Does civic tech have a funding problem? - Technical.ly DC

Civic

Mar. 30, 2015 9:32 am

Does civic tech have a funding problem?

Monika Shepard, of the government accountability nonprofit Global Integrity, says civic technologists need to have more conversations about how to monetize civic tech innovations.

From D.C.'s 2013 National Day of Civic Hacking event.

(Photo by Flickr user Justin Grimes, used under a Creative Commons license)

This is a guest post by Monika Shepard.

There are several opinions on what innovation is and how it should be applied by all actors of society, including government, business, academia, nonprofits, you name it. But in general, innovation does not happen overnight, it takes many iterations to get a good prototype — let alone a usable, “open” and scalable solution.

When it comes to the technology sector this quote by New York Times columnist David Brooks sums it up nicely:

The roots of great innovation are never just in the technology itself. They are always in the wider historical context. They require new ways of seeing. As Einstein put it, “The significant problems we face cannot be solved at the same level of thinking we were at when we created them.”

But what’s the role of civic technology?

Within the civic tech space, I keep struggling with the fact that there is no clear definition for how to best innovate and for whom.

There is a long list of reasons for this, chief among them:

  • Lack of sustainable growth/revenue models.
  • It’s a new sector where problems aren’t well articulated and solutions aren’t well defined.
  • Technology is changing every hour and traditional technology stacks are constantly being reinvented for an “open source,” “open data” and “open government” world.

I know several key actors are looking at these issues including the Knight Foundation, which put out an interesting report last year with several follow-up thought pieces on “What’s next for mapping civic tech.”

What I think most of these pieces fail to address is the sustainability of civic technology beyond the initial incubation stages. Who funds such work? Should all civic tech make money? How do civic tech tools scale, or should they even have to?

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As someone with a business background who has been working in the nonprofit civic tech space for some time (I’m currently at Global Integrity and was previously at the World Resources Institute), I have been struggling with everything noted in the above “What’s next for mapping civic tech” post.

The point I struggle with on a daily basis is the issue of impact vs. time, especially when it comes to scale and “profitability,” since we’ve chosen a revenue model not centered on selling data.

I know I am not alone in feeling this way.

Several other civic tech organizations/companies are trying to deal with the frustrations caused by the fragmented approach to building and managing civic technologies.

There are many costs associated with technology and therefore, though some NGOs might be good incubators for defining the core root problems where technology can be useful, most NGOs or small groups don’t have the expertise to sustain a long-term technology stack and team.

So what do groups in the civic space do when they want to find long-term solutions to support and grow their tech infrastructure? Do they sell their IP, their team, their connections and relationships or continue to develop their product and team?

It is hard to know what to do and how to juggle these issues with limited resources — and even when you do one of the many things well, there are always more hurdles to overcome.

"We want the maximum good per person; but what is good? To one person it is wilderness, to another it is ski lodges for thousands. To one it is estuaries to nourish ducks for hunters to shoot; to another it is factory land. Comparing one good with another is, we usually say, impossible because goods are incommensurable. Incommensurables cannot be compared."
Garett Hardin, 1968
The funding conundrum

When groups are thinking about going into the civic tech space, a key issue to think about is where will their long-term financial resources come from.

To figure this out, they should define what problem they are solving and whether that problem is big enough for a large enough market. With this comes the definition of what their services could and should be. Lastly, they should always think about their exit plan. All of this will help outline what the parameters are for the product and who to turn to for funding.

You’ve got the amazing civic tech innovation, now consider these specific points when defining your long-term revenue model:

  1. Money from foundations is often restricted to a timeline of very specific deliverables. In my mind this limits agility and flexibility with tech products. Therefore, is venture capital or angel investment better?
  2. SaaS-based approaches are OK, but it depends on where your stack lives. Does your team have the ability to host a cloud service itself? What will they sell? Who will they sell to?  Do you put your eggs in a sales and marketing team, a development team or both?
  3. Open source. Do you want to rely on an environment like GitHub where the community can help you develop your initial code? Of course, the community can also fork it and build their own revenue models.
  4. If you are an NGO, what will your board say? How long will your board support this work and can they help you support it for the long term?
  5. Relationships. Do you have enough you can bring to the table? And how do you best manage those relationship if you have to sunset a product?
  6. For-profit or not? Should your technology make money or just break even?
Should civic tech be free?

And the hardest question to reconcile is this: Should all civic tech make money? If not, how can projects be sustainable?

To me, this is particularly important to figure out. Especially if we don’t want to fall in the perverse-incentive trap when it comes to open government policies and open data. If we want civic information, how do we obtain it without paying for it twice or three times between creation, collection and interpretation?

By no means am I saying all civic tech should be subsidized. I do think there will and should be civic technology companies that make money. However, if tools created by NGOs or others are solving a problem of civic need, shouldn’t we consider and be willing to pursue options that could subsidize them as public goods?

At the moment, it feels like we are operating in a a technology/innovation-first vacuum. If so, are we really learning from our mistakes and asking the right questions to succeed in an environment where open source and data are not used to create progress for good?

Proposed next steps

I believe the answer is a very clear “No.” That is why we should not back down from the tough issues around scale and funding, no matter how painful that conversation — especially if we want to fund civic innovation, including technology that is “affordable” and can be scaled around other civic tech tools. I know there is no magic bullet, but I do think we need a new way of thinking about the funding component.

A few ideas: a repair-and-patch fund along with a scalability-and-iteration fund. If the funding/investment community, specifically around tech, seriously considered establishing something like this, I could see this having a tremendous impact on saving useful tools from the chopping block simply due to lack of capital.

In the U.S., this is analogous to how government has to maintain and fix certain pieces of key infrastructure, like water pipes. In some places, the infrastructure was built and implemented over a hundred years ago. Since they are integral to our everyday lives we have to maintain them.

A clear roadmap needs to be created to outline the practical terms of what the funds would look like and how metrics can be created to determine successful products.

Learning from history, and others

In my “perfect” world, I would design a future where a “civic technology commons” would be preserved for everyone to use. This is what GitHub and Wikipedia are doing so well. How can we contribute to or complement these great sources of information and community?

This is why, instead of just asking questions, I am putting out a call to action to everyone in the public and private sectors who fund such innovations, and work in the trenches. We need to figure out how to create and maintain important common services and innovations for people representing a multitude of sectors (global health, governance, data, gender, environment, governance, economic development and education).

I know there are some of these groups and conferences out there (Transparency and Accountability Initiative, Wired for Changes, Social Good at London’s Technology Week, GovTech FundFeedback Labs) but we need more of them bringing stakeholders together. We need a place, online and in person, to listen, share and explore workable solutions to answer the challenges of our time. Conference rooms with one-way megaphones are not enough.

Alone in silos, we will not solve the difficult challenges of our time: universal access to clean water and food, basic medicines, decisions made by governments, financial markets and educational institutions.

History is not built in a day or in a vacuum. It takes time and agile iteration. And so does a successful funding model for social change — especially for sustainable innovations in civic tech.

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Monika Shepard

Monika Shepard is a strategic project manager, focused on increasing efficiency and effectiveness. She has 14 years experience cultivating professional relationships and coordinating multi-disciplinary teams within the nonprofit, government, business and academic communities across the technology, governance, environment, building, education and design sectors.

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