A Personal Perspective On The Curse of Funding And It's Agencies

While I was at the Caribbean Internet Forum, the focus was on innovation - and one younger man brought up to innovate, funding needs to be provided. Due to the context of the conversation, it was implicit that someone had to provide the funding. I responded, saying that if you're looking for funding then you're not innovating. Two broad brushes met and disagreed, but for brevity I didn't really explain my position.

A fellow came up to me afterward - from one of the telecommunication regulation agencies - and told me he understood what I meant. In Cuba, to get something laminated, he'd seen people use two steam irons and some plastic. Innovation. Using what you have to do things that need to get done. And this is where funding agencies and philanthropists fail and, in my opinion, will continue to fail. My problem has been that I haven't explained the inductive kick that got me to my theory on failures of funding agencies and philanthropists. Watching Thomas Friedman talk about bubbles on Jon Stewart while doing some PR for his latest book, Hot, Flat, and Crowded: Why We Need a Green Revolution--and How It Can Renew America¹, got me thinking about how to explain this all.

Since my experience with funding agencies and so forth is in the Caribbean, my examples will focus there. I've seen Caribbean initiatives die lingering deaths after funding was cut because there was no 'exit strategy' of worth - or the 'exit strategy' was not implemented.

The Trouble With Bubbles

The trouble with bubbles, as Friedman so willingly pointed out (and Stewart nailed him on) is that people have to lose lots of money with economic bubbles for advances that benefit humanity to come to the fore. The Dot Com boom saw 300 failures for every success, as an example - and in case you were wondering, people invested money in the failures. Few people walk into a casino expecting to lose, and so it is with business ventures - and development ventures.

The theory that 'spending more makes more' holds true in some circumstances - but not all. Applied to oil, for example, 'spending more makes more' makes no sense because oil is finite. So how is applying it to money different, when there is a finite amount of money available - at least in theory? Because money isn't like oil. Money is based on value, and the various currencies out there are, or should be, based on the value of things within a nation that issues the currency. Money, itself, is only an indicator of how much something is valued at. A loaf of bread's value is determined by how much it is wanted; it's cost is determined by the value of the bread as translated to the cost of ingredients and labor. When bread is in high demand, so are the ingredients.

But what if money is in high demand?

Let's say we're doing a startup company in Soufriere, St. Lucia. We're going to provide a service that everyone wants - something like internet access at a cheap price. So, if we're successful, we're increasing demand on bandwidth and computing devices as well as education regarding usage of both.

Bandwidth pricing, allegedly, goes down the more you use (or should) - but that is not necessarily so since there are tiers you have to push through to get price drops. Bandwidth pricing is not as reactive as some would think; adding a thousand more people to the Internet presence in St. Lucia may not decrease bandwidth pricing for you. Computing devices, which devalue at a rate consistent with Moore's Law, will be needed. So as soon as you buy the devices, they are worth less. In fact, once the devices are actually designed their value begins decreasing - something manufacturers won't tell you, but the gains fund their research for the next technology advance. Or so the theory goes.

Education is dependent on people with knowledge. Traditional systems of education will not necessarily supply the demand immediately - so you might have to get some people from outside of the area to come in. So you have salaries, possible transportation costs, materials for education, etc.

Suddenly providing bandwidth for an underprivileged area becomes a large undertaking - and bear in mind I have simplified just about every aspect of this. But here's what it boils down to:

• A bubble of high demand for computing devices that will have already devalued.
• A bubble of high demand for education.
• A likely increase in the cost of bandwidth used, unless some sweet spot between tiers is hit (which is severely unlikely).
• More people with Internet Access doing... what?

Bear in mind that a bubble, by definition, is temporary.

So if we're successful with all of this, we now have a bunch of new customers and we've spent a lot of money. This cost is passed along to our customers who don't have much disposable income. Unless their disposable income can cover the costs of their new Internet connectivity and they believe it is worth it, we'll be OK. Except now we have to support the customers, which costs money as well. So we'll pack all of that together and see if the customer likes it.

Now we get to motivations. A parent's motivation for their child to get a good education, generally considered healthy parenthood, will permit them to make sacrifices for their children - but not to the point where the children cannot eat. A young entrepeneur-minded individual - let's put her in a skirt just to keep things hopeful - now wants to start a business with her internet connection. She makes fashionable outfits in Soufriere, let's say. So we have her. A blind person in Soufriere comes up with a revolutionary new way to 'visualize' data for other blind people, and wants to provide it as a service - he needs some specialized equipment and a way to subsidize his idea. A young woman in secondary school starts posting her mother's recipes on the Internet and putting Google Ads next to them.

By the way, is the financial infrastructure in place for payments? Probably not. So getting money into the country to subsidize the development is... where?

Things are looking up, right? Well, the parents aren't making any more money because of the Internet, but are willing to sacrifice. The entrepreneur providing recipes is going to make relatively small but fairly consistent gains as people visit her site - until people start copying her stuff and emailing it around. Even so, she should continue to make some money. The blind innovator might get funding from a funding agency depending on whether or not they like his official requests and the paper that they are written on - and whether he falls into the right geographical area for him to be helped. But the woman selling fashion items has a different problem - she needs to be able to send her product to people to pay for them - and more importantly, she needs to be able to collect the money.

And all of these people need a solid infrastructure such as, but not limited to, dependable postal service, electricity, water and internet access. We've got the Internet access covered, but we have the same problems with infrastructure.

Tada. We have a bubble. We have the potential abilities of people expanded, but we may not have managed to tie it to a version of reality that exists outside of our offices. Unless the development becomes self sustaining, this area will become a failure - and subsequently, we will be a failure. Not to worry. We'll apply for more funding from somewhere and do a project elsewhere, leaving the people here on their own.

And that's one of the many problems with these 'bubbles' that Friedman talked about. But Friedman isn't responsible for the bubbles (he certainly encourages them). The truth is that these bubbles can be extremely counterproductive for development just as those mortgages-turned-depraved-financial-instruments-that-no-one-understands have been bad not just for the United States economy, but the global economy.

Toward Reality

Aside from all of the above, there is now a thriving economy based around non-profits, NGOs and funding agencies. Navigating these murky waters is almost impossible unless you know someone, and social networks typically demonstrate that the people in the position to help in an area have significantly fewer contacts in the area to be helped than those geographically close to them. Therefore it is easy to infer that the influence of the people around them is greater than the influence of the people to be helped. Some will argue that, but the truth is that to get the funding one has to walk in different circles - and this almost always necessarily disassociates the involved people from the actual problems since the issues tend to be dynamic and the funding agencies tend to spend a lot of time in bureaucratic meetings. And bureaucracy, I will remind you, is designed to slow change just as a QWERTY keyboard is designed to slow your keystrokes.

A person in the area that needs help may have an idea that could help, but needs funding. A person with funding may want to help. Getting the two together seems sensible, but the bureaucracy starts getting in the way: first, defining what the money is for (which limits what can be done for reasons of accountability), how it will be administrated (and paying the administrators), decisions about milestones and related disbursements, plus the mandatory paperwork involved with all of that and more. If anything, the bureaucracy and the cost of it is probably one of the greatest challenges someone with ideas can encounter - I know first hand².

So what to do?

You'll note that during all of this, the power to change things is shifted from the people who need the change to the people who want to affect a change. The change wanted from outside may not be the change needed from inside. Things might be cut out due to financial constraints that would otherwise be important. But have no fear, if you can write a finite document applying for funding - a specialty occupation these days - you can probably get funding and maintain a level of employment despite not actually changing anything.

Again - so what to do?

The answer really is, was, and always will be with the people who need the change. Some organizations have clued in on this, but then screw it up by inserting their bureaucracy between the people who need and the tools of change. At no point are the people who innovate around these platforms of bureaucracy acknowledged - and there are quite a few.

And what is the difference? Less is more. The less you have, the more mental space you have to innovate with and find solutions to problems. Brick walls are not torn down by bureaucracy; they are reinforced by bureaucracy. And who says you have to tear down the brick walls? Why not... go around them?

While funding agencies and philanthropists put their emblems on projects, there is much that can be done to route around them and make things work. The developed world did not fund innovation through philanthropy and funding agencies all the time. A lot of recent development has been funded by venture capitalists who basically gamble. But the innovation happens before the venture capitalists show up, usually - and that innovation, by itself, might be done within the means available.

There is also the question about whether philanthropy, funding agencies, governments and venture capitalist culture creating a bubble of expectations that is not tied to reality - something that almost seems to tie the whole thing together. In doing that, people might be encouraged to believe that funding from such agencies is necessary.

There's a saying that where there is a will, there is a way. Tightening a few belts might go a long way in assuring development, innovation and creation - but how many people are actually willing to do things the hard way when it seems, on the surface, that it is easier to hire someone to write a document to get funding so that money falls from the bureaucracy like scheduled manna?

If you look to the innovators, to the people who create and, more importantly, adapt - the defining characteristic is making things work. So why can't that be applied to funding itself, where one works within the means available instead of using precious time and energy dancing with people with money?

Why not... do something, and capitalizing on it, and... moving forward that way? Have we lost our character? Has the funding come at the cost of the character of people? The 'Can Do' attitude?

I don't know where I heard it first, but this resonates: "Quit telling me what we can't do. Tell me what we can do."

A return to that sort of thinking would be refreshing.

¹ Odd how in The Lexus and the Olive Tree: Understanding Globalization and The World Is Flat 3.0: A Brief History of the Twenty-first Century Friedman talks about the tearing down of walls, but is very nationalist in the title of Hot, Flat, and Crowded: Why We Need a Green Revolution--and How It Can Renew America - isn't it?

² Since I'm not affiliated with an NGO and also because of a mistake in geography, funding agencies aren't very interested in my ideas. The mistake of geography? The Caribbean is not a part of Africa. Solution? Move the islands off the coast of Africa... Laugh.