The Vancouver Community Network,

Social Investing and Public Good Models of ICT development

Christopher Bodnar

Simon Fraser University
<cbodnar@sfu.ca>

Abstract

This paper links discussions of community access to ICTs to discussions of sustainability in the non-profit community and the viability of public good models of ICT development. It addresses the concepts of public goods and social entrepreneurship and their relationship to new funding sources for non-profit organizations. The paper examines the Vancouver Community Network’s investigation of for-profit service models to diversify the organization’s revenue stream. The paper suggests that the VCN has the potential to develop a project that may provide the basis for a new generation of community networking in Canada, based upon a new organizational structure model.

The role of community networks and, more generally, public Internet access points in Canada are at a turning point. Research assessing the sustainability of community access to technology suggests that the long-term viability of such initiatives has not been addressed (Rideout and Reddick 2005). To punctuate this, the Canadian Federal government has “sunset” the Community Access Program that provided funding for hardware to community-based organizations for the purpose of offering public access sites to the Internet. Of 10,000 CAP sites funded by Industry Canada as part of its Connecting Canadians initiative to make Canada the “most connected nation” and to reduce the “digital divide”, only 40 percent remain in operation (Neogi 2005). A 2004 evaluation of the CAP program indicated that 33 percent of sites would cease operations without government funding and 52 percent would offer reduced services (Industry Canada 2004: 32-3). The study also indicated that while 61 percent of surveyed sites had taken some steps toward self-sufficiency for post-CAP funding, those most viable were part of an existing institution such as a library or school, or had some sort of business support (37).In the meantime, many of the community organizations committed to ICT literacy and access through local networks have disappeared. Largely predating government programs promoting Internet access, Community networks highlighted the need for affordable, community-based networking initiatives and provided some of the earliest and most affordable Internet access in communities across Canada. What was in 1995, a robust network of 26 operating community networks with another 67 in various stages of development is now reduced to approximately six. The stories of demise vary. In January 2005 the Edmonton Community Network went into receivership and sold its assets to a local ISP. Later in the year, the Annapolis Valley-based Western Valley Development Agency, coordinator of FundyWeb and FundyMail community initiatives, announced it would cease functions after local municipalities withdrew funding. Following a January 2004 hardware crash, the St. John’s NF Freenet discontinued all member services. Meanwhile, the Squamish BC Sea-to-Sky Freenet remained, but in a precarious position. Overall, the definition of community networks for remaining organizations is far from clear. The once-common objective of providing free or low-cost Internet access and community-based resources in the service of public access to information and communication technologies is no longer as straight forward as it once seemed.

Although the reality of the situation is stark, there remain successful models of community networking and new generations of wireless community-based networking initiatives in development. As such, given the organizational turnover in recent years, attention to models of sustainability of community ICT projects warrants analysis. To date, this has been a primary concern to the field of Community Informatics. Schauder, Stillman and Johanson (2005) provide a specific assessment of the VICNET community network in Australia using a structuration framework for discussion. Rideout and Reddick (2005) take up the issue of sustainability in relation to Canadian access programs, suggesting that governments must continue to play a central role in providing funding for community projects that address social and economic inequalities.

This paper takes up another line of analysis, attempting to link discussions of community access to ICTs to more general discussions of sustainability in the non-profit community and the viability of public good models of ICT development. In particular, I address the concepts of public goods and social entrepreneurship and their relationship to exploring new means of funding for non-profit organizations while addressing social service needs within a given community. As a particular example of the link between notions of social entrepreneurship and community access to ICTs, I examine the Vancouver Community Network’s recent investigation of possible for-profit service models to diversify the organization’s revenue stream in light of reductions in government funding. The VCN is one of only a few remaining community networks in Canada. It exists largely because of its solid model as a non-profit with a focused mission, defined client base and diversified sources of revenue. Whether or not the VCN will pursue a strictly-defined social entrepreneur project remains to be seen. However, given the VCN’s vibrancy through a period when many other urban and rural community networks have languished and disappeared, the organization serves as an interesting model that addresses particular community needs in a changing urban environment. I conclude by suggesting that the VCN has the potential to develop a project that may provide the basis for a new generation of community networking in Canada, based upon a new structural model for such activities.

Defining the Public Good

The notion of a public good has been instrumental to the development of the Vancouver Community Network over its history. This will be discussed further at a later point in this paper. At the outset, however, it is important to note that by arguing that the Internet is a public good, many public interest and community groups have managed to keep access and education programs on policy agendas, extending into social and cultural discussions, beyond the standard economic focus of such initiatives. Nonetheless, public goods are traditionally defined in economic terms. Howver, this is now seen as potentially problematic in many instances and is garnering some new attention in policy discussions.

A public good is typically defined within the context of neo-classical economics, to quote Stiglitz (1999), as characterized by two “critical properties.” These are non-rivalrous consumption where “the consumption of one individual does not detract from that of another” and non-excludability where “it is difficult if not impossible to exclude an individual from enjoying the good,” (308). Within this definition, Stiglitz explains that “the benefits of some public goods were limited geographically. . . . At the same time, there are several public goods that are not so limited – the benefits of which accrue to everyone in the world,” (310). In his discussion, Stiglitz identifies five global public goods: international economic stability, international security (political stability), the international environment, international humanitarian assistance and knowledge.

Kaul and Mendoza (2003), however, argue that goods do not always conform to this definition because public and private realms are defined not by natural law, but by “deliberate policy choices,” (80). In this regard, public and private goods are social constructs contingent upon human decisions and choices. Land, for example, can be a public good such as in a park or communal grazing areas. It can, however, also be a private good when sub-divided and tenured by individuals or corporations. The land titles system and the concept of private ownership, however, can also be considered public goods. Not only can these be used in a non-rivalrous manner, they actually work better when used in this way. In this regard, widespread public use of this “good” establishes general respect for and legitimacy of the system by way of public participation.

Further complicating the neo-classical definition of public goods, Kaul and Mendoza point out that the traditional conception is that these are definitionally difficult or inefficient for the market to price. In this regard, public goods are thus viewed as being “market failures and as justified cases for government intervention,” (80). But at a time when private interests are more than interested in running programs traditionally designated as “public goods”, this definition appears weak. Furthermore, an assertion that public and private goods must be understood as necessarily being the products of the market is constraining.

By ignoring the inherent political process behind the classification of public goods, the term has come to gloss over the power dynamics inherent in the larger context of any public or private entity. More important to the present discussion, “public good theory” emerges out of a period when there were few actors outside of the state and market bodies. In a contemporary situation, however, public goods are provided – and, in many cases, defined – by other actors. These include charities, non-profits, cooperative associations, labour groups and citizens’ organizations.

Non-profits and sectoral change

It is precisely the change in dynamics between the state, business and various civil society actors that characterizes a developing shift in the non-profit sector. Scott (2003) identifies the current non-profit environment in Canada as one where, “In many fundamental ways, the traditional roles of the public, private and nonprofit and voluntary sectors are being altered, and the boundaries between them are blurring,” (Scott: 151). This is the result of two trends. First, there is an increased reliance by government on the non-profit sector to deliver what traditionally were public provided services. Second, non-profit organizations are increasingly competing against private service providers or finding themselves being co-opted by private firms seeking to advance their marketing through affiliation with “causes” in the non-profit sector. As such, “nonprofit and voluntary organizations have had to become more ‘businesslike,’ not only in their pursuit of earned income opportunities, but in their governance and management practices as well,” (151).

As non-profits are becoming more like businesses in management and service provision in order to remain competitive in the search for funds, many are also facing competition from businesses seeking to offer the same services (152). It comes as little surprise, then, that “Successful organizations in a competitive funding environment are likely to grow to resemble the for-profit or commercial organizations with which they are forced to compete,” (152). Not only are non-profits becoming more competitive, but funders increasingly expect such competition. While funders turn to the non-profit sector “because they are effective, responsive and invariably cost-effective,” they are also “seeking to insert nonprofit and voluntary organizations into the market,” (152). But in many circumstances, Scott suggests, this fosters “intense competition for resources that undermines the unique and valuable contributions of the sector,” (152).

A recent example of increased competition in the non-profit sector in Canada (and elsewhere) includes Venture Philanthropy. Started by would-be philanthropists who cashed in on the dot.com boom of the later 1990s and 2000, the idea of venture philanthropy is based on the premise that many non-profit organizations stand to supplement their missions through either a related business or business-style management. A defining article by Letts, Ryan and Grossman (1997) argued that non-profit organizations might have a significant amount to gain from venture capital funding models. The authors suggested that granting foundations should consider how they might build stronger organizations than by simply supporting a funding model that is based on program-to-program grant provision. Funding would thus operate on a model defined by risk reduction, identified performance measures, close working relationships, long-term funding and a defined exit strategy for the end of the start-up period. As well, venture philanthropists prefer to take a hands-on approach with an organization where they might take a personal interest in seeing the entire organization succeed beyond one or two projects. Involvement is similar to the way a venture capital investor would take an interest in an innovative business idea. The investor provides not only financial support, but also professional management, and resource development and business plan development advice.

As an example, Toronto-based Social Capital Partners invests in businesses that employ “populations outside the economic mainstream in Canada,” (SCP 2005). But the investment is not simply made in financial terms. The recipient organization also receives management and business plan support from SCP. Similarly, Social Venture Partners Calgary does more than simply provide grants to non-profit organizations. Instead, “it applies the venture capital model to philanthropy,” (SVPC 2005). With financial support also comes business and financial expertise to provide the organization with the infrastructural strength to effectively plan and deliver its programs without operating in a constant crisis mode. It might also be noted that early venture philanthropists had much to learn from the non-profit sector including that the lack of management capacity in non-profits was not necessarily due to lack of interest or effort amongst staff and leadership volunteers. Rather, funding and structural constraints often limited organizational capacity development. In this regard, the partnerships became two-way learning processes.

This latter model has found adherents in Canada and the U.S. as well as within international bodies and other countries. A 2003 Organisation for Economic Co-operation and Development (OECD) collection of papers highlights the entrepreneurial nature of contemporary non-profit organizations and the “social enterprises” they have fostered. Social enterprises in this context however, take a different tack, generally spinning off a non-profit organization’s services into a for-profit enterprise; thus allowing for diversified revenue sources to the non-profit and new avenues to advance their missions.

The risk, in reference to Scott’s early observations, is that such processes may contribute to the commercialization of the non-profit sector and the privatization of public services. Similar trends are found in the American non-profit sector (Young 2003) where an increased dependence on fees for services, the advancement of organizational mission through commercial enterprise, increased numbers of corporate partnerships, increased transparency requirements and the development of entrepreneurial or business-like attitudes have been noted. This is not to say that non-profits are being commercialized across the board. Indeed, the venture philanthropy model does not prescribe the commercialization of non-profits. But those who are adopting commercial management procedures are, in many cases, accessing funds more readily than organizations using volunteer or staff resources without commercially oriented management experience.

The adoption of corporate business models and the increase in competition, however, only constitute part of the story in relation to changes in the non-profit sector. The idea of venture philanthropy is finding applications in the development of social economies, or attempts to build partnerships between the non-profit and for-profit sectors. Moreover, these changes certainly pre-date the 1997 Letts et. al. report. As an example, Vancouver philanthropist Carol Newell has balanced charitable and enterprise investments through the creation of two separate organizations. Through the Endswell Foundation, established in 1992, Newell has supported various charities doing work in environmental and social justice areas. And through her firm Renewal Partners Company, established in 1994, she has provided venture capital to 50 social enterprises (Read 2005).

Meanwhile in Quebec, a group called the Forum on the Social Economy demonstrated that greater integration of the social sector with other sectors could, in fact, provide new models for funding (Mendell, Levesque and Rouzier 2003). In this for example, social investment could take the form of investment beyond simply funding social agencies. Rather, by providing loan and investment services at the community level, the integration of social sector principles into the wider economy might be achievable. Additionally, labour union retirement funds (among others) could invest in small and medium-sized enterprises that, for example, promote participatory or cooperative management.

Trends toward the appropriation of public good models in business practices have prompted concern by some (Anton, Fisk and Holmstrom 2000). Much of the concern on this point involves the encroaching of commercialization on public services, including potential social equity issues such as the privatization of currently public resources such as water supplies and the contracting out of government services to private firms employing low-wage labour. Indeed, as Scott (2003) outlines, the non-profit sector itself is often used by governments to provide services at costs lower than is possible through direct public sector delivery.

As well, such actions have prompted questions regarding how “non governmental” are many of the non-profits operating around the world on government grants (Troger 2002). Kaul and Mendoza further suggest that a broader approach to understanding public goods must be developed that incorporates business models for the purpose of encouraging for-profit firms to internalize the impacts of their decision-making in terms that extend beyond their financial bottom line (93). The range of these proposals would appear however to suffer equally from the defect of not providing for a public-ness in decision-making in regard to public goods and not allowing for participation by those communities being impacted by these corporate decisions

This raises some interesting questions about Community Networks, particularly as they have been structured in Canada. As will be discussed further below, many Community Networks have developed as non-profit societies with charitable status. Most of these organizations were the result of collective efforts in communities to provide free or low-cost Internet access to a broad portion of the population through a non-commercial service. The origins of these community networks pre-dated broad government programs, such as the Community Access Program (CAP), but became recipients of such funding as government project grants became available.

With the end of core government funding, the increased availability of reliable, low-cost Internet services from commercial providers and a lack of organizational capacity to adapt to new projects, many of these Community Networks have ceased to exist. As the remaining Community Networks explore new funding avenues, some groups are investigating the relationship between fee-for-service options and the financial viability of the organizations. Whether fee-for-service models compromise the nature of Community Networks may require a rethinking of the public good understanding of Community Networks as non-profit organizations. In fact, such issues might be the basis for the development of models for organizational structuring for the future.

Conceptualizing public goods in the non-profit sector

Given Kaul and Mendoza’s expanded definition of public goods as social constructions and the changing nature of non-profits, there remain a few points to clarify. In particular, many organizations argue that while their services or products are public goods, the organizations providing such services are, in themselves, also public goods – or at least that they provide a public benefit that, in turn, contributes to the public good. In this regard, “public good” can mean two things. First, public goods can be things or concepts defining resource use and allocation. Second, the public good can be a state of affairs, or an outcome. This, however, might be better defined as public benefit resulting from the use of public-goods-as-things. Kaul and Mendoza clarify this point in explaining that public goods are not singly defined entities, but have varying levels of public-ness in their consumption, decision-making and distribution of benefits depending on the context. (92).

The nature of public benefit in public policy decisions is a question already taken up in recent work, most notably that of Cordell and Romanow (2005). In their discussion, Cordell and Romanow suggest that government funds for ICTs should be directed toward communities defined by a geographic location, and particularly demonstrating strong social cohesion. This would, in turn, lend support to more effective uses of the technologies as a contributors toward the public good. In their discussion, the public good is understood as a state of affairs rather than as an item or service provided in place of a market failure. Investment in their understanding should ultimately provide benefit to as many people as possible.

There is a contradiction, however, between Cordell and Romanow’s conception of public benefit and the way Canadian connectivity projects have been implemented and assessed. The Government programs, at least in public rhetoric have been judged on the basis of empirical measurements with connectivity meant to mirror the “digital divide” discussions drawing on measurements specifically of the percentage of a population that has access to the Internet. However, such measurements have little utility in assessing matters such as social cohesion or social capital. Nevertheless, it is notable in this context that many of the recipients of government funds have been pre-existing communities and organizations (e.g. schools, libraries, community centers, etc.) suggesting that the government recognized these organizations as convenient vehicles through which to rollout a community connectivity program.

Given the high rate of failure in the Community Access Program, the road kill of discarded Community Network organizations and similar community groups and the evident lack of government attention to social cohesion in such programs, it might even be asked what part of these projects should even be considered within the category of “public good”. In many instances, the public good and subsequent benefits were more the result of how specific agencies utilized the public funds in support of their pre-existing communities rather than promoting the vague policy intentions of these programs.

Moreover, earlier research on Community Networks in Canada demonstrated that although communities of volunteers ran such organizations, most of those involved did not recognize community development itself as an objective of the organization (Guy 1996). The relationship between social cohesion, community development and public good are not necessarily easy associations to make. Organizations that contribute to the public good, that provide public goods and services and that contribute to social cohesion may not necessarily hold community development as a primary objective. Indeed, community development and social cohesion are the results of vibrant interactions amongst people through the systems and organizations they develop. In this context, the non-profit organizations, as structures through which many communities organize to address identified needs, must be understood as critical elements in relation to the maintenance of public goods and the provision of public benefits. How understandings of public good and public benefit relate specifically to the non-profit sector, however, have not received significant attention.

In developing a framework to discuss the relationship between the public good and non-profit organizations I draw on the concept of effective use (Gurstein 2003). Effective use is an attempt to provide a qualitative context to the widespread discussion of digital divides. Rather than simply asking what percentage of the population has access to information and communication technologies, questions of effective use centre on issues regarding the degree to which individuals and communities are able to use these technologies in accomplishing their existing objectives. In one sense, effective use is a broad category within Community Informatics discussions that identifies the need for culturally appropriate, technological literacy in addition to access to technologies (Clement and Shade 2000).

Community Network advocates have placed effective use aspects of ICT access at the centre of their activities from very early stages of their development. In Canada, organizations such as Telecommunities Canada, the Coalition for Public Information, the Alliance for a Connected Canada and the Public Information Highway Advisory Council advocated for Internet access models that included training and community development aspects with a social – rather than solely economic – focus. And while Community Networks generally provide Internet access and training within their local areas, they are only one of many non-profit organizations that are providing such services ranging from children’s sporting events and health research to shelters and food security initiatives.

In the discussion of effective use, many of these latter organizations also require information and technological support in order to better implement their own programs. In some cases this means providing clients with Internet access, but in many others, it is a case of maintaining databases for the purpose of information management, developing an online presence through a website or running a basic office network. As well, for many organizations developing such capacities is a difficult task; with the cost of commercial IT support often being prohibitive for small and medium-sized non-profits with only a local or regional presence.

This leads to the second concept useful in the discussion of non-profits and public goods: flexible networking. The concept of flexible networking developed by Gurstein (1999) suggests that ICTs provide many organizations, whether community-oriented or small business, with the opportunity to pursue their organizational taks through a networking approach otherwise unavailable to organizations operating only as “stand alones”. Notably, this model is already common among some non-profits without even considering the role of ICTs. For example, many non-profits collectively hire bookkeepers and communication strategists or share office space and equipment. The flexible networking model however, allows many organizations to increase their organizational capacity through collective initiatives otherwise unaffordable on an individual basis. In some examples, such as the sharing of office space, organizations with similar missions or thematic program areas benefit from relationships of proximity in shared programming or ease of client referrals.

By introducing ICTs into the equation, networks allow new opportunities for resource sharing unrestricted by requirements of physical proximity. Some organizations have for example, developed services for other non-profit organizations based solely on the use of online facilities. CanadaHelps.org provides charities with a capacity to accept online donations. ONE/Northwest is a Seattle-based non-profit organization with a Vancouver office that provides technology resources to conservation and ecological organizations. Their revenue sources are a mix of foundation and donation contributions and a fee-for-service model, thus allowing the organization to provide below-market prices to their non-profit clients. Meanwhile, other organizations use online facilities to offer their services to a wider audience. Along these lines, the Institute for Media, Policy and Civil Society (IMPACS) offers live online communication training workshops to individuals located outside of the regions in which IMPACS’ offices are located. As ;well, some organizations have developed entirely new approaches to their programming in support of their missions through their new online capacities. In this case, the Vancouver Community Network (VCN) is a primary example, given that it provides hundreds of community-based organizations with free web hosting services and web development software applications.

In each of the above examples, non-profit organizations have been able to reinforce their own programming or develop new programming based upon access to ICTs or other groups and individuals through the use of ICTs. Understanding these activities in light of flexible networking allows for a better conception of enacting effective use strategies within the non-profit sector. By developing resources through online facilities, the non-profit sector develops latent capacities that can be drawn upon by different actors as required. For example, a community mobilizing around a common concern might benefit from the ability to acquire web space and design templates upon short notice. Other organizations might make use of online donation functions in differing ways. Some might see the ability to accept funds online as a way of reducing the time and expense of administration related to the manual processing and receipting of cash and cheque donations. Other organizations might recognize a means of soliciting contributions from otherwise unexplored sources.

In a practical sense, the non-profit sector has begun to develop the provision of back-end services to support the ongoing activities of other organizations. As such, the non-profit sector has found innovative means to integrate ICTs into their operations, thus incubating a new notion of effective use of ICTs across the sector. By developing these services, there is a latent capacity within the sector to accommodate increasingly fast-changing circumstances of organizations and programming while providing stable, consistent and affordable service provision. Moreover, the services provided in such arrangements are themselves public goods for organizations that, in turn, produce public goods or provide public services that contribute to a larger public benefit. And these services fill a “market gap” by providing services most non-profits would otherwise be unable to afford.

The larger issue at hand in theorizing Community Networks is whether a transition is taking place (or has the potential to take place) in transitioning between what Kubicek and Wagner (2002) call “generational” lines. In their discussion, Kubicek and Wagner suggest that community network generations might be defined by either changes in actors or changes in technologies (294-6). A generational shift might also encompass both of these factors. Based on Karl Manheim’s sociological conception of generational change to understand systems, Kubicek and Wagner identify three predominant generations to community networks, corresponding roughly with the three decades between 1970 and 2000. This is a useful approach to understanding changes in the uses of network technologies in communities.

Given the above-mentioned shifts in the way in which community networks are organized, though, the two categories of change outlined by Kubicek and Wagner are insufficient. To this formula might be added the additional category of structural change of the organization. By including the structural change of an organization as a variable factor in such analysis community networks can be thought of in a way that accounts for the type of organizations and their operational frameworks within a context including the effective uses of information and communications technologies. For example, given the state of most community networks across Canada it could be easy to identify any new activities around community use of ICTs in a given location as a being associated with a new generation of community networking. This shift might be signaled by the presence of new social actors or the development of access to a new software or hardware application.

Such analysis, however, is simplistic in a social sense and technologically fetishistic in another, particularly in attempting to assess activities in recent years. It would be socially simplistic because it is very rare that a complete break exists such that an entirely new set of actors with no associations to previous generations emerges over such a short period of time. As well, the second category of technological change might be seen as fetishistic because it risks focusing discussion on simple differentiations amongst technologies. The most recent example of such a manifestation has taken place in the attention given to high-speed (broadband) Internet use in populations rather than for example to broad questions of the possible relationship of such high speed access to community autonomy and opportunities for self-determination. By focusing too heavily on questions of technology, Community Informatics risks diverting “access” discussions back toward “digital divide” questions of technological availability and uptake rates in a given population and away from qualitative social variables such as social cohesion..

By including structural change of organizations as a factor in generational change, such discussions are better able to account for the ways ICTs are being adopted and developed by community groups, but under varying structures and operational plans. Moreover, this third variable of analysis should act to make lines between generational shifts somewhat fuzzier than many researchers might otherwise desire. This serves to highlight the complexity of community development over time, given that different stages of development may involve any number of actors, technologies and organizations present in different periods. As will be shown in the next section, the VCN is a prime example of this type of change. While the organization continues to exist with a structure similar to that at its origins, it is undertaking new projects and engaging new partners while considering potential new structures in an effort to assure its viability into the future.

The VCN: Defining a new public good

The Vancouver Community Network’s viability and continued provision of public good services cannot be taken for granted. Beginning in 1993 as the Vancouver Regional FreeNet, the new organization was intended to respond to identified needs within the community for developing public Internet access. The organization’s creation involved over 100 volunteers from across the non-profit and public services community, including the municipal library.

Their efforts it might be noted had a significant impact in defining the charitable and public good legal parameters for the non-profit sector overall amidst the emerging commercialized Internet. In 1993 applications for charitable status by both the National Capital FreeNet and the Vancouver Regional FreeNet were declined by Revenue Canada. The VRFN challenged the decision in the Federal Court of Appeal and, in 1996, won its appeal. This decision specifically identified the free exchange of information and access to the means of information exchange as public goods. In its decision, the court outlined a framework by which the Internet might be understood in relation to the public good:

The court in part based its decision on the following argument: information is the currency of modern life. This has been properly called the information age. The free exchange of information amongst members of society has long been recognized as a public good. It is indeed essential to the maintenance of democracy, and modern experience demonstrates more and more frequently that it, more than any force of arms, has the power to destroy authoritarianism. The recognition of freedom of speech as a core value in society is but one aspect of the importance of freedom of information. (Hugessen 1996, para15)

The court noted that while the infrastructure might be used for activities that detract from the public good or for private gain this should not “disqualify the free provision of access thereto from obtaining charitable status,” (para 19). In this regard, the decision likens free Internet access to a public bridge or highway; that is that the opportunity for movement and interaction should be understood as a public good, despite the potential for misuse of such a resource.

VCN staff are clear that their first objective in obtaining charitable status was political: establishing access to the Internet as a public good was crucial for civil society groups to push for future community-based networking initiatives (Royce 2005). The importance of establishing public good principles around the Internet became apparent as the Federal Government’s commitment to developing the Internet along public good parameters became less evident. But obtaining charitable status at an early stage meant that the VCN was able to develop an organizational model along the lines of other social service and public engagement groups in the non-profit sector. By obtaining charitable status the VCN was able to adopt an operations model that has been a contributing factor to the organization’s continued existence for close to a decade.

A model that works

Given the VCN’s unique status as one of only a few remaining community networks, its operations model deserves attention. The VCN developed an organizational model that uses its charitable status to both provide a steady stream of income to cover basic charitable activities and to position the organization’s core services at the forefront of its activities. The core charitable activities of the VCN are the provision of free Internet access, e-mail accounts and hosting services. By offering these services at no cost, the VCN consciously serves a clientele that is otherwise overlooked by commercial ISPs; that is, the VCN provides services and training for individuals otherwise unable or unwilling to pay for commercial offerings.

Rather than charging fees for its services the VCN makes a point of asking for donations on the basis of what individuals feel the services are worth and that they are able to pay. The resulting contributions have been sufficient, with the exception of the years 2001 and 2002, to cover most of the VCN’s expenses related to communication lines for dial-up Internet access (see Figure 1). Although free access is unlikely to ever fund itself solely on a donation basis, this model does maintain a steady donation income that might otherwise be difficult to solicit.

Figure 1: VCN Membership and donation revenue and communication line expenses

This model has worked for the VCN, according to the organization’s staff, for three primary reasons. First, the city of Vancouver and the surrounding region is host to a steady influx of new immigrants, to a greater degree than many other Canadian cities. As such, there is an ongoing need for public Internet access to serve a lower socio-economic demographic and the VCN has been successful in networking with these communities. Second, the VCN developed a donation model that makes the need for donations explicit, but without requiring payment for core services. As VCN staff explain, it is easier to ask for money when the services do not have to be accountable in the same way that they would be on a fee-for-service basis; individuals understand the level of service they can expect, and donors receive charitable tax receipts for their contributions.

Finally, the organization became adept at attracting project funding very early in its history. Accessing foundation grant funds is contingent upon having charitable status. This project-based funding was particularly important to the organization in its early development when, for example, foundation grants in 1995 comprised over 17 percent of the VCN’s revenue. Although difficult in its early days, the organization was eventually able to capture a range of the funding opportunities it identified and chose to pursue. Since VCN developed its core services and infrastructure through a diversified series of revenue sources it was not dependent upon any single funding initiative, such as the federal Community Access Program, as was the case for many other community networks. In fact, the VCN only began receiving CAP funding in 1999, five years into the organization’s existence.

The VCN developed a successful revenue and operations model, in large part as a result of its charitable status. The charitable status allowed the organization to establish diversified streams of revenue that, regardless of government program funding, would support some core operational costs. Charitable donations continue to comprise approximately 9 to 10 percent of the VCN’s annual revenue (excluding flow-through finances related to the administration of CAP projects). This is a revenue source the organization, arguably, would not be able to access without its charitable status unless it were to make significant changes to its mission and move to fee-based core services.

Through a multi-faceted approach to finding complementary sources of funding that allowed for organizational development, the VCN has maintained core services based around a well-defined mission. In this regard, the VCN has never attempted to be a leader in using cutting-edge technology. In fact, the organization has continued to focus on dial-up and web-hosting services, even as commercial providers have developed high-speed services and other non-profits have established wireless services. Instead, the VCN has focused on key services for otherwise under-serviced populations.

New Funding Challenges

Despite the diversified nature of the VCN’s revenue and the relative financial health of the organization, it still faces challenges as government priorities move funding away from the public access programs of the past decade. In particular, the potential end of the Federal government’s Community Access Program marks a significant potential change for the VCN’s revenue streams.

On-going revenue fluctuations in the VCN’s finances were due to its role as a regional administrator of CAP within the Lower Mainland (see figure 2). Although revenues appear to have increased nearly two-fold between 2002 and 2003, with an additional 69 percent increase between 2003 and 2004, much of this funding was flow-through, or the result of funds the VCN administered for CAP and redistributed to project sites. In fact, once flow-through is removed, the actual changes in revenue were approximately a 15 percent increase in 2003 and a 5 percent decrease in 2004. These changes are certainly not as significant, in terms of a percentage of budgetary change, as in past years when revenues increased by 95 percent in 1999 and another 52 percent in 2000.

Figure 2: CAP Funding compared to total revenues

Even when the CAP funding for the administration of other CAP sites is taken into account, CAP project funding to the VCN still constitutes a significant portion of the organization’s revenue. The significant proportion of the budget constituted by CAP funding indicates as well a significant drop in revenues from other sources over this period. The VCN’s 2003 Annual Report notes that in addition to its regular CAP funding, an additional contract to administer 260 CAP sites across the Lower Mainland made the organization a “hub for public Internet access sites” (VCN 2004). This contract provided the VCN with the opportunity to continue service delivery in its specialized area of operations and gave recognition to the organization’s latent potential as a specialized service provider within the non-profit sector. But while beneficial to the VCN overall, the obvious result of was to make the organization even more vulnerable to any immediate change in government programming.

The VCN’s rapid growth in CAP funding had additional implications. For example, by virtue of maintaining revenues over $500,000, CAP funding became subject to Treasury Board approval, beyond the regular Industry Canada application procedures. As a result, the additional approval process adds one month to the review phase, thus reducing the budget year by one month for actual program delivery. As well, VCN staff have had to compensate for the increased administrative procedures through flexible scheduling against the organization’s other activities. Along with these accommodations, the organization also changed its own accounting procedures, including obtaining annual financial audits in response to funding requirements.

These changes are, of course, to be expected under the circumstances. Government funding requires adequate accountability and transparency while participation in such programs entails an obvious responsibility for meeting defined program and service objectives. However, it should also be noted that, while the VCN developed an organizational model early in its existence that anticipated many of the cyclical funding trends that came to characterize the non-profit sector since the mid-1990s, other Community Networking organizations (along with other not-for-profits) have not have withstood the rapid change and mounting organizational capacity requirements within the sector.

Throughout the various projects carried out by the VCN, the organization has been able to maintain its mission to operate a free, public, non-commercial “computer utility” to provide a public space on the Internet. This objective has remained as a common thread throughout the organization’s history and operations, and additional projects have supplemented this mission and facitliated a basic operations model in support of this mission. Other community networks have not been so successful and VCN has been the exception in successfully anticipating and responding to the requirement for the transition identified above.

Non-profit entrepreneurs and the VCN

Within the context of the VCN’s resiliency as an organization, its Board of Directors recognized the likely end of long-term funding for CAP from the federal government (Royce 2005). In an effort to investigate new funding sources, the Board turned to a program offering grants to non-profit organizations to explore opportunities in for-profit projects. In 2004, The VCN received a $10,000 grant from the Enterprising Non-profits Program of the VanCity Community Foundation to conduct a feasibility study and business plan for an enterprise offering IT services to other non-profits. The timing of such a project appeared to be particularly appropriate given that the board’s interest and the availability of funding coincided with the availability of an individual who had done a similar report for the Austin, Texas Freenet.

In the VCN’s case, the report provided inconclusive findings. The project would focus on small- and medium-sized non-profits otherwise unable to afford adequate IT support, however it remains questionable whether the VCN would be able to provide services at a cost sufficient to do anything more than break even. If the project were to proceed, much of the IT services offered would need to be provided by existing staff. Staff efforts, the report recommended, would be supported by a sales and marketing representative, although.there was little research into the potential market for such services in the Vancouver area (a crucial element in a market where a significant number of web development and IT support firms already exist, serving both the commercial and non-profit sectors). In a best-case scenario, the report suggests a three-year period before the enterprise would be profitable. Meanwhile, the risk of bringing on even one additional staff for such a project, at the same time diverting existing staff attention to meeting service deadlines, and along with the initial financial investment required represents a very significant risk for an organization such as the VCN.

From a historical perspective the report’s findings are not far from VCN’s previous activities. Throughout the first decade of the VCN’s existence, the organization regularly performed work on a contract or sub-contract basis for other organizations. Much of the work constituted “seed projects” with initial start-up funding. Half of the sixteen projects completed over the period were infrastructure projects intended to “benefit the general public or a large segment of society,” (Chan 2004). The other half of the projects were more oriented toward training in partnership with other organizations. The intention of these projects was to benefit “specific segments of society,” (Chan 2004).

All of these works are considered pro bono publico, or for the public good by the VCN. In effect, the VCN has been operating a fee-for-service model from its beginning, mirroring much of the back-end service industry within the non-profit sector outlined above. Further, since the VCN’s report on developing an IT support enterprise was written, the organization has continued to do contract-based work for other organizations on a small-scale basis. This has been an integral part of the VCN’s success as a non-profit organization, providing services that meet an identified need within its community.

A remaining question as to how the VCN will proceed with these activities, however, is what organizational structure should be used in a fee-for-service model and whether it could benefit from business management skills. For example, any organization with a significant volunteer base, such as the VCN, must consider varying management schemes to account for its diverse human resources. As well, considerations regarding an organization’s charitable status might also come into play. If the VCN were to pursue contracts through a more concerted effort, staff indicate that a likely scenario would be the establishment of a separate society, perhaps in a cooperative structure. This would remove any risk of problems with tax laws that might restrict a charity’s ability to conduct for-profit activities while reducing risk to the VCN itself if the project were to fail. Within such a model, while cooperatives are not allowed to profit from their operations, should funds be available, contributions from the cooperative could be made back to the VCN in the form of a community support program.

A new generational model for Community Networks

The question that remains is whether the VCN model offers anything of use to other communities. Given trends in the non-profit sector, the VCN appears to have survived not on the basis of being a Community Network or any accompanying serendipitous circumstances in Vancouver. Rather, the organization remains viable because it has steadfastly focused on its organizational mission. This mission, in turn, is based on identified needs in the community and is supported by a set of basic and practical organizational goals. This model could be translated into a number of other communities, given that it is possible to organize and gain recognition as charitable organizations based upon the past efforts of VCN and others. However, that a community networking movement similar to that of the 1990s might again emerge appears doubtful. Nonetheless, there are new initiatives that would suggest new generational developments in the community networking movement.

There are examples of organizations such as Montreal’s Ile Sans Fil and BC Wireless developing public, wireless Internet access points in their respective regions. According to Kubicek and Wagner’s generational model, these wireless networks might constitute new generations of community networks based upon the new sets of actors involved and the new technological means being engaged in such projects. These two examples are largely focused on the technological development of networks to meet community needs in a collective, cooperative manner. Both are non-profit societies, but neither is a registered charity although they would likely qualify as providers of “public goods” given the definition developed around the earlier community networks.

By comparison, the VCN is one of a few community networks that continues providing basic dialup Internet access and web hosting services. By Kubicek and Wagner’s definition of generations, the VCN would appear to be on a continuum without a discernable break from past activities. This, however, is questionable in light of the organization’s investigation of fee-for-service models, particularly if the idea were to be developed in a cooperative society structure. Furthermore, in the VCN example the organization is going beyond simply providing the infrastructure and access points for public Internet access. Instead, the VCN has developed an effective use model for their region’s non-profit sector, providing the resources for other organizations to offer comparable access services or training projects focusing on the range of aspects of technology access.

As already outlined, there is a demonstrated interest in the non-profit sector to share back-end services appropriate to their organization’s size and technological needs. The non-profit enterprise model being considered by the VCN might provide a suitable means to further develop an effective use model that also follows a flexible networking notion of resource sharing and cooperative development. If pursued within a cooperative model, the VCN might be able to further develop the non-profit sector’s capacity through appropriate technologies while protecting the core services provided by its existing organizational model.

While VCN considered this idea for a different organizational structure, it is questionable whether remaining community networks would find similar models useful. Given the anticipated difficulty of making the project profitable, it is an unlikely source of significant new funds. Nonetheless, applications of this model exist beyond the VCN’s geographic jurisdiction. In particular, a cooperative model of technological capacity building might be of interest to non-profits in communities that lack IT support services that require the physical presence of individuals at an affordable rate for services s.

Cooperative models would allow organizations to have input into how such services are developed and managed, while only being charged for services as required. With a large enough body of member organizations, an IT support and technological development cooperative should be able to maintain a professional staff capable of catering to member organizations’ needs within a business management model. Organizations, in turn, would only be charged for the services they require at a cost-recovery fee rate. Ultimately, such a model would integrate a particular type of community networking into the basic infrastructure of a communities’ non-profit sector. The creation of such a model is not dependent upon pre-existing organizations such as community networks, thus making the model viable in communities where community networks no longer exist in their traditional form.

The drawbacks of such an organizational model remains the lack of communities with populations of sufficient scale to allow the development of these cooperative organizations This might limit the effectiveness of such a model in smaller communities, such as rural areas if additional support is not available. Nonetheless, the pooling of resources and cooperation between towns might remain a viable means of developing capacity among organizations and individuals in such locations. In fact, the strong basis of the contemporary Canadian cooperative movement in rural areas should be evidence that such an organizational model could work if there is a discernable community desire to develop such services. This discussion, however, falls outside of the scope of this paper, although it also warrants further analysis.

Conclusion

Given the state of community networks in Canada, there is a need to examine effective ways of developing community networking into the infrastructure of the non-profit agencies operating in geographically-defined communities. Given the VCN’s long-term viability and success in developing a diversified funding base, the organization serves as a useful model in understanding possible integrations of community networking into the infrastructure and capacity of a larger non-profit sector present in a community.

Important to the notion of public good and the Internet is developing effective use capacities in the non-profit sector that extend the public benefits of such infrastructure. As outlined in this paper, notions of social enterprise might provide valuable lessons for the development of non-profit operational models. In the case of organizations such as the VCN, networking cooperatives might be the basis for further developing the sustainability of community networks and their public good contributions toward public access and the participatory development of ICTs.

For other communities, networking cooperatives might provide new resources to the non-profit sector struggling to find appropriate technologies to meet their programming needs. In either case, the model provides another means to keep the public good model of network development present in community, technology and policy discussions. In addition, there is a value to Community Informatics research to be able to better account for organizational models within a non-profit environment. In this regard, understanding generational models with a third “structural” variable may contribute to understanding the development and potential opportunities for future research and practice in the field.

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