Posts Tagged ‘Organization’

What kind of institution do we want to be?

Tuesday, December 8th, 2009

Apparently, everyone wants to be a nonprofit these days.

As this New York Times article describes, the broad and elastic definition of a 501(c)(3) tax-exempt organization has allowed the Internal Revenue Service to approve 99% of applications last year.  (And I had been so proud of our tax-exempt status!)  The new nonprofits include the Woohoo Sistahs, a social club that raises money for cancer research and other causes, and the Red Nose Institute, an organization that sends red clown noses to American troops serving abroad.  The proliferation of nonprofit organizations has a real impact on the country — each donation to a tax-exempt organization represents a loss in tax revenue to a government struggling to pay for two wars, healthcare reform, and economic stimulus.

As we’ve noted before, it’s not enough to offer services for free or to have no revenues.  Most people think “nonprofit” must “do good,” but that’s not a very useful definition.  There are lots of for-profit businesses that “do good,” as well as plenty of inefficient nonprofits that “do good” very badly (and I’m not even counting the fraudulent nonprofits that “do bad”).  “Nonprofit” can’t be defined by “no profits” either.  Many businesses aren’t profitable for years, and as this article by the same writer suggests, how is a poor, revenue-less alternative energy organization that hopes to eventually sell the technologies it develops different from Apple or Microsoft in their start-up stages?

So we know that in building our reputation as a trustworthy organization, it’s not enough just to declare, “Trust us, we’re a nonprofit!”  We really really care about what kind of organization, what kind of institution we’re going to be.  We’ve talked previously about how we decided to incorporate as a nonprofit, but now, it’s time to talk about other organizational models and ideas we want to learn from, whether or not they’re nonprofits.

As we study these institutions and how they work, we hope both to be able to better explain to others what we want to be (“We’re like a ____ for data!”) and to better understand ourselves what we need to do to get there.  Over the next couple of posts, we’re going to share some of our ideas, and we hope you’ll test us vigorously.


A. We want to be a bank for personal information, so you don’t have to put your personal information under your mattress.

We put our money in the bank for a number of reasons.  It’s safer than putting it under our mattresses, and at least up to FDIC limits, we know we won’t lose it.  It’s more convenient than carrying around wads of cash—remember what it was like to travel abroad before you could use foreign ATMs?  There are services banks provide, like interest, checkbooks, debit cards, and more.  And whether or not it’s a motivating force for individual account holders, banks make the economy run because funds are more easily moved around.

We want putting data into a datatrust to feel as easy, secure, and normal as putting money in the bank.  Although personal information is not like money, we think that the datatrust could do a lot of what a bank does for its account holders.  Account holders would have the ability to control how their information is shared.  They would know what is in the datatrust, as easily as we can check now online how much is in our bank account.  Although they may not get interest in a monetary sense, they would gain access to the information of others in the datatrust, once properly aggregated and secured.  Information would flow more easily when it becomes something that can be controlled.

One thing we want to avoid though is the conflict of interest that can arise when banks make decisions to enrich their shareholders rather than to benefit their account holders.  Which brings us to the next section.

B. We want to be a credit union for personal information, where the goal is to serve members, not a third party that pays the bills.

Credit unions are not as widespread as banks, and so are not as convenient in that your workplace credit union will not have ATMs across the country.  However, credit unions serve many of the same functions as banks but through an inherently different structure.

Credit unions are member-owned and member-governed organizations.  The credit union’s board consists of volunteers elected by the credit union’s members.  Credit unions generally offer better rates and lower fees than conventional banks.  Because credit unions are meant to serve its members, people tend to trust credit unions more than banks.

Although the Common Data Project is not strictly a member-based 501(c)(3), we’re interested in the member-based structure of credit unions.  We certainly want those who donate data to the datatrust to feel like the datatrust exists in their interest and that they are part of a community, even if that community is not limited to a preexisting defined group the way credit union membership is limited.  We’re exploring ways for individuals donating data to the datatrust to be involved in governing the datatrust on multiple levels.

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