Key Concepts

Organisation and structure matter, as they may influence either your eligibility, or at least your preferential access, to different types of funding pool.

Civic technology

Civic technology is seen by some as existing for a particular purpose: to inform, engage and connect residents with government and one another to advance civic outcomes. The close relationship between govtech and civic technology in these understandings is quite apparent – though govtech is designed with the government as the intended customer or user. But the civic tech ecosystem is naturally a broad one, including government, community organisations, non-profits, private and social enterprise, academia, and residents all concerned with the deployment of technology-supported products and processes to address civic issues in communities.

The open community, through Wikipedia, has created a definition of civic technology as technology that “…enhances the relationship between the people and government with software for communications, decision-making, service delivery, and political process. It includes information and communications technology supporting government with software built by community-led teams of volunteers, nonprofits, consultants, and private companies as well as embedded tech teams working within government”. This is consistent with the Civic Tech Innovation Network’s mission, which is to support “…its community towards the growth, development, and effective use of appropriate digital technologies and methodologies in connecting government and citizens, in public participation, in transparency and accountability and in delivering public services”.

Social entrepreneurship

Social entrepreneurships and enterprises apply business solutions to social problems. There is a broad spectrum of social entrepreneurship models, many of which can have civic technology objectives. Social entrepreneurships can be both for-profit and nonprofit, but they have two unifying objectives: achieving positive social, cultural, community, economic and/or environmental outcomes; and earning revenue and maintaining sustainability.

For-profit, nonprofit and hybrid

Borrowing definitions created by Greater Capital, for-profit entities can accumulate profit and disperse dividends. Though they have relatively few restrictions on their finance options, many grant foundations and grant-issuers will explicitly limit the eligibility to non-profit companies. These entities might be able to in certain circumstances apply for tax exemptions on forms of income in the circumstances of social impact work.

Non-profit organisations can not distribute any extra or accumulated revenue as dividends, or distribute profits in any other ways to private persons. Typically, they can apply for tax exemptions on income in their respective countries. Many grants and much of government spending is reserved particularly for non-profits but registering as a non-profit also has some limitations. While non-profits may access debt, they cannot access equity finance because they cannot distribute profits to shareholders.

Hybrid models are becoming increasingly popular. In this situation, a civic tech entity choses to create a for-profit and a non-profit legal entity in order to leverage the benefits of both structures. Choosing to operate two structures, you need to fully understand the parameters of each, the associated burden of additional compliance, and any extra administrative costs.