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.
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