Successful funding of a not-for-profit is always difficult. This process is called “resource development” and successful not-for-profits always have a designated resource developer whether this is a volunteer or a professional employee. Larger not-for-profits devote significant resources to this process and always have a highly compensated director of resource development and may have an entire staff of fund raisers and grant writers.. Without funding the not-for-profit cannot survive and cannot complete its mission.
Fund Raising
Basic expenses including rent, utilities and employee payroll are on-going expenses and are typically shown as line items in a Profit and Loss P&L statement. Of course in a not-for-profit the “Profit” is referred to as revenue in the same fashion that an account would. Many nonprofits use accrual based accounting because the funding is received well before expenses are incurred. Grants are intended for single one time only purchases such as purchasing a large piece of equipment, a building or to start a completely new branch of nonprofit work. Grants are always restricted and are rarely allowed to be used for ongoing monthly expenses and payroll. These ongoing expenses have to be covered through private donations and nonprofits are always doing fund raising campaigns to cover these expenses. That’s why every Christmas the US based Salvation Army always has volunteers out ringing their bells and collecting change in front of grocery stores. This is how the Salvation Army pays the professional staff that run the organization.
As an organization we have been trying to develop a way of receiving fund raising methods. I have recently received requests to help with fund raising from a small group of individuals who i hope to form into a team of fund raisers. If you are interested in volunteering for this purpose please contact me. Fortunately the ongoing expenses of the organization have been relatively small (internet access) and have been covered privately by a benefactor. The web server was paid for through a small grant through the generosity of Hickory Springs Corporation in Hickory, North Carolina ( http://www.hickorysprings.com ). Currently all private donations are being saved to help pay for ONC Certification for OpenEMR. I would also like to see a professional employee begin helping with this process though I don’t think we can cover a salary at this point.
During poor economic times private donations are much harder to obtain because they are dependent on discretionary income. Many nonprofits fail during economic recessions.
Grant Writing
Grant writing is notoriously difficult. To be successful you have to have a skillful writer who has a certain “gift-of-gab” that can lay on the correct adjectives and buzz words that strike the correct chords in the funders mind. Adding to the difficulty grants are incredible competitive. Literally thousands of nonprofits are pelting the the funding organizations staff with requests for money. Many of these are inappropriate requests for funds to pay ongoing operational expense. The initial funding request is usually made in a small text box online or in a 1-2 page letter. You have to have the skill to communicate to the funding organization that you are an appropriate organization to help the funder accomplish their mission. The funding organization then usually requests a more formal grant application. The larger the amount of the grant and the larger the funding organization the more restrictions that are placed on the requested funds. Large grants from large organizations are only granted usually to create a new project that no one else has done before. To do this we have to show how we are unique and creating something new that has never been done before. Finally, grants are inherently not sure things. No matter how good your concept, no matter how well your objective lines up with the objective of the funder, you can still get turned for very seemingly capricious problems. Not having the appropriate margins on the grant itself. Not being able to get the idea across in a text box that only allows 5,000 characters (including spaces). Simply not having enough experience with large grants. Being successful at the grant business is kind of like the credit game here in the United States. To get great credit you have to build up a history of responsible spending and payments. The best credit scores come from having very high cash to borrowing ratios. You have to start small with a very small charge card at the local department store and work your way up. Grant writing works the same way. You have to start small and slowly work your way to show a history of responsible spending. The organization is required to generate timely reports to prove that it is spending the grant money responsibly. Booking for each grant has to be kept separate with might be called a spend down list. Each dollar has to accounted for separately.
The Benefactor
Lucky is the non-profit that has a wealthy benefactor that wants to help the nonprofit establish its goals. Mana starts dropping from heaven. These relationships have their own problems and costs. The benefactor could get sick and die, run out of money, or be very capricious in their personality. Most universities raise a substantial amount of money in this fashion. The president of the university spends substantial amount of time have lunch with well-to-do alumni. All the time building a relationship of trust. After years of hearing whatever the alumnus is complaining about, the president finally asks for money. Not a little bit of money but many millions of dollars. The president does this with dozens of alumni at the same time. The next thing you know up goes a new business school for the university.
The Public Private Partnership
When you talk to the leaders of successful nonprofits all three of these traditional money raising methods are difficult and somewhat problematic. None of them are easy and they are all prone to sporadic, unpredictable failure. Like any other business, sudden failure of the cash flow stream usually sinks the nonprofit. This has led to the concept of the Public-Private-Partnership (PPP). I first learned of the concept of the PPP from my friend Forrest Toms around 2005. Forrest has been involved in running and managing nonprofits, consulting with nonprofit hospitals, both local and international governmental organizations. The idea is that the nonprofit should seek out one or more successful businesses that have a common interest or need. The non-profit uses donations and grant money to purchase services from the business. The business in return performs a service for the nonprofit usually at a reduced or discounted rate. The business also makes tax exempt cash donations to the nonprofit which are used to pay for operational expenses. This helps both entities. The nonprofit gets services at a reduced rate and cash donations to pay for ongoing expenses and salaries. The private company gets a steady stream of business contracts that makes it healthier. A few Google searches reveal that there are literally tens of thousands of these public-private-partnership in the United States including PPPs that are run by the Federal Government: http://ppp.od.nih.gov/pppinfo/foundation.asp and also large private foundations that create relationships between various entities: http://nationaldevelopmentcouncil.org/blog/?p=1412 .
Over the past few years I have struck by how many times I have come across these relationships. A typical example is In my home town we have a not-for-profit hospital that has a 501(c)(3) tax exempt Foundation. The Foundation collects donations and writes grants to the tune of $2,000,000 a year. When indigent patients arrive at the hospital, the Foundation pays for the nonprofit for the health health care. About a year ago I started a program for uninsured patients at my office where we provide healthcare for a flat monthly fee of $45 per person per month. I went to this nonprofit hospital and offered to pay the hospital the Medicare per diem for our area for these uninsured patients ($1,800 a day) the hospital turned the offer down. The stated reason was that the hospital makes close to the Blue Cross Blue Shield reimbursement rate from the 501(c)(3) Foundation for the care of indigent patients. The hospital is very successful and is always building and adding something new to their campus even in the middle of a severe recession.
What does this mean to us?
The OpenEMR project has always depended on the donations of software from individual developers and the donations of time that they put in on the forums. It has been a while since I polled the most active developers as to how much time and how much software they donate to the project. I think the last time I did this was 2008 at which point we were receiving about $800,000 a year in donated software and volunteer time. I would suspect that this has probable doubled in the last two years. In exchange for this the project gives away free copies of software by anonymous download. If we attach a fair market value of $35,000 per copy project has given away $1.2 Billion dollars of software in the last 12 months. We get downloads from 170 different countries and are especially popular in the US, India, Nepal.
The problem is that the current development method depends on a private individual or clinic who requests an enhancement of OpenEMR which is then produced by a private developer. OpenEMR is “easy to use”, is rich in features features, and has a functional-utilitarian appearing user interface. But nothing has been done to the inner workings of OpenEMR. The database development is a mess. It has a GUI that “only a mother could love.” This “feature” development is very typical of how MS developed their software. Pretty, glitsy, lots of features, very poor security on the inside. But users weren’t concerned with security, after all “who would attack my computer”. This development model led to a staggering industry of virus coders that has been a plague on all of us.
The other problem with the typical OpenEMR development method is that inside OpenEMR is somewhat like a 17 or early 18th century watch. Every part inside is meticulously hand constructed and exquisitely have fitted. Only the wealthy can make modifications to the watch and Lord help you if the watch maker moves away, retires or dies. Only the original watchmaker knows the intricacies of that watch to be able to make repairs. What happens if the original watchmaker doubles his rates? Well you just have to pay up or live with a broken watch. What happens if the watchmaker gets offended? I guess you might offer 4 times as much money and hope you get lucky. The only way to get around this problem is to modernize the watch. There are two main ways to do this. One way is to plan an orderly change from the old hand-fitted parts and convert them to more modern interchangeable mass produced parts. The other way is to scrap the old thing, hang it on the shelf and start over from scratch with mass produced modern parts. Now choosing between the first way and the second way will likely set off ideological wars and perhaps cause online “e-shouting.” Either way, it has to eventually happen to make further progress.
Our problem is that individual paying clients will never, ever pay for this type of transition. To do so there needs to an organization willing to do the hard stuff to make this happen. This is the real propose of organizing the two nonprofits Open Source Medical Software and the OEMR. Somebody has to be willing to pay for this change to occur. What I have been proposing more or less successfully is that the nonprofit should be in the business of raising money to effect this transformation. It also means forming public-private-partnerships with qualified vendors. The 501(c)(3) OEMR raises the money and pays the vendors to do this work. I recommend that the board use only qualified vendors and that only use vendors who are willing to cooperate. Telling the board of directors “no” or refusing to cooperate with the board means to me that the vendor should be left off the qualified vendors list. As in other public private partnerships I think that the vendors should contribute cash back to the nonprofit. Refusing to donate cash to the 501(c)(3) for the common benefit of the project also means being left off the qualified vendors list. I know this will not be accepted by all the vendors in the project and may set off more flame wars but this is the nature of how a Public Private Partnership functions. The real hard truth is that it takes cash to run this project and donated software while a critical part is not sufficient for what comes next.
Currently we have several Public-Private partnerships with small contributions coming in from MD-Online, ZMG, and Chris Lucena formerly of EHRLive.com. Ensoftek and Z&H Healthcare Solutions have made pledges of contributing part of their profit as donations back to the project.
We are looking for help with both fund raising and grant writing. Please contact me if you want to offer your assistance.
The new OEMR board has an attorney, an accountant, a banker, three software vendors, several doctors, a devloper of developers and one boatwright. The OEMR board is soliciting new board members for OEMR, especially physicians, practice administrators, fund raisers, and grant writers. If your do decide to volunteer for the board we want people who actively participate and do useful work for the nonprofit not just talk at the board meetings. Board meetings will be scheduled quarterly and are held by telephone conference. If you want to volunteer to be on this board contact Tony McCormick (tony at MI-Squared.com).
Sam Bowen, MD
