October 2010

"In 2010 the global internet-connected population will cross two billion people, and mobile phone accounts already number over three billion. Since there are something like 4.5 billion adults worldwide (roughly 30 percent of the global population is under fifteen), we live, for the first time in history, in a world where being part of a globally interconnected group is the normal case for most citizens."

Clay Shirky

Abstract

Freeform Solutions, a not-for-profit IT consultancy, discovered a large portion of its work was being carried out without being paid for directly from consulting fees. This led to an investigation of the nature of such pro bono work, and what value it could provide to Freeform and its clients.

Supporting open source communities was determined to be the most significant use of the time possible. Accordingly, Freeform has taken steps to focus a significant portion of its work on that task, and to integrate this work with its overall orientation to clients.

This commitment to open source provides a strong differentiator in the marketplace. It also enables one kind of prioritization of sales leads. Ultimately, the commitment to the work is considered the most important aspect of the work, rather than the specific kind of activities that are undertaken, or how they are paid for.

Background

Even in the best of times, the non-profit sector relies heavily on volunteer effort and donated goods. Many organizations are currently experiencing a variety of challenges due to current economic conditions, including a decrease in available financial and human resources and a simultaneous increase in demand for their services. In response, many charities have increased their reliance on volunteers.

Freeform Solutions is a not-for-profit organization, with a mission to help other not-for-profits use technology more effectively to meet their own missions.

The organization's activities are primarily funded through hourly rates charged to partner organizations (clients) in exchange for its specialized IT consulting and development expertise. A differential rate structure is used, such that larger organizations (i.e., those with annual budgets more than $1 million) pay a higher rate and smaller organizations (i.e., those with annual budgets less than $100,000) pay a lower rate. For the most part, Freeform's larger clients are subsidizing the time it spends working for its smaller clients. From a financing perspective, unfortunately, there is a large number of small organizations in the non-profit sector.

Generally, Freeform's rates are considered quite low. Fairly basic market research confirms that other organizations are charging higher rates, at least in other market segments. In Freeform's target market, charging “what the market will bear” usually means charging as little as possible. This is a significant tension that has to be carefully managed at all times. While higher rates would enable the organization to make investments that would further improve its efficacy (mission delivery), they might also make its services no longer affordable to those non-profits most in need of them.

Freeform also does a certain amount of pro bono work, that is not billed to clients. In any economic climate, this is critical support to non-profit organizations, but even more so now.

Currently, Freeform also benefits from a grant from the Ontario Trillium Foundation, an agency of the Government of Ontario. The grant is focused on providing support for activities that are of general benefit to all non-profit organizations, rather than enabling work for individual non-profit organizations. For example, one goal of the grant is the promotion of open source software in the non-profit sector, rather than building a new website for one specific organization.

Working Without Being Paid

While preparing the Trillium grant application, Freeform reviewed how staff time was being spent, and discovered that pro bono work constituted 20% of all activities. This statistic was included in the Trillium grant application. Trillium requested that Freeform continue to meet this target for at least the duration of the grant. The grant itself does not directly support Freeform’s pro bono activities. It supports other activities which will ultimately improve everything Freeform does, including its pro bono practice. Previously, the pro bono practice was largely sustained by the volunteerism of Freeform’s staff. Now, with a specific, ongoing target for pro bono work, it was necessary to carry out this activity in a focused, coordinated way.

Compliance with the “new” Trillium requirement raised several issues internally. First, it was necessary to determine just what activities were making up the 20% pro bono time. The fact it was 20% was known, but the work had not been carried out in an organized way. For example, some of it was additional, unbilled time spent on client projects, because additional features were desired which staff felt were “worth it.” Some of it was time spent supporting open source projects directly, which was outside the scope of client projects. And, of course, some of it was specifically planned work, such as time spent doing complete projects for clients for free.

Basically, all of it was time that was never invoiced for, but which was spent working on some aspect of Freeform’s mission to support non-profits in the use of technology. From this perspective, Freeform is following the traditional Latin meaning “for the public good” and considering all such time is part of a pro bono practice, this holds true regardless of how the time is being paid for. The primary point of contrast would be time spent doing work at the request of a client who is paying directly for the work to be done.

When the time-tracking logs were examined more closely, it turned out that most of the pro bono time up to that point had been spent essentially working for individual clients for free. Those activities definitely provided benefits to the clients, but was it the most effective use of Freeform’s time? That was the second thing that had to be determined. What is the best way to measure the relative benefits of all the various activities Freeform could be spending its time on? What provides value?

In the business sector, these kinds of business questions might be settled more easily, by recourse to “the bottom line.” Presumably, businesses are able to measure the effectiveness of various strategies by determining which provides the greatest profit. This is a yard stick that generally does not apply directly to the not-for-profit sector. This is true, in part, because funding and revenue are often not so directly tied to the activities the organization carries out. More importantly, this is true because of a growing effort to consider social and environmental outputs in addition to financial ones.

If a business pursuing some form of corporate social responsibility dedicates even 1% of its profits to charitable activities, that is often viewed as a progressive step. Some companies allow employees to spend up to 1% of their paid time on volunteer efforts. One working day a year, is the standard at other organizations. Freeform wants to dedicate 20% of its total effort towards pro bono activities. Twenty percent is a make-or-break figure for any organization, let alone a not-for-profit organization without access to the financial levers that many businesses have.

Furthermore, a business pursuing the triple bottom line has a responsibility to be sustainable: people, planet, and profits. If the “resource” that an open source community provides is “exploited,” for example through consumption and without replenishment, then it is no longer available for anyone. This phenomenon is often described as the tragedy of the commons. Perhaps the path to sustainability in this case is to include the cost of supporting (replenishing) an open source community by participating in it, into the cost of all of the products and services derived from using (consuming) it.

Prioritizing the 20%

Measuring the relative benefits of the various things Freeform could spend its time on, is a critical step. Accordingly, Freeform has chosen to dedicate as much of its pro bono activities as possible towards support for the open source solutions used most heavily by its clients.

The thinking behind this is that it provides much greater value to all Freeform’s clients, and to Freeform’s own viability, if the tools Freeform uses are constantly improving as much as possible. While some might believe that an army of volunteer developers is out there somewhere, making Linux and Firefox and Drupal what they are, the truth is quite different. The overwhelming majority of open source projects have only one developer. At the opposite end of the spectrum, major projects like Linux and Firefox have significant commercial backing. A full three quarters of Linux kernel code is now contributed by developers working for commercial companies.

The health of open source depends on the active participation of the community, and the community increasingly includes people and organizations making money from open source, whether they’re social enterprises like Freeform Solutions, or for-profit corporations like IBM. In turn, the health of the open source community increasingly depends on the active support of organizations that are making money from open source. It is a virtuous circle.

From a business perspective, this effort is perhaps best understood as the R&D cost of being an open source business. Or it is the marketing cost, or some other expense. Open source communities need help in all things, including marketing and R&D. Organizations that make money from open source software owe it to the community, and to themselves, to give back in some form or other, whether it is code, evangelizing, or something else. The payoff will be in stronger software and communities on which they can build more business.

So, if Freeform is going to spend 20% of its time not being paid directly for its work, the best course of action would seem to be strengthening this foundation upon which all the rest of Freeform’s business is built. It is not only good for Freeform. The well-being of the open source systems that Freeform’s clients rely on also rests on the strength of the software and communities. Furthermore, as freely available open source software, all the improvements and benefits Freeform provides will broadly support all the users and future users of the software, whether they are Freeform clients or not. In the case of software like the Drupal content management system, which is heavily used in the not-for-profit sector (among other places), supporting the community and the code will indirectly support many more organizations than Freeform could ever hope to serve directly.

A common measure of success in commercial open source projects, or at least in organizations that sell products and services based on open source software, is the extent to which those organizations contribute to and otherwise support the underlying community and code base. These projects and organizations seek to demonstrate the successful fusion of these oft-described contradictory worlds. In other words, they are seeking to answer the question, “is there a fair exchange of value?” and they want to prove that the answer is “Yes.”

At Freeform, giving back was never considered optional. Still, and unfortunately, this is an activity that non-profits struggle to afford, despite the obvious benefits they receive from the fruits of all of the labour that preceded theirs, volunteer or otherwise. The hard reality is, and as one community recently reiterated, someone has to pay for it.

Choosing the Right Work, and the Right Clients

As always, it is challenging to choose the right projects and do the right amount of free work at the right time. The contributions Freeform focuses on in its pro bono practice are a mixture of technical and non-technical. On the technical side, features are added to software to make it generally more useful and effective for the situations Freeform tends to use it in. These improvements are freely shared with the rest of the community. In some cases, Freeform spearheads major releases of software when an architectural evolution is required, which is beyond the scope of any one client project.

On the non-technical side, Freeform actively participates in open source events, particularly conferences and community meetings. These opportunities represent the best way to engage with other actors in the community, as well as stay on top of what the current state of the art is.

Occasionally, Freeform still does small amounts of work directly for clients, unpaid. But that is a slippery slope to be avoided. Freeform could always do more and more free work for more and more non-profits and never, ever, be done, and get very little benefit from it. Instead, the particular kinds of pro bono activities that Freeform focuses on produce more social innovation, and generally have a higher potential contribution to the non-profit sector as a whole, than simply building more Drupal and CiviCRM websites for small non-profits free of charge, as important as that is.

From a sales perspective, Freeform’s pro bono work and commitment to the open source communities it relies on, provides a strong differentiator. Freeform’s “money is where its mouth is” when explaining the values and benefits of the open source solutions it recommends. This allows, and requires, Freeform to be more than simply a vendor of solutions, and it suggests that fact to Freeform’s clients. In turn, clients that are comfortable with that approach can make a confident commitment to work with Freeform, knowing what to expect out of the relationship. This pro bono work is also a good method for developing a profile in the communities Freeform relies on. That act by itself can be an important sales factor, by demonstrating to potential clients the nature and depth of Freeform’s knowledge and commitment.

It is also possible to rank potential clients by the level of understanding they have of these concepts. Freeform knows from experience that organizations that do not understand the rationale and purpose of Freeform’s pro bono work, tend to make poor clients. Even in Freeform’s work that is paid for directly by clients, the technical artifacts are usually freely shared with the communities that would benefit from them. Clients that do not recognize the value of this have a more difficult time engaging with Freeform. This knowledge helps Freeform prioritize sales leads.

That is not to say that Freeform only works with other rabidly open-source-friendly organizations. Many of Freeform’s clients are still trying to get past regarding Freeform as a vendor of products and services. That is okay, and there is still much good work Freeform can do for those organizations, while simultaneously trying to help them knowingly, wilfully, and intentionally participate in this approach based on its merits.

Conclusion

Calling it a “cognitive surplus,” Clay Shirky illuminates how enormous humanity's potential capacity for change really is: people spend over one trillion hours watching television every year. Many good works have been proposed as alternative uses of at least some of this “free” time. Freeform believes that volunteering is important, and knows first hand that non-profits are counting on it to sustain a healthy civil society.

It has been a challenging and invigorating process, to first discover an unfocused resource of time, and then to put it to good use supporting the organization, and Freeform’s clients as well. Freeform chose to spend this resource on the open source communities Freeform participates in, as a demonstration of commitment to a “triple bottom line.” Freeform’s own efforts are focused on a range of technical and non-technical support for specific open source software projects and their communities.

However, the specific kind of contribution is not a very important part of this story, and really neither is whether the effort comes as part of an employer-sponsored volunteer program, or as part of focused strategic efforts by an organization. What counts is that the contributions are made. The growing portion of the not-for-profit sector using open source software will be thankful for the effort. It can be a key ingredient in a sales and outreach program that can uniquely position an organization in its market.

 

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