Jumo: Get Grant, Do Good, Sell
August 17, 2011
(Bradford K. Smith is the president of the Foundation Center. In his previous post, he wrote about foundations and unsolicited proposals.)
ChrisHughes.org has just gone back to being ChrisHughes.com. According to a story in Fast Company, Hughes' Jumo -- a nonprofit portal built with grant funds from some of America's largest philanthropic foundations -- is being acquired by GOOD, which despite its altruistic-sounding name and mission is a for-profit company. Is this what grants are for?
Hughes, described on the Jumo site as "co-founder of Facebook and director of online organizing for Barack Obama's 2008 presidential campaign," became something of a darling in philanthropy circles after he announced his intention to create a "social network that helps people find high-quality nonprofits and take meaningful action." Some foundation professionals jumped in with early funding and were prone to statements like: "If anyone can make the online giving space work, Chris can!"
Did Chris make it work? In a field where metrics are not difficult to come by, the Fast Company article is frustratingly vague with its numbers. Reference is made to "good results" in a recent Jumo campaign to raise money for Somalia. If this is the same campaign for which I received an e-mail, the approach was surprisingly old school and the goal a mere $3,000. Meanwhile, the folks at GlobalGiving have managed to raise $49.6 million for causes around the world. At the end of the day, Hughes' big takeaway from his experience is that the "do-gooder space" (as he calls it) is tough and that "people need carefully curated content if you are going to sustain their interest." Along the way, some offered that advice to Jumo and its supporters but no one seemed to be listening.
From the scant information available, Hughes fell far short of making Jumo the Facebook of online giving. Of course, this wouldn't be the first time that foundations made a bet on an individual with brains, charisma, and an impressive track record that didn't pan out. Nor should it be the last. Foundations have the freedom to take risks, and that implies the possibility of failure as well as success.
We don't know the terms of the deal, and undoubtedly everyone involved is sufficiently lawyered up to make sure everything is on the level. Still, the Jumo sale raises questions. Most foundation grant letters I have seen have language restricting the use of the funds to charitable, scientific, or educational purposes. Does selling your nonprofit and its intellectual property comply with these conditions? Have the foundations that supported Jumo unwittingly been transformed into angel investors with far less-than-fabulous rates of return (no re-payment of interest or principal)? Maybe as Betabeat has ventured, the acquisition involved no money at all. Apparently Jumo's code will remain open-source, hence a public good, but as anyone who markets anything online knows, content, e-mail addresses, user profiles, and click-through data have future commercial value, which presumably GOOD will put to use.
As we march off into a brave new world where the lines between nonprofit and for-profit activity increasingly are blurred, moments like this should make us pause and reflect. Are foundation grant agreements keeping up with the times? How much do we understand intellectual property in a digital world? I'm still sorting out the role of philanthropy in this one and need some help. If you've got any answers or questions of your own, please comment.
-- Brad Smith