Grant Makers Should Focus on Innovation in Addition to Serving Emergency Needs

In the face of a disastrous economic downturn that has depleted philanthropic resources even as human needs have escalated to heart-wrenching proportions, it is only natural that many foundations have refocused their grants to ameliorate human suffering and shore up frail organizations. The natural tendency in philanthropy will be to increase our commitments to alleviate the severity of the economic collapse.

But grant makers should recognize that this may also be a good time to invest in path-breaking solutions and social innovations that may not fit neatly into each foundation’s priorities.

After all, for the first time in history, the Internet has made it easy to spur collective action for relatively little money. As Clay Shirky, author of Here Comes Everybody: The Power of Organizing Without Organizations, put it, “Our electronic networks are enabling novel forms of collective action, enabling the creation of collaborative groups that are larger and more distributed than at any other time in history.”

Indeed, now may be the best time for grant makers to invest in the types of innovative social networks and other Internet services that are already becoming some of the strongest drivers of growth in the broader economy. Philanthropy should make sure that nonprofit groups benefit from the explosive communications revolution reflected in the growth of Internet-based communications, commerce, and research services like Google, YouTube, and LinkedIn.

Ironically, an economic slump can be the right time to support nonprofit technology projects. The talent and equipment that can help a project expand can be too expensive for a nonprofit effort to afford in good times, but can suddenly become much more affordable in a recession.

For example, GuideStar, Idealist.org, TechSoup Global, and VolunteerMatch are all highly successful Internet-based services that have each delivered great benefit to tens of thousands of nonprofit organizations. They were all able to take advantage of the dot-com bust to expand their organizations from small-scale and struggling services to nationally recognized leaders in the field of nonprofit technology. Back in the day we had a term for it: the revenge of the dot-orgs.

But how can grant makers best find the next generation of enterprises that will promote a vibrant and diverse exchange of educational information, cultural expression, and political discourse over the Internet?

While Silicon Valley venture firms are willing to put billions of dollars into the next Google or Facebook, there is no equivalent capital pool available for investment in the expansion of social enterprises operating in the public interest. So the real challenge is for grant makers to figure out how to effectively identify, vet, and support promising new-media and information services that put the public interest before commercial profits.

One easy way is for grant makers to stop spending so much time talking to one another and go to the places where innovative nonprofit leaders are talking about new technology approaches. Among the places where great ideas can be found: NetSquared, Pop!Tech, and the annual meeting held by the Nonprofit Technology Network, each of which focuses on social innovation and social enterprise with a strong emphasis on new technology solutions.

The tougher challenge is to figure out what type of service — commercial enterprise, government agency, or noncommercial organization — can be counted on to ensure that quality and diversity are given a prominent place.

Recent experience suggests that a new type of hybrid organization, driven by a strong noncommercial mission but operating with success in the consumer marketplace, may offer the optimal balance of financial sustainability and commitment to the public interest.

Two powerful examples of this new type of enterprise are the Wikimedia Foundation, which operates Wikipedia, and the Mozilla Foundation, which publishes the popular Firefox Web browser.

Both of those organizations run popular online consumer-information services, operating with relatively small paid staffs and thousands of volunteers who help to accomplish significant work for the organizations.

However efficient these organizations are, they are not entirely without costs. And it is particularly hard for them to get started because they have to operate on a very large scale to demonstrate their value to potential creators and consumers. Unfortunately, there is very little capital available for such start-up efforts.

Many people will argue that philanthropy has no role in developing technology tools and resources; that the market will provide what we need. But the market tends to focus on profits first and not so much on mission.

In 1995, Rob Glaser — fresh from a successful stint at Microsoft — founded a new company, Progressive Networks, which was initially intended to help distribute politically progressive ideas to counterbalance the strength of conservative organizations in getting their message out. Along the way, Mr. Glaser stumbled upon an early version of software that would make it feasible, for the first time, to transmit audio content over the Internet. He quickly redirected his company to focus on software development, changed the name to RealNetworks, and took the company public.

Now RealNetworks is a powerhouse in streaming media, delivering a large share of the audio and video that is available on the Internet. Now that RealNetworks has achieved a strong position in the marketplace, it’s interesting to go back to the original mission of the company — promoting progressive content in the media. How is it doing?

On a recent morning, the RealNetworks media service Rhapsody sent out an online alert touting a typical mix of programming available. Two highlights: One implores users to “See sexy pics of pop’s sun-kissed beauties,” and another promises images of pop fashionistas: “See what happens when your favorite rockers and divas take over fashion runways.”

Most days Rhapsody offers a similar come-on.

The simple truth is the market wants what the market wants. And even with the best of intentions, a commercial media enterprise is generally going to deliver content choices that follow the cold calculus of the marketplace. For RealNetworks, nee Progressive Networks, it is a far cry from the company’s original mission to help spread politically progressive ideas.

This example is not intended to castigate Rob Glaser or RealNetworks for abandoning the organization’s original mission. And it’s not meant to proclaim moral indignation in the face of more cleavage or carnage. It’s just a reality. There’s a reason for the term crass commercialism, after all.

Vince Stehle is a program director at the Surdna Foundation, overseeing grants to improve nonprofit organizations.