geert lovink on 20 Jul 2000 14:37:21 -0000

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<nettime> fwd: Foundations And The Digital Divide

from: (Jonathan Peizer)

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                     Foundations And The Digital Divide

                             by Jonathan Peizer
                         CIO of Soros Foundations,

U.S. foundations have been slow to adopt technology for a number of reasons.
In the late '80s and early '90s, other sectors of the economy were pressured
by external competition to overhaul their organizational structures and
become more efficient. Because their funding is endowment-based, traditional
foundations benefited from these changes, and consequent increases in their
investment portfolios, without having to change much.

Foundations have never been bastions of technical leadership in any case.
Like NGOs, they tend to be behind the technology curve, not because they do
not have the funds, but because management has not fully understood its
implications. That's changing, slowly, with a new group of senior executives
heading foundations. Few foundations still have stand-alone technology
programs or funding for technology, and most prefer to roll these programs
into their current funding sectors. Unfortunately, many of the program
directors who head these sectors may be experts in their particular fields,
but do not have the expertise to assess technology proposals. Most
foundations do not enlist their internal support staff to review or assist
with technology proposals for their programs.

Traditional foundations operate on a number of principles antithetical to
the Internet culture. The proposal review/approval process can take months
and multiple board meetings. Unfortunately, Internet proposals have a short
shelf life. If they take longer than six months to approve, they may as well
be rewritten. Foundations tend to operate on fixed program budgets cast at
the beginning of the year, while technology is an ever-changing animal and
requires quick venture capital to seize opportunities. An interesting
characteristic of traditional foundations is that they do not have a culture
of cooperation. Foundation boards tend to analyze different sectors,
determine if there are other foundation players and, if there are, look
elsewhere for their own unique niche.

Traditional foundations have not been able to properly address a new breed
of proposals I refer to as ".corgs". These are hybrid Internet projects
with a core social component (.org) and a supplemental, revenue-generating
potential (.com). They are a direct outgrowth of the Internet revolution
which couples low entry costs and huge reach with the unique information and
services some entrepreneurial NGOs can provide. Hypothetically these should
be a funder's dream; socially responsible projects with enough income-
generating potential to make them less likely candidates for continued
subsidies. But as it turns out, they do not fit neatly into foundations'
sectoral portfolios. The fact that they generate revenue is ironically
sometimes what disqualifies them for funding because foundations do not
have the appropriate metrics to distinguish them from pure business
ventures. Subsequently the equivalents of the social sector are
not being funded properly, and many are not meeting their potential. Worse
yet, some are being forced to abandon their ".org" core missions entirely
and become ".coms" because they cannot find public sector support.

Traditional East Coast foundations, many founded by old industrial-
revolution money, are being pressured by their grantees to address
technology proposals. While NGOs have been slow to adopt this technology,
five years into the Internet revolution they realize the importance of
being a player in this field. Unfortunately, many proposals are not well
developed, and the NGOs do not have the resources to do a better job of
developing their on-line presence. Nor do foundations often have the
personnel to properly review the proposals or to offer good technology
advice to NGOs.

Traditional foundations are also being pressured by the new kids on the
block--West Coast foundations funded by new information-economy wealth.
The new upstarts know how to cooperate and leverage their technical and
financial resources. They are also very comfortable with the concept of
exploiting unallocated funds or "venture capital" to solve development
problems. But these new foundations have their own limitations. They are
largely untested in the development field. While they know how to identify a
problem and spend money on it, they are just developing the experience and
personnel networks of the traditional foundations to work with NGOs in
communities and to affect long-term change.  Development work is not like
selling technology: you cannot simply go in, fix the problem and leave.

If it was that easy the market would have already dealt with these problems.
Bridging the digital divide requires understanding people's problems before
applying technology to solve them. It requires a significant time commitment
and lots of training, nurturing and handholding. Many of the new social
philanthropists see the world from a specific vantage point based on their
own experiences. Their world perspective is primarily shaped by CNN-type
news bytes absorbed during 10- to 15-hour stints in front of a computer
screen creating the new information economy. To date their funding has
tended to mirror their interests and experiences. Many focus on local
domestic issues, the environment, pet hobbies or training projects of one
sort or another.

There is nothing wrong with these focuses, and no doubt there is good being
done. However, with two billion people around the world making under $2 per
day and another two billion making under $1, developing world issues are far
more compelling and require more than the limited focus they currently
receive. The Internet is already seen in many places as another aspect of
Western imperialism. By not focusing more of the wealth on these intractable
issues in the developing world and instead focusing on problems in our
own back yard, the new foundations are further fostering the idea that this
new information revolution is not for everyone. (To be fair, there are
examples of inroads being made in this area; both the Gates and Intel
Foundations are making significant contributions in the field of healthcare
and teacher training abroad.)

The most important thing the old and new foundations can do to bridge the
digital divide is to forge better working relations with each other and then
combine their resources to work across sectors. The old notion of each
foundation focusing on niche sectors is obsolete in the new information
economy. Foundations must work together on technology-related issues, not
only because that is the nature of the Internet, but because most
foundations don't have the requisite expertise to go it alone. Traditional
foundations need to change the way they address technology proposals,
evaluating them more quickly and setting aside some venture funding to take
advantage of opportunities. The newer foundations need to expand their
horizons and learn more about working effectively in the developing world.
They need to learn from their older peer foundations both inside and outside
the United States about leveraging the NGOs that exist around salient
social sector issues. Their expertise can be leveraged in new ways using the
Internet to deal with development issues. Western foundations, with their
close links to founding corporations, present an incredible opportunity for
private sector partnership for all foundations.

Finally, the foundations must be more innovative in the proposals they
review and fund. The hybrid ".corgs" discussed above will only become more
prevalent and continue to cut across sectors. In addition, there are also
some socially responsible ".coms," such as, that work with
NGOs supporting artisans in the developing world to bring their products to
retail and wholesale outlets. Foundations must be able to work together like
venture capitalists do, pooling funds to support the social component of
these "best of breed," socially responsible ventures whether they start out
as ".orgs" or ".coms".

Some of what is being suggested is already happening but too slowly to match
the speed of technological change and need. A number of hybrid "social
venture" technology projects are making their rounds at the more progressive
old and new foundations and are being co-funded.

Foundations like Rockefeller, Pew, and OSI have separate venture-capital
arms or management structures that allow grants to be reviewed and funded
quickly. Foundations like AOL have put the talents and technical resources
of the AOL Corporation to work developing important technical resources and
tools for the NGO and foundation community at the site What
is a more cohesive strategy and commitment than that?

Jonathan Peizer ( is CIO of Soros Foundations
(, one of the funders of

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