JISC

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This paper was commissioned by JISC as the first step in a 3-stage process aimed at gaining a more systematic understanding of the mechanisms for pursuing sustainability in not-for-profit projects. It focuses on what we call ‘online academic resources’ (OARs), which are projects whose primary aim is to make content and scholarly discourse available on the web for research, collaboration, and teaching. This includes scholarly journals and monographs as well as a vast array of new formats that are emerging to disseminate scholarship, such as preprint servers and wikis. It also includes digital collections of primary source materials, datasets, and audio-visual materials that universities, libraries, museums, archives and other cultural and educational institutions are putting online.

This work is being done as part of the planning work for the Strategic Content Alliance (SCA), so it emphasises the development and maintenance of digital content useful in the networked world. In this first stage, we have conducted an initial assessment of the relevant literature focused on not-for-profit sustainability, and have compared the processes pursued in the not-for-profit and education sectors with those pursued by commercial organisations, specifically in the newspaper industry. The primary goal of this initial report is to determine to what extent it would make sense to conduct a more in-depth study of the issues surrounding sustainability.

Processes

This study was conducted over three months. We reviewed relevant literature and case studies from the fields of business, management, and philanthropy, we conducted interviews with individuals who have been involved in relevant organisations and initiatives, and we relied heavily on our experience from more than a decade starting up several not-for-profit digital content initiatives (1).

Our goal for this first stage is modest: to establish context for a conversation about further work in this area and to help prioritise areas of inquiry that would be helpful both to funders and to new projects. Readers of this initial report are encouraged to challenge its analysis and commentary and to engage with us to identify the most valuable areas for further study.

Executive Summary

There is no formulaic answer or single approach to achieving sustainability There is no formulaic answer or single approach to achieving sustainability. No study can lay out a ‘one-size-fits-all’ plan that any organisation can follow to reach a point of financial stability. There are, however, a variety of processes and procedures that can help to improve the likelihood of entrepreneurial success. These include establishing organisational mechanisms to develop accountability in leaders, setting measurable goals and objectives, reviewing progress on those objectives on a regular basis, and assessing the performance of both the project and its leaders. Although the development of those procedures is outside the scope of this report, in Appendix A we have provided the framework Ithaka relies on to help guide the development of new initiatives. In our experience, we have been surprised by how few not-for-profit initiatives rooted in the academic environment have such procedures in place. Clearly the leaders of these initiatives are competent professionals; why do they not rely on processes that have proven effective in both commercial and not-for-profit contexts? We have concluded that a key reason for this is that academic researchers tend to approach these problems from a different perspective, and with a different mindset, than do commercial entrepreneurs.

The reason for this different mindset, we believe, is that these kinds of opportunities are relatively new to the academic environment and culture. Over the past decade, developments in technological infrastructure on college campuses combined with the revolutionary changes in the economics of disseminating content have encouraged the creation of services to provide online content hosted from college and university campuses. It now takes relatively little money to ‘publish’ content on a website, and once there it is theoretically true that anyone with a computer and internet connection can access it. The very low costs associated with this kind of passive distribution of information have encouraged the first wave of these projects to focus almost exclusively on securing resources to fund the upfront costs of developing the digital resources. Operating as they did within a grantmaking culture, it has been natural for project leaders to see the challenges in ways consistent with their roles as principal investigators on research project grants.

Acting as the principal investigator of a research grant project is a very different responsibility from operating as the organisational leader of a sustainable enterprise. The issue of ‘impact’ is just one example. In our opinion, delivering impact is the key factor in the potential for achieving long-term sustainability; only high impact and highly useful materials will draw the financial support from beneficiaries needed for long-term success. Yet the importance of impact is often underestimated by leaders of not-for-profit digital resource projects. Much attention is given to making material available and very little attention is given to doing the work to make sure that people will become aware of it, that they can find it, and if they do find it that they will actually use it. We find that few digital resource projects have devoted substantial financial or intellectual resources to understanding user needs, preferences and behaviours. Nor, often, have they invested in understanding the environment of other resources that compete for those users’ attention and support. The absence of focused effort on use, impact, and competition among these types of projects has deep implications for their potential long-term success.

For these reasons, we suggest that a shift in mindset among project leaders is necessary if the projects are to secure the needed ongoing resources and manage their cost structures effectively. This shift in mindset has several components.

Among them:

1. Assuming that grant funding will always be available is not likely to lead to a successful sustainability plan. Of course there are exceptions to this assertion – for example, if a grantee is offering a service that is vital to a foundation’s mission or is exclusively serving an important programmatic focus of the funder – but these cases are unusual. Most project leaders will have to generate other sources of ongoing support.
2. Project leaders need to adopt a more comprehensive definition of ‘sustainability’. It is not enough to cover operating costs; projects need to generate capital for ongoing reinvestment in their content and/or technology if they are to grow and thrive. The web environment is evolving rapidly and relentlessly. It is incorrect to assume that, once the initial digitisation effort is finished and content is up on the web, the costs of maintaining a resource will drop to zero or nearly zero.
3. The value of a project is quantified by the benefits it creates for users – what it allows them to do that they could not do before. Audiences must value the resource if they are to use it, and it is the aggregated value that can be monetised in one way or another to support the enterprise on an ongoing basis. This focus on understanding, monitoring and measuring the demand side value of projects is new to many leaders of these projects, especially those who have traditionally operated in the grant-based culture.
4. Project leaders need to consider a range of options for long-term governance. Success might come in a variety of forms, and sustainability does not necessarily mean independence. An Initial Public Offering (IPO) is not the only exit strategy for a commercial venture. Start-ups in the private sector aim for independent profitability but they also consider it a success to sell their companies to a larger enterprise with the means to take those assets forward. They may also seek to merge with complementary businesses. Not-for-profit projects should think similarly about their options and pursue different forms of sustainability based on their particular strengths, their competition, and their spheres of activity. It is enormously difficult to survive in a competitive environment with a single product aimed at a single market.
5. The web is a highly competitive environment. Projects must embrace the best operating practices of their competitors for mindshare and resources, a group which includes commercial organisations. That means they will have to act strategically, develop marketing plans, seek out strategic partnerships, understand their competitive environment, and identify and measure themselves against clear goals and objectives for how they will accomplish their missions successfully and affordably. Public–private partnerships can provide access to both investment dollars and new skills and business discipline needed to thrive in this environment. Leaders must also embrace the fact that their environment is rapidly changing
6. Leaders must also embrace the fact that their environment is rapidly changing. We are aware of many projects that, as part of an initial grant proposal, have committed to a multi-year course and then remain stubbornly committed to that course to fulfil those grant terms even as the environment has shifted in ways that require a new direction. OAR project leaders (and their funders) must continually ask whether they are headed in the right direction and be prepared to adapt when necessary.
7. Running a start-up is a full-time job and requires full-time leadership. The mode of principal investigators, in which they divide their time between overseeing a variety of research grants, teaching courses, and other responsibilities, is not conducive to entrepreneurial success. New initiatives aiming for sustainability require fully dedicated, fully invested, and intensely focused leadership. If a principal investigator cannot provide it, he or she will have to retain a very capable person who can.
8. Innovation depends on experimentation, and project leaders should embrace the fact that there are generally no straightforward solutions. In most cases, the initial plan for achieving sustainability will be wrong, and will require modification. Engaging in a recurring process of trying new things and adapting plans to fit lessons learned is critical to longer-term success.

The first part of the report is focused on highlighting the need to engender these principles in leaders of these not-for-profit projects and putting in place infrastructure to ensure success. Through its efforts to develop entrepreneurial not-for-profit organisations, Ithaka has developed a framework of operational and governance processes designed to increase the probabilities of success for new initiatives (see Appendix A of the full report). We think it beyond the scope of this study to review each of the components of that framework, even though we believe strongly that putting in place the right kind of organisational infrastructure to promote accountability, flexibility and discipline in any project is essential.

The middle section of the report focuses on the component of the above framework dedicated to defining the service model of the enterprise – how one goes about determining the value of the service to be developed. This value must be tied to how the project serves the needs of specific audiences, and how it does this more effectively than other available options. Most online academic resources invest too little in market research to inform their product development and the segments of users their projects will support. They risk developing services that are not what people really want or that go beyond what people are willing to support. Moreover, on the web, secondary audiences (ie those not defined as the ‘core’ target audience) can be a valuable means of extending the impact of a project and tapping into new sources of revenue.

We want to emphasise that we recognise that sustainability has both a revenue component and an expense component When the work to develop a clear understanding of the value of a project is completed, and a project can demonstrate that it indeed delivers a service that will have measurable impact on an intended community, the next question to be addressed is how to convert that value into sustainable support. We want to emphasise that we recognise that sustainability has both a revenue component and an expense component. We have chosen in this first stage to focus on the revenue side of the ledger. The final section of the report outlines the various mechanisms being used by projects and commercial organisations to monetise that value into ongoing revenue streams. Here we offer some high level principles, a framework for thinking about the options, and specific examples of some of the mechanisms of revenue generation being employed. Our objective is to test whether it would be useful to develop a descriptive matrix that groups organisations based on certain characteristics (for example, does the resource provide access to unique content?) and then provides them with information about the kinds of economic models being deployed by products and services with similar characteristics. Such an effort would require a substantial amount of research to categorise and research the different models. It would also only be a snapshot and would require regular updating to continue to be valuable. We hope this paper will promote dialogue that will help us to answer whether the development of such a resource is worth pursuing. Or, are there other research efforts that could be pursued that would advance the community’s ability to sustain important not-for profit academic resources?

We hope that the framework, analysis and examples presented in this paper provide helpful background and useful context for a discussion of the important challenge of sustainability, and the next steps to take.

1. This analysis is not based exclusively on information we have gathered specifically for this review, and we want to emphasise that it is not to be understood as ‘representative’ of the views of the community generally or of the people we interviewed