable nonprofit the open source way

How to build a sustainable nonprofit the open source way
Image by opensource.com
submit to reddit
 
(4 votes)

Building a broadly impactful and long-lasting nonprofit is no easy task. In addition to formulating a long-term mission, establishing community recognition, and developing ties to other organizations, traditional nonprofits must also secure regular sources of external funding. The cycle of worry is never complete, as there is the never-ending possibility that donor pockets will empty and grant opportunities will not come to fruition. Moreover, fund-raising efforts can divert substantial time from actively fulfilling the nonprofit’s mission.

To diversify their revenue stream and alleviate the pressure associated with always-tenuous funding sources, some nonprofits incorporate commercial activity into their revenue-generating agenda. Sustainable nonprofits earn profit independently by providing a product or performing a service that has real commercial value, reducing their need for donor support. Products may have artificially inflated prices that consumers pay in a combined purchase/donation, or be offered at market price or in exchange for a specified or unspecified donation. To engage in this type of commercial enterprise, nonprofits must recycle profits back into the organization rather than disseminating them to owners and investors—but one catch is that state and federal tax on these products may apply (Nonprofit organizations 2008 [1]).

The nonprofit I work with, GIS Education, does not sell a product. We instead provide low-cost GIS workshops to students and professionals around the San Francisco area. This service provides much-needed income while still dovetailing with our greater mission of increasing local knowledge through public outreach and K-12 education.

However, we struggle to reconcile this profit-based mission with open source philosophy. We strive to create an enriching and engaging curriculum that challenges our students and keeps them coming back for additional workshops. We need to protect our materials in order to retain our customer base. But this protection is at odds with the heart of our mission: to disseminate geospatial knowledge throughout the Bay area.

We have reconciled these opposing demands by making our K-12 outreach materials freely accessible to teachers, but protecting our fee-based workshop curriculum. Ultimately, we must clearly articulate what intellectual property we will protect and what we will freely distribute.

This struggle is not unique. Community groups making information accessible via the web, published articles, or conferences must weigh charging for intellectual property against allowing as much material as possible to be open source. Broadly, we all must balance attempting to distribute relevant materials while protecting the intellectual property we need to power our fund-raising.

There is no one method for merging an open source mindset with the revenue-generating agenda of a sustainable nonprofit. Given this potential conflict, some organizations will wonder whether engaging in economic activity is even worth the financial risk. Foster and Bradach (2005)[2] outline the relevant questions a nonprofit should ask before attempting a profit-making endeavor, while Froelich (1999)[3] discusses the benefits of diversifying nonprofit income sources. Their research has shown nonprofit entrepreneurial ventures can often be detrimental if not properly integrated into the nonprofit mission and not well thought-out. Indeed, our the GIS Education Center has a long way to go before we become truly self-supporting, but at least the framework for a sustainable nonprofit is in place, along with a continued commitment to open source.

So what do you think? What is your experience with treading the line between business and nonprofit? As a nonprofit, how have you reconciled maintaining an open source attitude with intellectual property rights? 

 

Sources:
[1] Nonprofit organizations. 2008. Publication 18. Available at: [http://boe.ca.gov/pdf/pub18.pdf].

[2]- Foster, W., and J. Bradach. 2005. Should nonprofits seek profits?
Harvard Business Review, 83:92-100.
[3]- Froelich, K. A. 1999. Diversification of revenue strategies: Evolving Resource Dependence in nonprofit organizations.
Nonprofit and Voluntary Sector Quarterly. 28:246.

""
Creative Commons License

9 Comments

Michael Tiemann's picture
Open Source Evangelist

You say:

However, we struggle to reconcile this profit-based mission with open source philosophy. We strive to create an enriching and engaging curriculum that challenges our students and keeps them coming back for additional workshops. We need to protect our materials in order to retain our customer base. But this protection is at odds with the heart of our mission: to disseminate geospatial knowledge throughout the Bay area.

And this makes a new connection for me.  When I was growing up, I simply did not understand ecology and environmentalism.  I spent hours in the library looking for reliable reports (mostly in the New York Times microfilm archives) to debunk environmental claims and promote nuclear power.  What I found was something really surprising: mining is not as simple as just pulling resources out of the ground.  Indeed, one of the things that made me an environmentalist was a new understanding of just how problematic were all the activities before the first fuel rod went into the reactor.

The connection to open source is this: you are absolutely right that you need to protect your work.  If you lose the abililty to practice, reproduce, improve, and teach others to participate in developing your body of work, your have no professional future.  I realized that of all the licenses I had ever read, the GPL was the first (and I argue, still the best) at protecting me by protecting my work in a way that makes that work a sustainable practice by allowing a community to form around it.

Concepts of "protection" that actually protect against community interests are the worst sort of protection there is.  Mining companies are "protected" against following the Clean Air and Clean Water acts, and utter destruction of the environment and community is the result.  That's not sustainable.

Your mission, which is to disseminate geospatial knowledge (which I applaud, by the way), is the thing you should protect.  Using open source software as a means to that end is a great approach.  I have come to believe that sustainability is a better approach to achieving profits (or non-profit success, as the case may be) than focusing on profits to achieve sustainability.

The structure of world peace cannot be the work of one man, or one
party, or one nation...it must be a peace which rests on the cooperative
effort of the whole world. -- Franklin Delano Roosevelt

quaid's picture
Open Minded

Michael and Jon hit upon a very important point - copyleft is your friend in this situation. If you free your content with a license that requires modifications be contributed back to the main body, you allow a community of experts to grow up around the content with you at the center.

From the very start, your organization is the key expert, and very few other experts will drop from the sky. Most will be amateurs interested in using the materials, and if they do end up offering training or directly learning from your material, you can benefit from that in many ways - improved networking, more clients, more recognition as experts, and so forth. Some of those others will grow to be experts, and evangelize for you, be future staffers at the non-profit, start up other businesses that are interdependent with the non-profit, and so forth.

Freed content has a way of growing beyond itself as others take advantage of everything from the data to the information about it. Perhaps you could try by taking a selection of content (the beginning 101-level material? or the most advanced and hardest to reteach?), put it under a CC BY SA 3.0 license (as an example of a copyleft content license), and then curate the content and the community around it. Invite people to meet-ups and such to learn about the content, how to help grow it, etc.

What just came to my mind is, for the last 10+ years we have used the same tax preparation agent who taught a class on how to do your own taxes my wife took 12 years ago. We learned that it was going to be more than we wanted, and every year since then one of my favorite checks to write is paying her for doing our taxes, making it all so much easier, and saving us more money than we pay for her services. I know that is a classic reason people teach such classes, and I'm glad it worked for us.

--
Participate in writing "The Open Source Way"
https://TheOpenSourceWay.org/wiki
Teach open source participation
http://TeachingOpenSource.org

Jon's picture

Hi Mel,

I'm in a very similar situation to you - my business isn't a non-profit, but we exist to serve community-based organizations to advance their missions. If we could, we'd give away all our work - but we must balance the issue of needing to pay ourselves.

Fortunately, we come down hard on the side of releasing almost all of our work product as GPL/AGPL/Creative Commons, for two reasons:
1) To quote Tim O'Reilly, "Obscurity is a far greater threat to authors and creative artists than piracy." We derive a tangible benefit from sharing besides just feeling good - it puts our name out there as the authority on the issue. When someone gets funding to pay for a training, 9 times out of 10 they won't try and do it in-house with freely available material - they'll call whomever they think are the experts. By producing relevant material, we become the people they call.

2) We do trainings for which our curriculum is freely available. People still pay us $300 per training, because there's value in having the material taught by an expert who can explain things and answer questions. By releasing our curriculum freely though, we build our reputation in the community, we're offered job leads by colleagues, and our colleagues also occasionally update or improve our curriculum for us!

John and Dagny Galt's picture

Google Cory Doctorow.

Robert Hacker's picture

I think there is a framework that helps to answer your question about open source. Every organization has two objectives, to create value and capture value. Creating value is the concept of utility typically achieved by creating a product or service. Value capture is the process of monetizing the value creation. Every organization type gives a different priority (ignore, satisfice and maximize) to value creation and value capture. A social entrepreneurship project maximizes value creation and satisfices for value capture to achieve cash flow breakeven and reinvests any excess cash in operating assets or operations. (A criminal enterprise ignores value creation and maximizes value capture.) By managing your project as two separate activities, it becomes less complicated to deal with the question you present. For example, One Laptop per Child has an open source laptop (XO) and open source educational software called Sugar. The initial and ongoing development of hardware and software is the value creation or social utility. The commercialization is achieved by selling the laptops to sponsors who give them away for free to children, but this sale is hugely dependent on OLPC's expertise to manage large deployments with the sponsors. In other words create a value-added that compliments the open source knowledge through add-on monetized services.

nydiarra's picture
Community Member

Hi Mel,

A model for your nonprofit to support itself and continue creating contents at almost no cost is to take projects at a broader community level by letting volunteer experts contribute online. This is basically the Wikipedia way for generating free content. For sure, a drawback of this model, is that the content may not always be of the highest standard. Nonetheless, the nonprofit may raise funds by touting the value of the product to potential donors all over the Internet to cover much lower operational costs than in the current model.

On another hand, your question made me wonder the following: In efforts to reconcile open source and Intellectual Property Rights what is most important? To make the content free of the delivery format of this free?

Nouhoun

Paul Girault's picture

I suggest the open source model is competing with the merchant model on the latter's rules. Take the example of the Arms Race during the Cold War : The Eastern Block could not win, because the West had unlimited funding through credit/debt, while the "Commies" did not, and went bankrupt. The Eastern Block tried to beat the West at a game ruled by western rules. Why both economic models could not coexist without competing is beyond me, but I think it has something to do with some built-in, natural dynamics of Life, like "Grow or die" ?

cedarhillbilly's picture

Thanks to Mel for sharing these thoughts and for the insightful comments. I just had the question "sustainability plan for 3-5 years" on a grant application. It's a challenge in flush times; more so now when everyone's cause has a tin cup or a handbell and kettle.

jalmasi's picture
Newbie

Tried with non-profit and failed, due to issues you described so well.
But then I discovered that open source works quite well with for-profit, and last 5 years I make for living exclusively with open source.
Sometimes it's just developing custom software, which we deliver with source. More often, it's customizing free software.
If we think we have something useful to general public, we publish under GPL.
But vast majority of revenue are services based on open source, all the way from teaching to maintenance.

And what about intellectual property?
No we don't do that.
As simple as that.

So I don't think open source vs. intellectual property should be an issue for a non-profit.
Real issues are those specific to non-profit organizations, from, obviously, making no money, to volunteers who don't do what they were volunteering for.
Or, merging non-profit activities with for-profit activities may be real trouble.