Efficiency in non-profit operations

There's been some discussion on the boards recently about paradigms of non-profit management that gets phrased "Should a non-profit be run like a business?" It's a funny phrasing. There are well-run businesses and poorly run businesses. Honestly run businesses and criminally run businesses. I'm not sure what it means to be run like a business -- but it's clear that question is asking something about to what extent fiscal considerations should govern non-profit operations. So lets begin by asking, "how high are such considerations currently on the agenda of the non-profit leader?" I'm glad you asked. The answer is, right at the top. In a study I've quoted before, the consulting firm Accenture surveyed more than 200 non-profit executives. When asked what the top five issues were that they confronted in managing their organization, the execs listed: Expanding the current donor base Recruiting high-impact board members Increasing donations from current donors Attracting and retaining skilled staff Increasing donor loyalty and retention In other words, increasing revenue and retaining staff - issues that would certainly be high on the on the agenda of any small business owner as well. So you could say these non-profits are already being run like businesses. But maybe they could be run better. What the execs did not list were ways to increase the use they got out of their existing resources by increasing operational efficiency. The study recommended the following approaches: Make better use of technology. Overcome inherent limitations in headcount by more effectively organizing and managing volunteers as an extension of paid staff. Explore and adopt new collaborative business models with complementary organizations. Convince corporate and private-sector donors to fund general operations instead of “signature” or “vanity” programs. Adopt appropriate metrics that enable organizations to evaluate the success and impact of their delivery of services and programs. Engage board members to ensure quality governance structures. All of these in effect are efforts to allow more of the existing financial and human resources to flow directly into mission by lowering administrative costs, eliminating procedural barriers, and tapping underutilized organizational and community assets. If this is taken as a definition of efficiency, I think it's something both businesses and non-profits could use more of. I know mine could. Image originally uploaded as http://www.flickr.com/photos/joelmutate/46795031/

One Laptop Per Child

Stu Leigh of Real World Productions sent me a link the this video, in which Hakon Wium Lie, the CTO of Opera Software, demonstrates the hardware for the new OLPC (One Laptop Per Child) initiaitve. It's pretty impressive. Opera, if you didn't know, is providing the web browser for the OLPC effort. It's hard not to be enthusiastic about the OLPC project, originally conceived by MIT's Nicholas Negroponte. But my thinking was focused a bit by a posting I stumbled into that offers some criticisms of the project from a basically supportive stance.

Hold my calls

Technology Review published a survey of the role of mobile technology in the developing economies this past January. Going beyond the merely anecdotal, the article tried to put some metric on the role mobile technology plays in growth in these countries. Based on market research in China, India and the Philippines, consulting firm McKinsey & Co. found that raising wireless penetration by 10 percentage points can lead to an increase in gross domestic product of about 0.5 percent, or around US$12 billion for an economy the size of China. The economic power comes from the ability to communicate with suppliers and customers across greater distances, often allowing unproductive middlemen to be cut out of the process. To we technologically inclined folks this may seem obvious, but not everyone sees it. Last weekend I met Canadian filmmaker Sylvain l'Esperance, whose wonderful documentary about life in the Niger Inland Delta region of Mali was showing at the Toronto Hot Docs film festival. Chatting after the screening, l'Esperance was saying that he thought the sale of cellphones was an economic drain in the regions he visited: people seem to be spending cash they could be saving for economic betterment to chatter on the phone. But the preponderance of what I read convinces me he's wrong. What moved me to think about mobile technology in the developing world today was this report of mobile activism in the developing world: a young girl arranged her rescue from a forced marriage by texting her schoolmates. Folks like The Other Michael Stein have been blogging for a while now about the value of cell phones in mobilizing advocacy campaigns. Because of my personal distaste for phone interruptions I've tended to pay very little attention to what people are doing in this area. I think I need a wake up call.

The Browserless Internet

It's not really a new a idea - here's a Network World article from more than six years ago talking about the idea. But I think we are going to hear lot's more about it real soon now. This week, Adobe Labs released the first public version of its much-heralded Apollo development environment, a cross-platform tool to build internet applications that live on the desktop, with all the additional solidity and security that can provide. Here's a video of a wee demo: a desktop application that manages e-bay auctions. We've been thinking about such applications for over a year here: last May I wrote in this blog The idea of the Internet and the browser have been welded together in our minds, but really the Browser is just one way to display the content we pull across the network. Developers are just starting to realize that what used to be thought of as desktop apps can access data and content from anywhere on the net just as a browser can. I'm convinced that this technology - not Apollo in particular - but internet delivered desktop apps using the public net rather than your office LAN as their infrastructure - are going to bring a lot of power and security to non-profit applications in the very near future. The major development platforms have been working with components that handle internet data and document access for years now; browserless internet apps can be built in virtually any of the existing desktop development environments popular today. So stay tuned.

Tooth-fairy economics

The discussion of Open Content I joined last week has continued. In an articulate polemic Laura Quinn of Idealware lambastes what she calls the "tooth-fairy" idealism those who maintain that all content in the non-profit sector ought to be free. I think we as a community also need to consider possible negative impacts of advocating that all content ought to be open. It’s already very difficult to pay for the effort of creating great content. If in addition we promote in people’s mind the idea that all content ought to be free, it’s hard to escape promoting the idea that no content is worth paying for. Which puts us in danger of tipping an environment in which it’s very difficult to support good content into one in which it’s downright impossible. Let me emphasize one phrase of Laura's: It’s hard to escape promoting the idea that no content is worth paying for. In a sense it boils down to the value of content. No one is advocating that all staff of non-profits work for free, for example. A person's time has value! What one is willing to pay for something reflects the value one places on it. David Geilhufe comes out and posits this directly, in a posting in his Social Source blog. He writes: Content is no longer a value generator... it is a consumer capturer. You need to capture the consumer with your free content and then extract value through alternate channels... ads, products, services, memberships, etc. I've always thought the word content itself leads us in this direction. Content is just so much stuff - as in "We need a stream of content for our website." Contents may settle during shipping. When it is seen as content, it's just something you can buy by the pound. I'd like us to throw the word out! Content economics places sharp limits on what kind of media will be created, since it makes it difficult to pay for creating media that might take weeks or months to prepare. And it eliminates, for the creator, the ability to take advantage of the economies of reselling their work to finance additional creation. This devaluation of text and media will lead inevitably to a paucity of high quality materials. And keeps the non-profit world in charity mode, supplied by creators who do not need to earn a living. Laura's comments are important because her project has tried to create just this sort of serious media - pieces of work that are not created in in just a few days. Pieces of work that are of direct value in themselves. Laura is not creating media, as David suggests one ought, to lure you into her site. The media here IS the service. So how do we propose to pay for it? Image uploaded as http://www.flickr.com/photos/mikebabcock/58508023/

News from Members Only Software

As many of you know, we were sad this week to see long time Project Manager Krista Bocus decamp to tackle an opportunity in a very different industry. She was getting burned out by her at-least-an-hour commute into DC every day. And having been with us for over a decade, she felt the need for a new challenge. Krista was very involved in our efforts to find just the right person to fill her slot; and we're very excited by the results. Next week Gale Mamatova will be sitting in Krista's seat as Project Coordinator. (Or at least someone's seat - we have a tendency to play musical offices every time someone joins or leaves) Gale comes to us after several years of experience in the association and non-profit world here in D.C. Most recently she was at the American Academy of Child and Adolescent Psychiatry (AACAP), and before that at the Eurasia Foundation. Gale has worked with a number of non-profit software packages in these positions. Not a techie at heart, she's worked in development, grants management, and program development. So she brings a much needed user's viewpoint into our team. Gale is currently working towards a masters degree in public administration with a focus on non-governmental organizations. Her passion for the non-profit and association world will bring real value to our users! She'll be starting on April 18th.

Open Source Economics

At a session on Web2.0 at last week's NTC conference in Washington, a woman took the microphone to comment on a conundrum her non-profit is facing. About 40% of her organization's revenue comes from the sale of educational video's in the K-12 market. They suspected they could significantly increase their visability by posting content for free on the internet - but this would destroy their sustainability. How can they take advantage of these new web-based distribution tools without going broke? It's the same problem the record labels are facing. New distribution technology is forcing new business models. Independent Software Vendors (ISV's) have been wrestling with this for years, as the success of the Open Source movement places a downward pressure on the value of software. While the Free and Open Source community has always stressed that Free in the FOSS context is "Free as in Free Speech, not Free as in Free Beer", the reality is that much open source software is available at no cost. To adopt or compete with this model, independent developers who must generate revenue to meet payroll have created new business models. Some vendors, such as MySQL, have a split model - a free license and a commercial license, for example. Others, such as Red Hat, expect to make their money from implementation and support services. But generating enough cash to amortize software development this way is a challenge. A few years back,Steven J. Vaughan-Nichols wrote a piece in eweek called Going Broke with Free Software that documented the stress the developers of open-source software were under to produce revenue, and he interviewed several who had taken positions in proprietary firms like Microsoft to pay the the bills. Just yesterday, I spotted this programmer's blog post about why he has opted NOT to provide his work as Open-Source. Vaughan-Nichols concludes Yes, you can pay nothing for most open-source software, but if you want to see the next and better version of it, you'd better start paying something for it. This week, Michelle Murraine in her blog takes non-profit pundit Michael Gilbert to task for charging for his new journal, Journal of Information Technology in Social Change. Michelle also publishes Michael's response, where he cites the necessity of raising revenue to sustain publication. Since Free and Open Source groceries and housing don't seem to be on the horizon, I think this tension between free distribution and the need to sustain organizations will be with us for while. image posted as http://www.flickr.com/photos/loneprimate/451169287/

Varieties of Membership Management

A naturalist studying non-profit membership organizations would quickly identify two principal subspecies. One sort of specimen is the type of organization that NTEN classifies as the "mutual benefit organization". The organization exists primarily to serve its members; the members join specifically enjoy the benefits the organization will provide to them. They want the journals and publications, the professional seminars, the reduced prices on publications or classes. This subspecies includes trade associations and professional societies. But it also includes groups like JCCs and YMCAs. The other sort are organizations that exist to serve a broad social or cultural goal. Membership here is a way to package fundraising. Members join primarily to offer financial support to the organization, although a well designed program will offer benefits or premiums that help to draw people in. Museums and cultural organization tend to be organizations of this sort; many advocacy and political groups also structure themselves in this way. Dues Billing is managed very differently in the two sorts of organizations. For the first type, the dues represent is a fee in advance for services. Each member will receive a renewal notice for a specific amount. That amount might be determined by the membership type (corporate, individual, academic, etc). For organizational memberships it might be based on the members revenue, or number of employees or even -- in the case of one leather-industry trade association, the average number of hides processed each week. And the dues may be due monthly, or quarterly, or annually, depending on the membership type. The second type of organization has a mirror image set of billing business rules. Rather than bill people based on their classification, members are classified based on what they pay(i.e. $25-$50 members, $50-$100 supporters, $100-$250 sustainers, etc). And rather than tell members when their dues must come in, development teams struggle to understand when people tend to renew. The staff and board need to articulate quite different sorts of business rules and practices for these two subspecies. So it is critical they understand which type of membership program they are developing. Every now and then we see an organization stuck in the middle. This uncertainty leads to in ability to settle on membership policy and practice. And not surprisingly to confusion in marketing and development messages. After all, no one ever joined their public radio station because they really needed a tote bag. We often first hear the signs of "membership ambiguity disorder" as an organization debates software requirements for membership and development support. But it's not a problem of deciding what you want your software to do. You need to first understand what sort of beast your membership program is.