Wednesday, February 06, 2008

Notes on nonprofit networks

Enough of my noodling about networks, I decided to take my questions, "What do nonprofit networks look like, how do they work, and what does this mean for philanthropy?" to the experts. So I asked these questions of the folks over at FAS.Research - who do very important work mapping networks.

Here's some of what they told me:

"It's a large and diverse universe. Nonprofits have many different network structures and properties depending on the function they serve. It's the classic case of form follows function. A local direct service nonprofit like Glide Memorial Church will have a different network structure than a global movement-based nonprofit like ForestEthics. And if we think in terms of nonprofit production cycle, a research nonprofit like the Institute for Politics and Democracy on the Internet (IPDI) is going to have a different network than an advocacy organization like NRDC that might use IPDI's findings to sharpen it's online advocacy work.

The one thing that I would say in general is that because it is a large and diverse universe, and one where nonprofits are fairly evenly distributed geographically, that the links within and between sectors are limited in their number (low link density) and in their function (low multiplexity). This leads to higher search and collaboration costs. This makes it tough for players to see what is being done elsewhere in the sector and find collaborators. This leads to low innovation, duplication of effort, and stranded local innovation, among other things.

I think this is partly to be expected given that the dramatic growth of the sector since the 1950s. In the United States alone, we have gone from tens of thousands of nonprofits to around 1.5 millions in about 50 years. We need to think of the nonprofit sector in terms of an evolutionary lifecycle. We may still be in the primordial soup. My sense is that the larger, more complex, collaborative structures are yet emerge.

This, however, begs the question, "what can we do to speed up the sector's development?" Our world needs a powerful social sector right now. Do we need more connections? Not necessarily. A large number of indiscriminate new connections can lead to network congestion. That means things slow down. You have to be strategic about how you link resources.

Our work in researching technology clusters is instructive. Tech clusters like Silicon Valley create tremendous value because they optimally link diverse resources in pursuit of a shared goal. And this is key, participants in this ecosystem are…drum roll…clustered! They're close to each other both geographically and socially. And equally, if not more importantly, they're also linked in the right pattern. The research, development, production, and distribution functions of the system are distinct and robust, but optimally linked to create and spread technology innovation. The universities, VCs, entrepreneurs, and professional services in Silicon Valley are linked in what can be described as an autocatalytic set - a technical name for a virtuous circle. This means that the outputs of each entity are a useful inputs for other entities and that as a set, they catalyze their own production. They have other properties too. Like a rainforest, they tend to cycle energy with increasing rapidity through the system as the system evolves creating increasing numbers of niches and innovation. Think of the rapid escalation in VC investment and the increasing diversity of tech investments available. In other words, the system scales. And once one is set in motion, it can be difficult to stop since each participant gets increasing rewards for being part of the set. Think of the incredible personal wealth that has been created in Silicon Valley.

Another way to look at it is that participants experience self-sustaining growth through collaboration with other dissimilar entities. OK, there must be something to this because it sounds like a paradox!

From my experience, there's no structures even remotely like tech clusters in the nonprofit world. One mistake I see over and over is that when folks organize nonprofit networking events with an eye to strengthen a specific sector, they make the mistake of mainly inviting nonprofits. ... What does this suggest about how foundations work in the sector and what they could do differently?"

So, first of all, thanks to Neal and Doris and Harald at FAS. Their work is very interesting, you can see some of it on the site and more of it on their own site.

My thoughts on what these observations might mean for philanthropy, and foundation funding in particular:
  • Thinking about networks isn't enough - funders need to know what kinds of networks are good for what purposes, what kinds of networks exist in the geographies and issue areas they care about, and what kind of lever or inflection point exists and what can it be shifted to accelerate, transmit, redirect, or expand
  • Networks exist of many things, and across many things - people, institutions, ideas, materials, money -
  • And, of course, networks of funders exist - of relationships, grantees, board and staff, founding families, vendors - what do these look like and what do they do?
  • How do funder networks and organizational networks compare?
  • What types of actors beyond nonprofits matter when thinking about social change or public good - and how, if at all, are these actors connected or isolated from existing networks?
Here's a thought, one I mentioned to the folks at FAS. What if we could map regions of actors by their funders - all the environmental groups and activists in the San Francisco Bay Area or all youth programs in Detroit. What would you expect to see? What if you didn't see what you expected? What about mapping the same groups (Bay Area environment or Detroit youth groups) by networks of board members? Of individual donors? Corporate contributors? Isn't it likely that the same organizations have very different types of networks depending on what types of connections are being mapped? And doesn't that matter when we think about where to put more money, more people, more capacity (or, conversely, less money, people and capacity)?

It seems to me that we know that networks are out there. But we don't know enough about them, how they work, and what they can/cannot do to make knowledge of their existence useful. This, of course, is not limited to philanthropy - network theorists themselves don't all agree on how networks work - here's an article about one theory-publicizer, Duncan Watts, taking on another, Malcolm Gladwell.

Still, really looking at how networks work, what is connected to whom and whom to what, and what might be accomplished through certain kinds of networks - this all seems worthwhile when making choices about limited resources. Legend has it that mapping efforts such as these are what led to the Democracy Alliance - what might similar efforts accomplish on social and philanthropic issues?

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