Damned if you seek money, damned if you don’t
Tom Steinberg wrote yesterday that he’s observed shame for civic tech projects that don’t make good business:
I think that the widely shared desire to create a strong market of healthy, profitable civic tech companies has to some extent obscured an awkward and inconvenient truth . . . that there are, quite simply, some terrific civic tech ideas out there that will always run at a loss.
What I want is for people to be able to say, loud and proud, “I have a great civic tech idea but it simply doesn’t come with a self-funding model.”
Tom’s point resonated, but I was surprised to see him write it because I thought the prevailing attitude was actually just the opposite.
Most of my civic tech work has been in the not-very-profitable for-profit space, and this has almost universally drawn ire. GovTrack is a project of my tiny for-profit company Civic Impulse, LLC. POPVOX was/is a startup in the Silicon Valley sense. if.then.fund is for-profit. My civic tech consulting work has been split between for-profit and non-profit/government clients.
To be sure, I haven’t made any significant profit yet. Ellen Miller’s salary as executive director of the Sunlight Foundation — a nonprofit — far exceeded any revenue that GovTrack has ever seen.
Still, I’ve found resistance to the notion of profit.
After POPVOX launched with new (and expensive to build!) write-your-rep functionality, OpenCongress (a joint project with Sunlight) did the same. David Moore of OpenCongress explained on multiple occasions that the difference was his was non-profit. It was one of his talking points:
No other website offers this service in a web app that’s free, libre, open-source, and not-for-profit.
I’m not really sure what his point was, except that open and non-profit were somehow better. (Note: OpenCongress no longer exists.)
Sean McDonald has written about a fascinating idea of a civic trust, as a way to address how “it becomes dangerous when [for-profit companies] govern the way we access public institutions, representatives, and services.” A civic trust would provide a legal framework for civic responsibility lacking from businesses (and perhaps even non-profits).
People are suspicious of if.then.fund’s fees. On if.then.fund, there is approximately a 9% fee taken on each contribution to a candidate for Congress. It’s in line with the fees on Kickstarter and similar platforms, and it’s legally necessary so that we aren’t seen by the FEC as supporting the candidates ourselves. Nevertheless, the idea that we charge a fee to participate in governance irks some people. (Maybe rightly so — but I’m just saying that that’s a thing.)
I am suspicious of Code for America’s model of spinning off new government vendors, and I know others feel similarly. Is city blight something that we want government outsourcing to a vendor to solve?
And, well, it’s not that I disagree with any of these points. All things equal, open is better than closed, trusts are better than fiduciary obligations to maximize profit, and no fees are better than fees. Free money from foundations that goes to helping people who lack money is great.
But, in my experience, there’s a lack of appreciation for why a business model has advantages too.
For one, it’s sustainable: Your business goes on so long as someone finds it valuable. (Foundation support, on the other hand, comes and goes.)
Second, and the most important advantage to me, is that, at least for certain types of businesses, your goals are in alignment with the goals of the people you are trying to serve. On GovTrack and if.then.fund, I only make money if people use the site. I am accountable to the users and only to the users (roughly speaking). That’s a healthy position to be in, and it is all too often not the case at nonprofits and trusts.
Third, sometimes just doing the work is more important than investing in getting 501(c)(3) status and building an open source community, which are both quite time consuming/difficult. And, finally, grant money doesn’t just come to those who want it — it’s often simply not an option.
So while I agree with Tom, I think the norms vary in different circles and, basically, you’re damned if you do and damned if you don’t, with respect to whether people accept your sustainability model and desire for profit.