Changing technology funding practices (again)

Over the last couple of weeks, I was thinking a lot about "network leadership," and the role of innovative technology, and how it all becomes part of a movement here in Canada that could change the field of innovation. The last burning question for me is: How can Canadian grant makers play a bigger role in catalyzing the necessary networks, and helping innovators build the necessary relationships?

Lots has already been said about the opportunities for a more holistic approach to financing non-profit technology initiatives. So, when it comes time to explore new ways of financing social innovation, I hope that foundations and grant makers will invest some time to integrate the "old" ideas too. But, when I return to the question "how can Canadian grant makers play a bigger role in ensuring that technology projects are successful and sustainable," I always come back to the same conclusion: the funding model needs to be innovative too.

Innovative funding catalyzes innovative approaches to problems

My thinking around "innovation 2.0" can be summarized as: it's not the technology that is important here, it's the innovative approach to problem solving and an enterprising spirit that will rule the day. And, similarly, I'm convinced that changing the way that organizations and projects are funded would catalyze new approaches to problem solving, networking, and relationship building.

Basically, grant recipients take their cues from the grant maker; reporting periods, reporting requirements, and project length and size are all set in advance. The funding program drives the focus of applicant's projects, and the funding requirements drive the approach to problem solving. So, as I see it, there's an opportunity to introduce some system-changing interventions at this level (because, no matter how the funding program is set-up, organizations will still figure out a way to apply and work within the guidelines.)

So, if grant makers were to take a cue from the Web 2.0 companies that they're often enamored with, the first change that I'd recommend is move toward nimble funding. After all, if we're going to encourage the grant recipients to be innovative, should the grant makers lead the way?

Nimble funding

Currently, funding program cycles in Canada tend to be pretty darn long. From application submission, to application review, to negotiation, to the release of funds -- it can often take up to 12 months before a project gets off the ground. (In some situations, I've experienced a three or four month turn-around. But that is the exception not the norm.)

So what, you say? Well, here's the issue when it comes to funding technology projects...

Internet technology -- unlike community organizing which has been around for centuries in various forms -- is still very new. It's changing at an incredible pace. Think about the Internet you experienced as recently as two years ago, or even twelve months ago, and how much things have changed. Think about Microsoft's dominant market position as recently as five years ago, and where organizations like Google are today. One thing is clear: where this is all going is still very unpredictable.

So why are technology projects funded like something that's predictable? Let's think through that twelve-month period that it took to get an application through the funding process. Now, it's a year later, and the ideas in the application are twelve months out of step with where the Internet is right now. Personally, I can't think of a single recommendation that I made last August that I wouldn't at least take the time to re-consider if I was asked that same question today.

This leaves us with the question: What would nimble funding look like? And how could it address this inherent challenge when funding non-profit technology initiatives?

Grant making could look more like social acceleration

If grant making organizations were to explore the idea of nimble funding, they might look first to the world of venture capital, or maybe venture philanthropy. The idea of "social return on investment" is something that most grant makers have probably already embraced (at least unconsciously, if not publicly). And, though I'm certain that most grant makers think their funding programs are reaching their full potential, I know that many of them could be providing much more return on that social investment (any researchers out there?). Specifically: many grant makers could acheive this by re-tooling the approach to funding (often expensive) technology initiatives. And, by re-tooling the approach to technology funding, grant-making organizations could actually help to improve the success of technology projects, mitigate "shareholder" risk, and move toward the role of social change accelerator.

Where should funders start? Simple:

Iterative funding cycles: Short applications, fast reviews, and project time lines that produce useable pilots (or "perpetual betas" if you will) very quickly. Look to the Knight Foundation's News Challenge funding for an example of leadership in this area.

Open standards over open source: Programming languages, development frameworks, and technology stacks are still evolving rapidly. New tools and approaches to building Web applications are emerging every day, and this field is sure to look as different next year, as it did this year. However, through all of this change, standards have -- for the most part -- kept things sane. Think of faithful old standards like HTML or XML, or newer ones like RSS or iCal -- in most cases, documents created in the earliest versions of these standards can still be used today. The opportunity here is for funders to help their grant recipients to embrace standards over languages, applications, or even licenses.

Be SaaSy whenever possible: Over the last few years, there has been a huge shift away from installed applications -- software that organizations need to run, maintain, and upgrade internally -- and toward hosted, or provisioned, applications. With provisioned applications -- often referred to as "software as a service" (SaaS) -- the headaches involved with managing the hardware infrastructure and software stack are transfered to outside organizations that specialize in delivering the software "on demand" to many users. The advantages here outweigh the risks, in my opinion. Too many organizations are now saddled with aging, insecure, and outdated applications that have no upgrade path -- shifting these responsibilities and decisions to market-based, and market-driven, specialists just makes good, long-term, sense.*

Finally, I'd like to see more funding that focused on taking an idea from concept to pilot -- the Office of Learning Technology program got this part right -- and then from pilot to the next iteration or cycle. Or, like Askoka, looking for the field-changing initiatives that are already having an impact, and accelerating them with follow-on rounds of funding that are focused on growth, reach, and replication. And, for extra points, I'd like to see non-profit technology funding that steers clear of Goliath undertakings, too much complexity, or technology that needs to be directly managed by the grant recipient for a period greater than 12 months.

I'm sure you have your own thoughts on changing technology funding practices ... why not post them in the comments below?

* Before my more radical colleagues pounce on me for that statement, I should just say that there are very specific situations -- usually related to the type of organization -- where I would not recommend exploring the SaaS options, and I've talked about them in detail here, and here.