New Open Road Philanthropic Project Takes On Nonprofit Project Derailments

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January 13, 2017; New York Times

A new philanthropic project called the Open Road Alliance has been established to help grantees that hit snags in promised projects. It is intended both to help the grantees complete projects and educate funders about the need to be supportive when such snags appear.

The Haitian nonprofit organization SOIL provides toilets to the poor residents of Port-au-Prince. These toilets don’t just offer residents a measure of dignity and safety; they also lead to the production of fertilizer, fueling employment opportunities and environmental restoration. Working since 2006, the organization, with a budget of $1.3 million, has empowered some of the poorest communities in the world to restore their environment by transforming hazardous pollutants into precious resources.

Providing services in Haiti is fraught with challenges and risks. SOIL is increasing the probability of success by employing staff who speak the local language; putting local suppliers, including local residents, to use in decision-making; creating projects with an earned income stream; and valuing diverse educational experiences. Even with all of these measures, the project was on the edge of failure less than two years ago when the private company running the local landfill lost their contract. Afterward, the area became full of smoke as trash was burned to maintain access. Employees were only able to reach the site once every two weeks, and there was no contingency landfill in the area.

SOIL’s predicament is not unusual. According to two separate reports by the Clinton Global Initiative and the Open Road Alliance, about one in five projects face challenges that could “slow or derail” successful outcomes. The large number of projects facing adversity is due in part to the failure of nonprofits to discuss likely risks with donors and donors’ inability to identify potential complications. According to the Open Road Alliance’s report, 76 percent of donors don’t ask potential grantees about the risks they face, and 87 percent of nonprofits leaders state that grant applications do not ask about potential hurdles.

The Open Road Alliance is a funding initiative providing one-time grants and loans covering “contingency funding that nonprofits frequently encounter” across sectors worldwide. Its report is based on its survey of four hundred grantors and grantees. The findings were centered on a random sample of two hundred organizations designed to determine the frequency, donor response, current policies and procedures, and consequences of unfunded requests on the relationship between funder and recipient.

Surprisingly, the report found major differences between grantor and grantee perceptions:

  • Grantees believe that asking for additional funds negatively affects the likelihood of being awarded future grants, while the vast majority of Funders claim such requests have no effect on future decision-making.
  • Funders incorrectly believe that if they deny a request for contingency funds, Grantees will find an alternate source of funds.
  • Grantees report that when requests for contingency funds are denied, projects are much more likely to be delayed and somewhat more likely to be reduced in scope than Funders believe; Grantees report 16 percent of such projects are terminated, while Funders estimate 10 percent.
  • Funders believe that Grantees are more comfortable talking about these issues with them than Grantees report.

Due to these findings, Open Road Alliance teamed up with the Rockefeller Foundation and Arabella Advisors to assemble two dozen organizations, including the Bill and Melinda Gates Foundation, Goldman Sachs, and the law firm Patterson Belknap Webb & Tyler, to develop a toolkit to identify and assess project risks. The new resource is available to the community and is constructed to encourage donors to use it in whole or in part to better assess project success.

The kit is part of an increased need to apply business fundamentals to grant making and to encourage grant makers to strategically take on more risky projects. To be more strategic, grantors need more information. The kit includes seven items to help facilitate conversations between donors and potential grantees. Equally important, the developers acknowledge the power differential between grantor and grantee.

“Part of the reason we focused on donors is they have the money,” said Dr. Michaels, a clinical psychologist who is married to David Bonderman, a founder of the private equity firm TPG.

“There’s a power differential,” she added. “It’s hard for a nonprofit to come to a funder and say, ‘How are you going to insure us if something gets screwed up?’”

While funders are fond of touting the need for innovation, taking risks and being open about the inevitable complications that surface is still somewhat foreign to many nonprofit/funder conversations. The answer, according to Open Road Alliance, is less about being a helicopter funder and more about simply being available to face reality with resources. This culture change could not come soon enough for SOIL. As the landfill access challenges continued, the organization went back unsuccessfully to its project donor to ask for additional support. The donor suggested Open Road Alliance, who granted SOIL $100,000 for a new composting site.—Gayle Nelson

Original post: https://nonprofitquarterly.org/2017/01/25/new-open-road-philanthropic-project-takes-nonprofit-project-derailments/

Small Open Source Nonprofit Defeats Groupon in Trademark Fight

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In May, Groupon created a tablet to help merchants process and serve Groupon customers. They called it Gnome. The hitch? GNOME was already trademarked as a worldwide, open source computer operating system. The GNOME foundation and its thousands of supporters mobilized to protect its name. Thanks to crowdfunding and social media, Groupon backed down and will develop a new name.

GNOME and the GNOME Foundation were created seventeen years ago and its trademark was registered in 2006. Located in California, the foundation’s mission is to open technology up to everyone through crowd-developing open source operating systems. Their products are translated into a number of different languages and include accessibility features supporting and encouraging users from underdeveloped countries. The egalitarian community includes computer programmers from around the world, including employees from one hundred different companies.

No doubt Groupon was aware of their work. In fact, Groupon’s own company blog describes the company as a “strong” supporter of open source programs. Additionally, GNOME products are used in the retail space as well as in “common software everywhere” and in many consumer devices, including televisions, tablets, and phones. Further, GNOME staff reached out to Groupon, advising them of their almost two decades of use of the name GNOME.

Instead, Groupon thought they could ignore GNOME’s efforts and FLOSS principles by filing for U.S. trademark protection. (FLOSS, or free/libre open source software—like GNOME—is created to encourage the use of technology by developing software that can be freely shared, used, and distributed. This is particularly helpful for people living in undeveloped countries who cannot afford to pay for essential computer software.) The conflict started out as a typical David and Goliath battle: Groupon ignored GNOME and filed 28 trademark applications. After all, the GNOME Foundation’s revenue stream of less than $600,000 does not compare with Groupon’s $2.5 million.

GNOME sounded the social media alarm and mobilized thousands of developers and supporters. Using the same crowdsourcing principles it uses to develop software, GNOME looked to crowdfunding to finance its battle against Groupon. Five thousand GNOME supporters fundraised over $102,000—thousands more than the $80,000 GNOME attorneys estimated they would need to contest the first ten trademarks. More importantly, thousands more people used social media to voice their anger toward Groupon.

Last week, Groupon raised the white flag and agreed to find a new name for their tablet. In a joint statement, Groupon and GNOME announced the parties would continue to work together to develop a solution.

Original cite: https://nonprofitquarterly.org/policysocial-context/25181-small-open-source-nonprofit-defeats-groupon-in-trademark-fight.html

Gates and World Bank Back Tech Aided Access for the Underbanked

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Imagine living without a connection to a bank or financial institution. Your check from your employer must be cashed at a check-cashing store, where they charge 5 percent of the check amount. You cannot shop online, do not have access to credit, and are likely terrified of being robbed. If you need to send money to a child living in another state or family member living in your country of origin, you are charged 5-8 percent to send funds to them, and they then pay another 5-8 percent to cash the money order. Luckily, new technology is on the horizon to help millions gain monetary protections and increase credit opportunities, leading to small business expansion and more hope for those trying to climb out of poverty.

The number of people living in the United States and in the developed world without access to the convenience and safety measures banks provide is staggering. In the U.S., an estimated 9.6 million adults live without a bank account. Internationally, an estimated 2.5 billion adults, including 59 percent of people in the developing countries, live in a cash-only society without access to credit or other opportunities to grow their small businesses. Access is particularly limited for women in these countries: 63 percent, compared to 54 percent of men, do not possess an account. The numbers increases to more than 75 percent for adults living in extreme poverty.

In the United States, the end of the recession and the onset of new technology have created new avenues for the poor to access banks and financial institutions. According to the Federal Reserve, 25 million Americans built a relationship with a bank or other financial institution for the first time in 2013. Of those, more than a third opened an account because their new employer required direct deposit.

Unfortunately, for far too many, this new relationship is limited. The same report identified one in five, or over 67 million, underbanked Americans; this number remained constant from the previous year. The report defines the underbanked as those using a check cashing or other “alternative” service at least once in the last year.

For many, the relationship with their bank is limited due to a growth in bank fees and prior negative bank history due to the recession. A 2013 Bankrate.com survey found bank fees rose for the fifteenth year in a row. This limited relationship constrains the poor’s ability to exit poverty. According to The Cost of Cash in the United States, a Tufts University report, the unbanked and underbanked throw away more of their money on fees and spend more time waiting in line to receive their funds than those with full access to financial services.

Internationally, people remain unbanked because of lack of documentation, arduous regulations, and ineffective and obsolete financial infrastructure. They are unable to prove their assets, identity, or reputation, crippling potential business opportunities and leaving developing countries with little opportunity to grow. Fortunately, digital technology is changing access to money nationally and internationally, but in different ways.

In the U.S. and other developed countries, digital technology is creating a stronger connection between people and their money. New mobile applications allow people to deposit checks without visiting a teller. Text alerts provide notice of potential insufficient funds or low balance penalties before fees are accrued. Although these features are available to all account holders, low-income individuals tend to use them more. In the long run, they can turn the underbanked into full access consumers, but they do little to connect the unbanked.

Internally, technology is developing innovative financial systems that lead to new relationships with banks for millions of people. The epicenter for this growth is in Africa, where a partnership between the World Bank and the Gates Foundation is encouraging the creation of a digital payment system. One of the companies leading the way is M-Pesa. M-Pesa transmits funds via SMS or digital messaging. It was launched in 2007, and currently two-thirds of the Kenya adult population uses it, transferring funds with minimal fees of one to three percent. It is also available in the Democratic Republic of Congo (DRC), Egypt, Fiji, India, Lesotho, Mozambique, Romania, South Africa, and Tanzania.

The system is on the verge of tremendous additional growth, with last week’s partnership between M-Pesa and MoneyGram. The new system will connect funds between people in ninety countries using their mobile devices. Continued expansion of these services will open up $9.6 trillion in assets, according to controversial Peruvian economist Hernando De Soto.

We would love to hear from readers on this and similar projects.

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