A Guidebook for Managing Telecentre Networks/Financial Sustainability for Telecentre Networks

Financial Sustainability for Telecentre Networks
Aminata Maiga (AFRIKLINKS, Mali)

This chapter identifies resource challenges, business models for telecentre networks and discusses ways for networks to undertake resource mobilization programs. Since the first telecentres were established in the early 1980s, a number of different models have emerged around the world. The models often take varied management approaches, technologies, connectivity options, and services. Yet no single telecentre model has so far proved inherently superior in terms of ensuring financial sustainability. Issues underlying financial sustainability of telecentre networks have been mostly similar to those of the network members – i.e. the telecentres themselves. The difference however, is that as a network, there is more potential for finding working solutions.

The Financial Picture for Telecentre Networks
The telecentres of today and of the future are increasingly networked telecentres. The impact of telecentre networks has been significant in terms of providing quality support to telecentres, strengthening their mission of delivering ICT training and services to rural and marginalised urban communities, and in bridging the digital divide (or specific digital divides, such as urban-rural).

Telecentre networks function well if they have a heart – a core team of people – that champion the exchange of ideas, propose projects, ensure lessons are documented, make connections with potential partners and oversee long-term planning. It does not matter whether a network is virtual or physical. But there is only so much that a core team can do if it does not have the financial resources needed for the tasks at hand. Ultimately, a lack of resources often results in frustration and undermines the spirit of the network. In fact, the collapse of many telecentre networks has been attributed to lack of financial resources.

Before entering into the relevant aspects of financial sustainability for telecentre networks, we will start by quickly identifying other dimensions of TCN sustainability, besides the financial one, which have an effect on overall sustainability. The remainder of the chapter focuses on financial sustainability:


 * Social sustainability – This may be the most influential dimension of the various types of sustainability, since it is driven by demand of its members. As Fillip and Foote say “sustaining a network is first and foremost about providing value to the telecentre managers who belong” (2007, p. 151).
 * Institutional Sustainability – It is beneficial to increase the scale of telecentre networks through partnerships with other telecentres, and with sectors including government, the private sector, academia, and civil society. By involving an extended set of organizations, responsibilities and costs are shared, collective commitment is increased, and risks are reduced.
 * Technological sustainability – Telecentre networks require good access to the proper technologies and skilled technicians needed to provide adequate services to the member telecentres.

Box 5.1 Achieving institutional sustainability: the Brazil Community program

The project Brazil Community (www.ec-corp.com.br/midia/2002/nov/cam_comunidade.htm) was created in 2002 with the purpose of creating so-called ‘Community Rooms’ that have internet access in the whole country. It put in motion an interesting public-private partnership model in telecentre-related initiatives.

The partnerships model was based on a union between the Brazilian government, civil society organizations and the business sector. In so doing, it gained the commitment of a diverse set of partners, each with different contributions and responsibilities:


 * Intel (www.intel.com) donated equipment for the telecentre;
 * Microsoft(www.microsoft.com) provided licensed software;
 * Web-Class (www.webaula.com.br) offered the technology for a distance education program;
 * Planner (www.plannermob.com.br) provided Marketing Intelligence Service tools;
 * Caixa Econômica Federal (CEF) (www.caixa.gov.br) provided some of the funding;
 * The Federal Data Processing Service (SERPRO) (www.serpro.gov.br), committed to giving technological support to telecentres;
 * Câmara Brasileira de Comércio Eletrônico (www.camara-e.net) provided a little funding and e-commerce technology;
 * An e-consulting business (www.ec-corp.com.br)created the web portal www.comunidade-brasil.net;
 * The NGO Moradia e Cidadania (www.moradiaecidadania.org.br), supported local workers;
 * The NGO Sampa.org (www.sampa.org), provided telecentre management training; and
 * Brasil Telecom (www.brasiltelecom.com.br) offered free internet access.

Financial challenges for telecentre networks
Telecentre networks face various types of challenges while trying to achieve financial sustainability, as listed below:


 * Low financial diversification : Many telecentres and telecentre networks, in their initial stages, are funded 100% by donors, and later experience a reduction in this funding. This generates a high level of risk if key donors withdraw their support.
 * Restrictions on the use of funding : Some grants include restrictions that inhibit a telecentre network’s ability to grow and develop independently. That is, some grants may only be provided to carry out specific activities or hire particular staff for the duration of a project. Moreover, there are usually no provisions for subsequent funding. It is important to limit expectations to the explicit terms of an agreement.
 * Lack of funding for non-project work : It is often hard to secure funding for advocacy and institutional strengthening activities. For example, in many countries, the benefits that telecentres and ICT4D activities may bring to communities need to be more widely and publicly communicated, since these tasks figure under ‘soft’ operations, and are therefore hard to finance outright.
 * Proposal-related hassle : There are often difficulties related to the preparation and presentation or follow-up of funding proposals. Each donor organization requires the submission of proposals in a particular format; and naturally, each donor targets specific interests. In this way, the preparation of multiple proposals often becomes too time consuming for TCNs with limited capacity (with respect to technical and human resources).
 * Project-only funding : Funds are often limited to short-term projects that are financed by a handful of donors (such as national governments and international agencies), compared to a lack of funding for projects supporting overall organizational development or projects with a broader social impact.

Bearing these challenges in mind, it must also be understood that if many telecentres in a network are not sustainable themselves, then it is difficult for the network to be sustainable as a whole. Therefore, apart from supporting telecentres individually, telecentre networks also have a vested interest in contributing to their financial stability.

Planning for financial sustainability
Effective financial sustainability starts with a clear strategic plan: a long-term perspective of what the network is about and what it plans to do. This strategy should outline network objectives, priorities, resources required, and a means to track performance and resource levels. Each of these aspects is discussed in detail in other chapters of this guidebook, where this chapter focuses mainly on locating resources for the implementation stage of a telecentre network.

A telecentre network strategic plan may include obtaining resources from internal and external sources. Internal financial resources may include:


 * Membership fees – Who pays, and how much, are questions that should be carefully thought out. Collecting membership fees requires transparency, accountability and ample reporting on the part of the network leadership. Otherwise, fees can become a source of network instability.
 * Consultancy services – Networks can provide technical services for a fee to their telecentre members, governments, private or civil society organizations. In several countries around the world, telecentre networks are leaders in universal access issues and enjoy good access to communities, which makes them valuable project partners. For instance, UgaBYTES in Uganda provides technical maintenance support to telecentres at a discounted fee.
 * Sale of products – This may include discounted software, hardware, training programs or telecentre supplies. Products that are connected to the core business of a telecentre network may be the most feasible to sell since they may not require the development of new skills.

Box 5.2 Growing the market for telecentres: Cooking school (and other services)

''“I had a chat with Mohamed (Afriklinks) yesterday – kind of trying to digest the focus of eight telecentres that were launched early this month by government of Algeria which provides 100% support. This program is supported by InWent (Germany). They visited a telecentre in Djelfa, Algeria almost 300 km from the capital.''

''The catch for me, these telecentres provide certified training in cookery and adult literacy in addition to your usual telecentre style services. I think that is really revolutionary. This is why; if rural communities where most telecentres are located are largely illiterate and therefore unable to effectively use most services, how will a telecentre helps to address that problem and therefore drive more use?''

''You have probably heard of telecoms and other private companies spending time and energy to grow the market…working with young people and investing in schools (tomorrow’s market). How can a telecentre grow its future market? Well, adult literacy training is one great way to do just that ”.''

This blog post has been drawn from:

www.digitaldivide.net/blog/Meddie/view?PostID=27668

Resource mobilization from external sources
There are many resource mobilization opportunities from external network sources. Perhaps this is an area within which telecentre networks have focused significantly, but still not enough. The foundation of a good external resources mobilization plan is based on a strong awareness of what a network can do well, knowledge of its internal capacities (to offer as services to other organizations) and a recognition of the organizations that might be interested in working with the network. This implies an objective partnership analysis, and one that requires regular updates.

One way for telecentre networks to raise external resources is to directly cover operational overheads. This may mean getting another organization to pay for the salary of key network staff member(s) or paying for the internet connectivity. The network, in this instance, does not have to receive the money directly.

Telecentre networks can also mobilize external resources through endorsements. When a network can demonstrate its network value in terms of quantity, it is possible to use it to endorse products and services in return for economic value. Some telecentre networks such as the Brazilian Telecentre Information and Business Association (ATN) have developed a highly regarded public reputation so that private sector companies and local governments may even provide funding just in order to be associated with the network brand. Clearly, network value can be highly valuable if it is properly communicated and marketed.

One of the most significant ways to generate resources externally is for a telecentre network to act as a distribution channel of content and services. This implies working with private sector companies, civil society organizations and governments to distribute, implement, test and demonstrate products or services. TCNs can obtain significant resources this way. It gives networks an opportunity to expand the range of products and services they offer beyond the traditional ICT-related ones. And it places TCNs as significant actors in public-private partnerships.

Telecentre networks with the capacity and processes in place to act as distribution channels can work together with international partners such as UN agencies, multinational corporations with corporate social responsibility programs and universities. They can work either from the demand side, such as bringing online university courses to telecentre users. And they could also work the supply-side, such as offering project collaboration opportunities for a UN agency at the telecentre/community level. For instance, the partnership between the Brazilian Telecentre Information and Business Association (ATN) and Microsoft will provide 40,000 Windows XP/Office Package licenses for telecentres. Another benefit from this partnership is the email service hosted and operated by Microsoft in the platform Windows Live Custom Domains.

ATN provides another interesting example of helping telecentres’ financial needs with respect to university education. Through a partnership with the Metropolitan University of Santos (Unimes), telecentres are able to offer graduate and post-graduate courses accredited by Brazil’s Ministry of Education. Through this program, students attend classes once a week in the telecentres which are given by teachers from the university. Throughout the week, students can use any computer and other telecentre services they may need. By the end of the course, students receive an accredited degree while the telecentre receives 20% of each student’s monthly payment.

Perhaps the most frequent approach taken presently by telecentre networks is to raise external funds is via direct project funding. However, this is also the most unreliable of all sources. External funding may come from national or foreign donors. It is common for industrialized countries such as Canada, Finland, Australia or Spain to provide telecentre services for free to individual users in their territory. The Government of Western Australia, for example, gives recurrent support to most of an estimated 150 telecentres via its well-established WA Telecentre Network and makes use of the distributed potential discussed in the previous section to provide a range of educational and government services to the local communities served. This implies that the Western Australia Government considers its financial support to be an investment and not a simple ‘donation’.

Less developed countries that try to follow this type of highly subsidized project funding for telecentre development may find it to be financially unsustainable. It may lead to an abrupt stop in funding, or limit the extent and reach of telecentre programming. But this makes an even stronger selling point for supporting telecentre networks: if, as a government, you cannot maintain individual telecentres, at least try to strongly support telecentre networks that will work to stabilize the situation of the individual telecentres.

In the Philippines and Brazil, as in Australia and Spain, some telecentre networks are run by government organizations where workers and operational fees are paid for by the government. In Mali, the government wants to establish telecentres called ‘Community Access Points’ (CAPs) in all 703 communes, and to provide support for them (at least initially). The existing telecentre network in Mali, called FETEMA, is lobbying the government to demonstrate the advantages of networking and to send the message that FETEMA has the required expertise to support telecentres – and can probably do it more effectively and efficiently than government officials with lesser expertise and who are busy with other issues. This is a proper way to seek official support for a telecentre network, in promoting a partnership with a government department.

Social enterprises and telecentre networks
Telecentre networks can turn to the ‘social enterprise’ concept for effectively and efficiently complying with its essentially social objective (i.e. to support its member telecentres), as a logical extension of the social enterprise models exhibited by individual telecentres. This model can be applied to income-generating activities to supplement existing program funding and individual telecentre contributions.

The term ‘social enterprise’ refers to any entrepreneurial activity that generates revenue for an organization (that is, the ‘enterprise’) while at the same time helping to achieve social objectives. A network that ‘sells’ market information to telecentres to strengthen their services in the community and allows them to generate revenues is operating as a social enterprise. A different example could relate to a national NGO that wishes to disseminate good practices and training about family planning but that finds it difficult to reach municipal areas - the national telecentre network could then negotiate a fee with the NGO to send the relevant content to its telecentres, and thus provide the information to the NGO’s target audience in effective manner.

A social enterprise model for a telecentre network can bring a series of potential benefits such as:
 * Increased and diversified income resulting from a social enterprise’s ‘profitability’, which helps to reduce dependence on uncertain funding sources;
 * Greater flexibility because, unlike grant funding, a social enterprise’s income is not restricted to a specific use, thereby allowing networks to use the funds in ways that best meet their organizational needs;
 * Improved overall organizational performance as the proper financial and managerial discipline required for running a successful social enterprise will improve the network’s organizational efficiency and planning skills;
 * A positive impression on donors as they may appreciate that the telecentre network is being proactive in generating its own resources;
 * Increased visibility and network self-confidence: marketing for social enterprise purposes can reach new audiences for the network, making the same the network leaders and staff realise that they have the ability to generate income on their own.

A telecentre network can manage more than one social enterprise, depending on its size (or, to be more precise, its management capacity). It also depends on the level of demand from telecentres or other clients (such as government entities or businesses) for delivering value-added services such as health content, tax information, delivery of official forms, and so on. While social enterprise models may bring significant benefits for telecentre networks, network managers should be aware of potential limitations. Managing a social enterprise of any type is not easy, and it may run against local economic or business cultures. Social enterprises also require a certain level of financial stability and expertise that not all telecentre networks have, and therefore they must be professionally managed. Furthermore, there is no direct recipe for success. Rather, each social enterprise model should be tailored to each particular telecentre network’s mission, and level of capacity, expertise, and technical skills.

According to Loïc Comolli, a social enterprise is not a way to get ‘quick money’ because it requires a long-term financial strategy and it may take several years before a financial return is realised (2008). In addition, as with any kind of business, a social enterprise is vulnerable to socio-economic conditions and market fluctuations, and if it not well managed it can place the network’s reputation and financial integrity at risk. A social enterprise’s activities may also cause a variety of internal organizational and cultural dilemmas as well as ideological conflicts with the core mission of the TCN.

Types of social enterprise models for telecentre networks
There is a range of possible social enterprise elements or activities that can be appropriate for telecentre networks. Some are closely related to the network's mission to strengthen telecentres, while others may be unrelated to the network's core missions and thus have a more limited – or even nonexistent – direct social impact. We take a look now at some of the various types, with tendencies ranging from lower to higher profit generation.

What will emerge from this quick examination of social enterprise aspects in telecentre networks is an apparent trade-off between network mission impact and impending profit levels. In general, the less related the social enterprise is from the telecentre network mission, the lower the resulting ‘impact’ of the activities in achieving network goals, but the higher the expected profit. Working on activities unrelated to the network mission may prove risky to the TCN, because the market and product is less familiar. In any case, the primary goal of non-mission related social enterprises would be to generate enough revenues to either cover operational costs (what is commonly referred to as 'overhead') of the telecentre network and/or support specific projects.


 * Implementing telecentre network program activities and providing services specified in the telecentre network’s charter without charging any fees from members : For example, a TCN may provide IT support to telecentres which strengthens a telecentre’s capacities, but additional funding is still required from other sources to pay staff members. The social impact of this kind of activity is high (telecentres cannot operate without staff) but the network relies 100% on grants and subsidies. Generally this kind of telecentre network is not seen as a social enterprise but rather as a type of NGO unless they use their social enterprise label to access funding as a regular component of their income generation strategy.
 * Using a partial cost-recovery goal, covering a percentage of their existing program costs through fees . This implies that the remaining costs would have to be covered by grants or donations. For example, the TCN may charge fees for providing IT support to telecentres. This helps to increase the prospects of sustainability of the program by reducing the amount of grant funding needed.
 * Offering new services to existing clients (such as telecentres) . For example, they can sell ICT course curriculum to telecentres to offer higher quality training to community members. This type of social enterprise has a high mission impact, i.e. it aims at the core purpose of the organization, its mission, and is funded by cost-recovery. It can either allow for these tasks to be performed on a break-even basis or may even have a potential to create a financial profit.
 * Offering extended program activities to new paying clients . For example, a telecentre network may charge fees for IT support for local schools or NGOs for a small profit.
 * Providing completely new products or services to new paying clients . For example, a telecentre network social enterprise that sells refurbished PCs to non-profit organizations and to the general public is not directly related to the network missiong since it does not directly involve the strengthening of telecentres; not in the service delivery, nor in the sharing of revenues from the enterprise. The overall goal is to make a profit that subsidizes the telecentre network's core activities and organizational development.

Since telecentre networks support and interact with a large number of telecentres (sometimes numbering in the hundreds or even thousands), the type of social enterprise that strikes a better balance may be one that provides new product or services to the existing clients (that is, member telecentres). At any rate, a rigorous analysis of TCN objectives, telecentre needs, revenue streams and resource mobilization possibilities is always required. The most appealing scenario, in most cases, is one where both networks and telecentres generate some revenue, offering products and services that are useful to the communities.

The Rural Center of Digital Inclusion (CRID) (www.multimeios.ufc.br) based at the Federal University of Clara (www.ufc.br) presents an interesting example of a social enterprise within a telecentre network. A project they run helps to mobilize the community to become acquainted with the process of digital culture, as a road towards ‘knowledge transformations’. As stakeholders in a public-private partnership scheme, the project involves rural communities in managing the telecentres, which offer services in digital inclusion, educational informatics, distance courses and telecommunications in a context of social, personal, economic and cultural empowerment. The telecentres are well-managed, the communities are empowered, and useful services are provided to the users of the telecentres.

Case Study - A Project Partnership with Malian Telecentres
“Building the capacities of young girls/women who are school drop-outs through Malian Telecentres: A partnership between Afriklinks, Microsoft CTSP and FETEMA”

Background
Telecentres in Mali do not typically receive subsidies from initial funding partners to support operating costs. Among the various types of telecentres that exist, only those known as Community Learning and Information Centers (or Clicks) ever received direct subsidies, which ended in March 2005. The role of Afriklinks and its partners is to support these individual telecentres to achieve a higher level of sustainability (including within the network itself).

With the support of telecentre.org, in addition to technical support from Afriklinks, the Federation des Telecentres du Mali (FETEMA) was created in 2006. However, FETEMA needed additional funds to become operational as an independent entity. Most of its funding was originally supposed to come from network members. But annual subscription fees were not allowed to cover network activities, and Afriklinks’ staff in Bamako constituted the de-facto permanent secretariat of FETEMA, essentially providing free human resources for the federation. In order to mobilize resources, therefore, FETEMA carried out many formal and informal meetings with potential partners. This case study is the result of one of those meetings.

The project
This project process started in Benin during the African Telecentre Leaders’ Forum that was held at Centre Songhai, in December 2007, where the Afriklinks team met with Microsoft representatives. We learned that Microsoft can fund community based ICT projects, and we knew that the person dedicated to Mali-based projects was based in Senegal. After initial contact, we learned about the eligible areas for project funding at the community level, through Microsoft’s Community Technology Skills Program (CTSP) initiative.

In Mali, many young girls drop out of school because they marry or have children at a young age. The majority of these girls do not have access to any ‘professional’ training of any kind, due to their poverty level, or for cultural reasons (for example, their husbands are not willing to pay to send them to another locality in order to attend courses). These young women therefore stay home to take care of domestic chores, and have little to aspire to besides raising a family.

There emerged an opportunity to develop a project to provide these young women with ICT skills. The project covered their training fees, which in turn could help them make a new start. They were given the chance to improve their lives (if allowed the possibility to apply for jobs or manage a personal activity at the local level), while having access to useful information in telecentres which enabled them to better care for themselves and their families.

How it was designed
We submitted a proposal online at the Microsoft Unlimited potential website in June 2007. Two months later, we received an invitation to participate in a workshop organised by Microsoft in Senegal as a potential partners. The cost of travel (about USD $1,500) needed to be covered by the invited organizations, and Afriklinks invested in the project and sent one delegate to this workshop. There were meetings with Microsoft to clarify doubts and answer questions about the project, and one month later (in October 2007) the proposal was selected. The grant was for USD $50,000, which allowed for approximately 200 young girls/women to be trained through the community telecentres.

We opened a bid for FETEMA’s members to apply to be project partners to help with the execution of the project. FETEMA members were informed through the federation website and the distribution list about the project, including eligibility criteria. Twelve telecentres were chosen according to the manager’s level of technical capacity, as well as the availability of adequate equipment. We used communication via the local community radio over a two-week period to broadcast project information and beneficiary criteria in French and in at least one local language. A national press conference was held to formally present the project and the locations of the chosen telecentres.

Project outcomes
After the first year of implementation, 42 young girls out of the total 200 involved in the project got a job in their communities. The remaining girls were either hoping to open their own local cybercafés, or to continue studying to obtain a professional diploma.

The project budget covered the telecentres’ training costs, and it provided FETEMA with some core funding (approximately 5% of the total funds). All telecentres involved in the project agreed to share their resources between them.

We see this activity as a social enterprise that permitted young girls/women at the local community level to develop ICT skills, bringing some revenue to individual telecentres, and also to the network as a franchise fee.

In 2008, Afriklinks presented another proposal to Microsoft to help young girls create their own businesses. If approved, the project will receive USD $50,000 to be implemented in February 2009. The project would allow for ten new telecentres to be created by Afriklinks using refurbished computers, to be managed by some of the newly trained girls in their communities. FETEMA will order the refurbished computers and re-sell them to telecentres that need to improve their technical equipment, getting some revenue in the process.

Lessons learned
Accountability and regular reporting to donors and partners are a crucial part of the fundraising process.
 * The rather new FETEMA executive board, whose members are fully employed within the telecentres or their hosting institutions, did not have the capacity to write effective proposals at the time of application. It is therefore recommendable for the FETEMA telecentre network to initiate training sessions on fundraising for its members. The
 * Afriklinks team had the capacity to submit the proposal due to support from telecentre.org and USAID, otherwise it would have been very difficult to conduct the process.
 * Access to some initial funds is critical to begin network activities: the network needs to be able to hire people who competent in communication and fundraising activities.
 * The project was one of ‘learning by doing’ for both the telecentre network and the selected telecentres involved.

Quick Tips for Financial Sustainability

 * Dependence on only one source of financing should be avoided, even if it provides significant funding or if it appears stable: the situation can change from one day to the next.
 * It is (operationally) necessary to plan for the short term, called annual action plans. It is also (strategically) necessary to have long-term strategies and planning (that is, planning at least five years ahead).
 * Financial sustainability for telecentres or for telecentre networks does not guarantee overall sustainability: other dimensions like social, institutional and technological sustainability are important as well.
 * Content and services from individual telecentres can be combined into a network-wide catalogue of content and services, to respond to the needs of telecentres users all around the network.
 * A telecentre network can help telecentres to expand their range of products and services beyond the traditional ICT-related ones, such as ICT technical support and training, to include health, e-government, and educational related products and services, for example.
 * Using a proper distribution strategy, a telecentre network can offer products and services that come from national and international entities.
 * Building the capacity of individual telecentres to formulate good project proposals (including the provision of helpful materials like proposal templates) is a practical way to help the overall sustainability of the network by contributing to individual telecentre sustainability.
 * It may prove useful to provide incentives for telecentres to keep financially contributing to the network, for example, by inviting only those telecentres to events who are consistently paying their fees.
 * If a government is going to set up a telecentre program, or if it already supports telecentre programs, one of its central ‘smart’ investments should be in telecentre networks.
 * It should never be assumed that project funding will be extended beyond the life of a given project. Therefore, any related measures for extended financing or in seeking additional project phases should be timely and taken accordingly. For example, networks can negotiate with the donor early on, arrange for project evaluations, become familiar with the donor’s calendar, prepare new projects, etc.).
 * Non-financial resource contributions such as expertise and human and technological resources can contribute powerfully to sustainability needs (including the financial sustainability).
 * Social enterprise business models can be appropriate for telecentre networks, just as they are for individual telecentres. But they require a relatively strong level of institutional capacity to succeed.
 * The closer a social enterprise is to the telecentre’s overall mission of strengthening telecentres, the higher its potential impact.

References and Resources
Comolli, L. (2008). Increasing Telecentre Network Sustainability through Social Enterprise. Telecentre Magazine, 2:4, pp. 18–22.