Statement on Funding
Last document change before entering git revision control made on 2010-08-19. This statement was written by David Eads and Taylor Hales in response to increasing interest in third-party funding among members of the FreeGeek community, friends, and allies. Our purpose is to describe FreeGeek's policy to date, to explain the reasoning behind our approach, to raise questions we believe should be considered if pursuing outside funds, and to offer a few recommendations for a governance policy about fundraising.
In our first five years, FreeGeek Chicago has pursued a handful of funding opportunities, and received no grant or foundation funding. The most significant donations during this time were the thousands of hours logged by volunteers and staff to make the organization work, and a rent subsidy during our first two years which allowed FreeGeek's revenue stream to grow slowly yet still keep pace with increases in rent and overhead. Several times, lack of funding almost forced us to shrink back to being a hobbyist's club, or simply close our doors.
All of FreeGeek's founders and early staff held IT positions in traditional foundation- and grant-supported nonprofits. Our employers often did necessary work, but their strategies were sometimes misguided, dysfunctional, or insufficient.
At some point in these organizations’ histories, a substantial grant award caused rapid growth: new positions, new initiatives, new programs. That funding created tremendous pressure to sustain the complex and costly structures created by that infusion of resources.
Pursuing funding to maintain organizational subsistence can lead to quickly-shifting and often compromised decisions about strategy and direction. Getting the next grant becomes the top planning priority. The organizations we worked for were often still doing great work for the people they served, but the money chase became a driving force.
Our experiences led us to these conclusions:
- External funding means someone else decides your organization's priorities: A funder's priorities may or may not match the desires and needs of a community or help to fulfill an organization's mission.
- Fund-raising is work: Funding and fund-raising requires skill and creates organizational overhead to seek and manage money.
- Funding obscures failure: Bad ideas can live on as long as they attract funding or make for good public relations.
- Funding is an exchange, like any other: Funding has strings attached, whether organizations choose to discuss them or not.
- Funders are often “trendy”: Especially in information technology, grants follow intellectual fads and forgo long-term perspective.
FreeGeek Chicago could cautiously and deliberately pursue grant funding in order to bring on more paid staff, grow educational programming, and expand to another location. But right now, without external funding, FreeGeek is growing at a pace that feels organic and constantly checks us at each small step forward.
Our reliance on sales revenue as the primary source of income and our dependence on dedicated volunteers as the majority of our workforce make it hard for FreeGeek to grow unsustainably. If a new FreeGeek program fails, we know that there wasn't interest in the community, or that we weren't ready to take on the project.
FreeGeek is not afraid of earning money. We believe that the way we're growing now will lead to an organization that can serve thousands of Chicagoans without losing sight of its mission, and without sacrificing community governance or open participation in the pursuit of funding. Part of our mission is to care for our own: we believe that all relationships at FreeGeek – with funders, businesses, customers, and with each other – should be based on mutual respect, accountability, and hard work.
This is not to say FreeGeek should not seek third-party collaborations or small-scale funding opportunities. There are many ways to exchange money, goods, and services with natural allies of FreeGeek. We can imagine trading our services for classroom space, accepting money from an organization to pay someone to teach a class we've planned, or pay rent to sustain a donation space on the south side or the suburbs.
Natural partnerships–with schools, health care clinics, local businesses, metal scrappers--could yield tangible benefits without undermining FreeGeek's mission, and allow FreeGeek to contribute to an ecosystem of organizations which provide for human needs far beyond digital literacy and access.
We believe these questions should be kept in mind when pursing funding:
- How does funding sustain or improve something FreeGeek Chicago already does?
- How does funding make FreeGeek more sustainable?
- Who provides the funding? Do their values and behavior match FreeGeek's mission and values?
- Has FreeGeek planned for the time when funding runs out? Where does it leave us?
- What forms of overhead does the funding create? Do we have the organizational resources to properly manage the transactions?
- What forms of accountability go along with the funding?
- How could the obligations of funding affect our organizational structure and community process?
- Can the goals of a funding source be better filled by another organization (either existing or to be created) outside of FreeGeek?
- Does the funder require personal information from participants? Are we comfortable asking for that information?
First and foremost, these matters should be decided by our community – anyone who volunteers 30 hours per quarter and attends community council meetings. The authors’ experience is not definitive, and some forms of funding would allow FreeGeek to move more quickly to hard-pressed areas of the city. If there are healthy funding opportunities for FreeGeek, the community should talk about them.
We'd like to suggest four guidelines for a governance structure for making funding decisions:
All funding should be approved by a community process: All FreeGeek governance bodies–staff, community council, and potentially a traditional “board” in the future–should direct funding decisions together. There are several models for decision-making to choose from: we could use the two-thirds community council vote and staff consensus process used for staff approval, or extend the process of formal consensus to the community council.
Fund-raising efforts should be open and transparent to the community and public: Volunteers who wish to pursue grant funding, foundation funding, or other formal partnerships should announce their plans on the FreeGeek email list and at community council. Everyone at FreeGeek should be solicited for input.
Limits should be set on how much funding constitutes our total revenue: FreeGeek could set concrete limits on external funding. For example, we could decide that no more than 30% of FreeGeek’s revenue may come from third party funding, and no more than 15% from a single source. This policy should exclude individual monetary donations, which likely require a case-by-case discussion.
Funders should sign a memorandum of understanding: We propose that FreeGeek ask funders to sign a document affirming they will abide by any and all decisions made by staff and community council, and that they will allow us to publish all communications and financial details of any funding arrangement on our public website.
FreeGeek is built around open participation, providing a useful commodity at a fair price, striving towards the humane use and responsible disposal of information technology, advocating for free and open source software, and treating each other well. Because we deeply value our freedom to act on these principles, we should remain attentive to institutional relationships – whether with a foundation or a recycler – that could compromise our values. A strong community process for approving and managing funding has great potential to guard these principles against the pitfalls and excesses of third-party funding, and encourages growth at a humane pace and scale.
Thanks to Andre Williams, Andy Eads, Susan Golland, Chach Sikes, Rebecca White, and Tom Wolf for their contributions.