Budget narrative

BUDGET NARRATIVE (250 words)

Open&Change's budget structure follows from our choice to decentralize. It has two tiers: one supports swarm-level activities, the other supports initiative-level activities.

Swarm-level (coordination) activities are in turn divided into operations and community activities. There are three main operations activities:

  1. Matching initiatives with sandbox environments.

  2. Evaluation. Initiatives are evaluated at the end of their prototype phase and again at the end of the deployment phase. See section C for details on the initiatives cycle. The project as a whole is overseen by the steering committee.

  3. Admin.

There are three main community activities:

  1. Supporting online conversation and documentation production.

  2. Physical meetups.

  3. Communication.

Initiative-level activities vary a lot in their specifics. But all need to complete the following ones:

  • Year 1. A rapid and cheap, but teachable, prototype in a sandbox environment. Example: an initiative on peer-to-peer emergency response deploys a test bed in collaboration with Black Lives Matter in Detroit. Average cost per initiative: USD 100,000.

  • Year 2. A scaling up of the initiative, conducive to generating revenue fairly early in the project cycle. Average cost per initiative: USD 300,000.

  • Years 3-4. A consolidation phase, preliminary to O&C funding being withdrawn. Average cost per initiative: USD 400,000.

Each activity unlocks the following one. We project 150 initiatives, 50 launched in year 1 (batch 1) and 100 launched in year 2.

The following chart gives an idea of the time profile of spending.  

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TOTAL PROJECTED IMPLEMENTATION COSTS

Check this table and the previous spreadsheet that feed into it.

TOTAL RESOURCE REQUIREMENTS AND SUSTAINABILITY (200 words)

Open&Change costs under 100,000,000 USD.

Individual initiatives achieve sustainability by deploying a variety of strategies. Based on what we see in opencare, most generate revenue by selling services. Many produce low cost or peer-to-peer care services. Others have typical open source business models (open up the IPR as a platform, sell customizations and services based on that platform).

The beauty of swarm-like approaches is is the initiatives they enable tend to be self-sustaining, nimble and over time less dependent on outside energy or money. This is because the swarm doesn’t offer to fund or support them, but merely to connect and enable them. They do need a platform to connect them, but the costs of this are mainly in the set-up phase.

OTHER CONSIDERATIONS (200 words)

  • Two-tiered structure. A layer of swarm-level activities serve and connect 150 specialized initiatives into an ecosystem. The actual solution finding is in the initiatives layer, allocated 93% of the budget.

  • Flexibility. We estimate the total cost of all initiatives to be on average 800,000 USD over 4 years. Different initiatives have different needs; we negotiate with them as needed, before launch.

  • Decentralization. Initiatives make their own decisions. Oversight provided.

  • Tough checkpoints. At the end of Year 1, initiatives must have completed sandbox testing. At the end of Year 2, they must have generated some revenue. Failing a checkpoint means no further funding is unlocked.

  • Planned failure rate. We think it unrealistic that no initiative would fail. In fact, we want them to fail, to allow swarm-level learning. We weed out unpromising initiatives early, so that failure is cheap. We assume 20% of initiatives to fail each checkpoint. This means that 54 initiatives out of 150 launched will not reach completion, but will only absorb 14% of the budget.

  • Phase-in. Batch 1 is smaller than Batch 2 to allow for organizational learning.  

Budget logic fully explained here: http://bit.ly/openandchange-budget-logic

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