How to Organize and Fund Free Culture Projects Kevin Shockey - PowerPoint PPT Presentation

Case Study: Mozilla Foundation Mozilla Foundation Revenues $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- 2003 2004 2005 2006 2007 2008 2009 2010

Case Study: Wikimedia Foundation Wikimedia Foundation Revenues $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- 2006 2007 2008 2009 2010

Mozilla Foundation Drill Down  July 15, 2003 - The Mozilla Foundation is born with a $2 million start-up support from America Online's Netscape division  FY 2005 - The Mozilla Foundation added $28 million in revenues in royalties  August 3, 2005 - The Mozilla Corporation was established to handle the revenue-related operations of the Mozilla Foundation. - The Mozilla Corporation (abbreviated MoCo) is a wholly owned subsidiary of the Mozilla Foundation

Mozilla and Subsidiaries $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $- 2003 2004 2005 2006 2007 2008 2009 2010

Mozilla Foundation 2011 Annual Report (sort of)

Mozilla Versus the World

Free Software Foundation Drill Down  Primary channels are: - Website - Email - Conference participation  Little or no social media

Assumption Take Aways...  Mixed State of Open Source - Acceptance of open source decline is misguided  Best projects use project methodology - Growing a community - Shipping in iterations  Financial support (donations, purchases, memberships) is lacking  Large difference between public relationship strategies - Most successful projects use modern strategies  Niche groups who are content with scratching their own itch - Dogmatic approach to community

Another Bridge

Top Ten Startup Fund-raising Lies 1. All we have to do is get 1% of the market 2. We filed patents so our intellectual property is protected 3. Our management team is proven 4. The large companies in our market are too big, dumb, and slow to compete with us 5. Our product will go viral

Top Ten Startup Fund-raising Lies (Continued) 6. Hurry up because our other investors are about to do our deal 7. No one else can do what we're doing 8. Several Fortune 500 companies are set to do business with us 9. Jupiter says our market will be worth $50 billion in ten years 10. Our projections are conservative (Kawasaki, 2012)

Fund-raising Best Practices  Build a Foundation  501(c)(3)  Establish a Fund-raising Program  Obtain Grants  Corporate Donors  Community

Best Practices for Startups  Build something interesting  Innovation Accounting - Testing - Methodology  Team - Talent  Leadership  Use Web2.0 and Cloud Computing

Build a Foundation  Incorporation - Think about SEO first  Mission/Vision - Ensure your mission matches up with the charitable activities you plan for your 501(c)(3)  Board of Directors  Transparency - Expect to make all of your founding documents public - Required by IRS for all 501(c)(3)

Setting up a 501(c)(3)  Supporting documentation: - Formal articles of incorporation - Create corporate bylaws - Appointment and record of every board meeting and action.  Financial data - Financial statements - A current balance sheet  Open to foreign corporations - Donations are not exempt

IRS Application  Form SS-4 – Employer Identification Number  IRS Form 1023 – Application for Recognition of Exemption  IRS Form 2848– Power of Attorney  Organizations must usually file a form 990 (or 990-EZ) every year

How to Start a Fund-raising Program  Create a fund-raising committee - 5-7 members  Put your fund raising goals in writing  Develop a plan of action  Revise your plans - Build-Measure-Learn - Contingency  Share your plans

Finding Government Grants  Grants.gov  Department of Health and Human Services - http://www.hhs.gov/grants/  National Institute of General Medical Sciences - http://www.nigms.nih.gov/Research/  National Institute of Health - http://grants.nih.gov/grants/guide/ - http://grants1.nih.gov/grants/funding/sbir.htm (*)

Finding Government Grants (continued)  National Science Foundation - http://nsf.gov/funding/  National Endowment of the Arts - http://www.nea.gov/grants/index.html  Department of Defense - http://www.dodsbir.net/ (*)

How Can Grants Fund A Project?  Must be able to align project's needs with needs of the CFP  Whether it is research or development, the needs can be the same  Examples: - DARPANet - The US DoD has spent > $100 million on social network sentiment analysis - The NSF just initiated a multimillion dollar CFP for Big Data projects

Finding Private Foundation Grants  Other 501(c)(3) Organizations - Private Foundations  The Number One Complaint of Foundations: - People do NOT do thorough RESEARCH! - If you do NOT qualify – do NOT apply! - When in doubt, reach out...  Best Practices; Be clear about: - Purpose of your program or project. - Type of support that is needed to carry out the project. - Total amount of money that will be needed to complete the project.

Top Private Foundations by Giving (June 2012) 1. Bill & Melinda Gates Foundation - $2,486,342,209 2. Walton Family Foundation, Inc. - $1,479,636,053 3. Genentech Access To Care Foundation - $587,337,392 4. Pfizer Patient Assistance Foundation, Inc. - $569,495,443 5. GlaxoSmithKline Patient Access Programs Foundation - $555,867,032

Top Private Foundations by Giving (June 2012) - Continued 6. Abbott Patient Assistance Foundation - $482,610,604 7. Ford Foundation - $424,695,000 8. Johnson & Johnson Patient Assistance Foundation, Inc. - $416,443,559 9. Sanofi-aventis Patient Assistance Foundation - $392,778,999 10. The Bristol-Myers Squibb Patient Assistance Foundation, Inc. - $392,567,134 $7,787,773,425

Total Giving By Top 100 US Private Foundations (June 2012) $18,498,784,792 $46,900,000,000

Why Corporations Give?  Creating programs to use company employees as volunteers  Forming partnerships  Promoting the corporation  Gaining cost effectiveness  Creating a win-win situation

Best Practices for Corporate Donations  Create list of corporations  Identify A-list prospects  Personal contacts make a difference  Stay in touch - Add to social network - Engage with your network directly (Thank you, RT, posts)  Don't take “No” for an answer

Corporate Solicitation Kit  Current list of board of directors  Mission statement  Budget information  Purpose of funding request

Most Common Forms of Corporate Support  Cash  Matching donations of employees  Employee time  In-kind

The Power of the Crowd Crowd Funding & Sourcing

Contributions From the Crowd  Crowd funded - Crowd funding platforms - Donations - Merchandise - Customers  Crowd source - Bugs, testing, documentation, code, design - Governance

The Crowd Funding Battle Royale  There will be an estimated 530 platforms by the end of 2012  $280,600,000 raised by CFPs in 2012  Majority are ONLY for 501(c)(3)

Kickstarter 56% of all projects fail!

Drill Down on Kickstarter Success Success Rate By Category 80.00% 70.00% 69.00% 63.81% 60.00% 54.18% 50.00% 48.22% 45.49% Over all Aver age is 44% 40.83% 39.62% 40.00% 38.30% 35.47% 33.83% 31.86% 30.00% 28.80% 27.29% 20.00% 10.00% 0.00% Fashion Technology Publishing Games Design Photography Film & Video Food Comics Art Music Theater Dance

Kickstarter Failure Analysis Funding for Failed Kickstarter Projects, by Percent 0.52% 1.19% 3.89% 22.51% 11.19% 0% Funded 1% to 20% Funded 21% to 40% Funded 41% to 60% Funded 61% to 80% Funded 81% to 99% Funded 60.70%

Kickstarter Best Practices  You're already a 501(c)(3) non-profit  You have an existing brand, fan base, or personality  Extensive pre-launch preparation  Social networking: - Your social engagement platform is working optimally - You consistently share valuable status and progress and communicate effectively - You maintain constant contact with anyone granting you permission  Kickstarter platform: - Your project explanation is clear and concise - Imbalance between offer and value - Getting too greedy