A. Lauren Abele

In response to some of the conversations I have been having lately—both virtually and in-person–regarding the role of competition, collaboration, and communication in the social sector, I have been trying to think about how and why these issues exist in the first place….and how they might be addressed. Now, we all know that generalizations can sometimes be unfair, but sometimes they can also be rather accurate….read on:

Competition: Nonprofits are constantly targeted by the business-minded as lacking efficiency due to the fact that NPOs are not competing in an open market. As a result, the need for innovation is removed. Which is not to say that innovation isn’t necessarily occurring in the nonprofit world, but it tends to be driven internally (as in, “Hey we feel like we want to do this”) rather than externally (as in, “Hey we have to do this if we want to survive”). The competition element is increasing, however, as nonprofit watchdogs, like Charity Navigator, and private foundations are relying on industry best-practices to evaluate the relative effectiveness of nonprofit organizations. This in turn is informing where foundations invest their funding and encourages individual donors to also do their research when giving.

Collaboration: There seems to be two main camps of nonprofits: those who play well and those who don’t–and these two are often easy to distinguish. Nonprofits who play well with others collaborate with complementary organizations in order to better achieve their mission and further define their social niche. For these organizations, there are formal and informal partnerships, co-sponsored events, etc. Those who don’t play well tend to feel threatened by organizations who are “encroaching” on their funding territory and will not only avoid any sort of collaboration, but may even try to sabotage their competitors’ efforts (yikes!).

Communication: Talking with folks in the social enterprise and nonprofit world, something you hear all the time is the lack of communication happening between organizations. Maybe part of that is related to the competition element, where NPOs feel like they only need to communicate with their funders. Maybe part of that is related to the collaboration element, where NPOs don’t feel like sharing what is working well for them because it may threaten their  success relative to others. Either way, the lack of communication is decidedly a factor leading to many organizations simultaneously inventing the wheel…and maybe even simultaneously re-inventing the wheel. Both of these scenarios are pretty inefficient.

What does this mean? In the business world a lack of communication (like trade secrets) are part of what give businesses their advantage over others (for example, Coca Cola’s secret formula). But Coke’s competitors are using private investor money to develop their competing product and  (assuming they believe in the product otherwise they wouldn’t be investing in it) are expecting a return on investment (ROI).

In the social sector, does it make sense to fund Organization A with $10,000 to learn how to best to do X and also to fund Organization B with $10,000 to learn how best to do X? It sounds really obvious, but it happens all the time.

Furthermore, what are the ethical implications of inefficiently (or maybe even irresponsibly) using funding? How can we reduce a lack of communication and collaboration to encourage more efficiency? If Organization A learns how best to do X  with its $10,000 and shares this information with Organization B, then Organization B can learn how to do Y (the next step after X) with its $10,000 and in turn share that information.This would lead to a higher social ROI, because now, instead of having 2X for $20,000 we would have 2X+2Y for $20,000.

“Wait wait! This sounds crazy! But then they would be direct competitors and one would clearly fail!” Well, yes that would happen if they both provided the exact same service. The trick is for these organizations to find niches–which can be geographic, programmatic, population-based, etc. For example, maybe Organization A works in San Francisco and Organization B works in South Africa. Or, Organization A works with environmental issues and Organization B works on hunger issues. Or, Organization A works with elementary school children in NYC and Organization B works with college students in NYC.  Rather than spending time co-learning how to do X+Y, both organizations can now spend the rest of their time perfecting their program based on their niche.

“This sounds like a horrible idea.” Well, it may be a horrible idea, BUT! Look at what open source has done for the mobile technology community. Apple could have made its API a “trade secret” and have a monopoly on the applications that were sold for the iPhone. However, they made it open source and the number of iPhone apps has exploded because individual developers can create applications for the iPhone that they can then sell to iPhone users. So, while Apple isn’t solely benefiting from the income from app sales, they have dramatically increased the value of their product by passive collaboration and communication via open sourcing. [You can also look at WordPress the successful open source blogging platform--which I am currently using .]

Kiva has taken a hint from this and has open sourced their API in order to speed up the development of their online micro-finance program. They even include a list of things that they would love to see someone develop, including:

• An application for iPhone or Blackberry that let’s you keep up with Kiva on the go
• A service where lenders can register for alerts on new entrepreneurs they want to fund
• Integration into a social network where friends can engage around each others’ activity and loan updates on Kiva
• A map that simulates the realtime transfer of funds across the globe

The take-away: Open sourcing is a great way to share information, increase efficiency, and increase innovation because it offers others incentive (whether that is bragging rights and exposure or actual monetary benefit) to participate in your larger development process. It also naturally increases communication, collaboration, and competition (which of course feedback into increased efficiency and innovation). So, the next question is: What are ways that the nonprofit sector can open source?