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Philanthropy Journal of North Carolina – Open-source fund shuts down

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By Todd Cohen

DURHAM, N.C. — The Center for the Public Domain is calling it quits two years after top executives of Red Hat, the open-source software firm, launched the charitable foundation with big plans to boost the sharing of knowledge and technology.

“Our job here is done,” said a short email message from the foundation, initially known as the Red Hat Center, which in its short life took important first steps to balance the competing demands of private ownership of intellectual property and public access to it.

But the foundation’s early exit also underscores the big challenges facing new philanthropies created by entrepreneurs. Making a difference over the long term requires patience, focus and stable funding – critical ingredients for effective philanthropy that were not part of the mix at the Center for the Public Domain.

The brevity and vagueness of the email announcing its dissolution says a lot about the foundation. Curiously, after initially saying its founders had endowed it with $30 million, the foundation was less than open about its financing, refusing at first to disclose details about its endowment.

As it turned out, the foundation was “endowed” with pledges of Red Hat stock. But the value of that stock, which surged after Red Hat was launched, plunged before the pledged shares actually were donated to the foundation.

Last year, with the foundation finally in possession of the stock, its assets were worth only $5 million.

As a result, the foundation cannot honor some grant commitments it made. In September 2000, for example, it pledged $4 million to ibiblio, a Web library launched by the University of North Carolina at Chapel Hill.

But the foundation actually gave only $2 million to ibiblio.

The foundation also was too quick on the draw in mapping its course.

After asking for a meeting with U.S. Sen. John Edwards of North Carolina, for example, foundation officials showed up at the meeting with no specific agenda or proposal.

No less foggy was the foundation’s search for a focus. After initially saying it would back groups wanting to test open and accessible technology in a variety of disciplines, the foundation later shifted gears, saying it would strive to balance the rights to intellectual property with public access to knowledge.

Meanwhile, Red Hat co-founder Bob Young, a moving force behind the Center for the Public Domain, has wound down his role at the company and turned his attention to new ventures.

Perhaps reflecting his disengagement, Young in the past year has sold nearly 1 million shares of Red Hat stock worth nearly $8 million, according to insider trading data reported at Yahoo!, the Internet search engine.

Despite its wandering focus, however, the foundation has helped shape debate on the emerging issue of access to knowledge in the digital world.

A foundation-sponsored conference at Duke University last fall, for example, represented a big first step in getting experts from the separate worlds of intellectual property and of information-sharing to talk to one another about the critical issue of control over information.

Mario Morino, one of America’s leading venture philanthropists, recently conceded that most entrepreneurs have acted too quickly when first getting involved in philanthropy.

Venture philanthropists, he says, have been “too strident,” too pushy about the “wonders of running nonprofits like businesses” instead of focusing on the importance of strong leadership and good management, too quick to offer solutions to nonprofits and too anxious for fast results.

While it kick-started some important initiatives, the Center for the Public Domain lacked the perspective and staying power to pursue its vision for the digital future.

That’s a big loss. But it also should be a big lesson for entrepreneurial philanthropists who want to make a difference.

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