Funding & Sustainability
Oftentimes, local response groups start with a 100% volunteer donation strategy. In the context of an emergency, many just get to work and start making and delivering. But even the most bare bones Local Response effort has costs: food for volunteers, filament for 3D printers, electricity bills, rent, and more.
Understanding the Cost of Emergency Response
Even the most bare bones Local Response effort has costs, and sooner or later, a plan for funding the production must come into focus.
Before you start, take a moment to step back and calculate your costs for production before you share pricing or fundraising goals. We suggest starting a spreadsheet that keeps track of all of the following expenses. This portion of the guide is heavily borrowed from another OSMS document called Making Medical Supplies Sustainably.
Monthly & Yearly Fixed Costs
Especially for those working out of a physical space such as a building that is rented, what costs are incurred by just keeping the facility open and in compliance every year? Here are a few costs to consider. We suggest dividing any yearly costs by the number of months in the year, and representing them as monthly costs.
Variable Staff & Volunteer Costs
What costs are incurred by the number of people you have in your organization? If these are staff, these costs include their salary, payroll taxes, and benefits. If these are volunteers, these costs can include food, drink, and volunteer appreciation activities like food, drink, parties or gifts. If possible, break these costs into monthly or weekly costs.
Variable Supply Fabrication Costs
What is your cost of goods to make medical supplies? This doesn’t just count raw materials – this counts wear and tear on your tools, shipping, delivery, packaging, labeling, and more. If possible, try and divide out all of these costs into a “per-item” cost; as in, a given medical supply costs X amount in raw material, Y amount in tool use, Z amount in packaging, and the like for the sake of this exercise. Based on your production thus far, also come up with a certain number of supplies you can make in a given week.
How Wrong Are You?
You are well on your way to creating the expenses side of a Profit & Loss Statement. Unfortunately, we can all be pretty bad at estimating costs, or fully planning for unexpected costs (like a tool going down and needing to be repaired). It’s worth attempting to figure out how wrong you think you might be, in the form of a percentage. Are your expense guesses usually 25% wrong? 50% wrong? 100% wrong? Add an explicit line item in your budget that multiplies all your previous expenses by some sort of fudge factor for unexpected circumstances.
You should use all of the data you’ve created above to create a flexible spreadsheet model that tells you what your total expenses are per month, given a certain number of supplies that you produce, and the variable costs of maintaining your staff and volunteers. Ideally, if you set your supply creation to ‘0’, your model gives you the fixed costs to keep the space open, and if you set your supply creation to the max you’ve produced recently, your model should give you the costs you actually paid.
The purpose of creating this model is to inform the costs you need to charge for your supplies. Put simply, you cannot effectively determine what amount of grant funding, or what to charge per unit, without a good model of the types of expenses you need to cover.
Now that you have figured out what your costs are, it’s time to decide how you are going to cover them. Many groups have found opportunities for hybrid funding models (commerce at cost + grants + volunteers), and others discover paths to e-commerce and becoming vendors for institutions. And many have perfected non-profit fundraising and persist as 100% donation/volunteer efforts.
Public Donation Campaigns
Most local PPE production efforts are currently funded generously by donations. Donations can be in-kind (e.g. free use of an empty warehouse, large donations of materials), and also cash. Some U.S. platforms and methods that facilitate fundraising campaigns are:
- GoFundMe for individuals/groups and for non-profits/NGOs.
- Facebook Fundraising, either for non-profits or for individuals.
- Direct contribution to non-profit via web commerce plugin (example).
The COVID-19 Relief Fund facilitated by ACE Monster Toys is a good example of how a non-profit makerspace or other organization might fund member and community efforts. The organization can run a campaign, collect donations, and then make decisions to distribute resources to community efforts as desired. Sharing news on award recipients both instills trust via transparency, and provides deserved praise and attention to worthy efforts.
A huge opportunity for funding is through major donor solicitation. Finding these high-net-worth individuals is usually a function of personal relationships; spread the word you are looking for introductions. Remember to be discreet around these communications and clarify the donor’s preferences to be credited or remain anonymous.
Corporate and Foundation Grants
Many grants are available to makerspaces. Look for grant opportunities that align with your organization’s mission. Larger corporations are also now offering grants that specify COVID-19 response requirements.
- Local community foundations are partnering with elected officials to galvanize private sector funding for emergency response efforts and COVID-19 aid programs. See this example from Colorado, USA.
- GetUsPPE has an ongoing maker grants program for U.S. production to cover materials costs (note they are not funding face shields at this time).
- Research who the largest companies and employers are in your region. If they don’t have a published contact for their community engagement or social responsibility team, contact their human resources department.
Government Contracts and Grants
Very few local response groups have reported receiving government contracts or grants for their work. Most groups did not have pre-existing relationships with emergency response agencies which made securing disaster relief funding or government contracts in a time-sensitive situation difficult. However, some have been successful in securing government contracts and grants. Here are some examples from OSMS Local Response Network Groups:
- The M19 Collective in India figured out how to win bids with the Indian government’s public tender process, so they could respond to official requests for equipment, and receive funding for production. Also, in West Bengal, the Department of Self Help Group & Self Employment financed and supported the production of 477,316 cloth masks. Learn more about M19 Collective in our National Case Study.
- Ace Makerspace in Oakland, CA was able to secure reimbursement for COVID-19 through a city-run arts grant program funded through the Federal CARES Act. Look for grant opportunities through your city’s economic development, arts, and workforce development agencies.
- NWLA Makerspace in Shreveport, LA also received CARES Act funding for new equipment in the form of a Community Development Block Grant.
- OpenWorks in Baltimore received contracts from the U.S. Department of Agriculture to design and produce a unique face shield design for meat processing industry inspectors.
- The Brazilian Government of Maranhão provided grants (approximately USD $37,000) to maker organizations for tool equipment purchases to enable and increase production. More on the Local Response in Brazil in our National Case Study.
Demand for PPE and supplies is at an all-time high worldwide, and there are opportunities to profit from your production. For example: Huntsville, Alabama’s face shield effort (made famous in this video by Destin of SmarterEveryDay) has transitioned to a sales endeavor for a local business, Detroit Sewn’s shop features masks, gowns and surgical bonnets, and Kings County Distillery has pivoted from whiskey production to hand sanitizer.U.S. state and city governments are incentivizing production of medical supplies, and local response groups have been able to secure contracts for production this way. The Maryland COVID-19 Emergency Manufacturing Relief Fund and the Economic Development Corporation of New York City are both excellent examples of this.
In an emergency situation, donors may not care about tax status or an official not-for-profit designation. But as your campaign prolongs, acquiring non-profit status will be helpful for securing donations and grants. Setting up a complete non-profit organization in any given country is usually a 6-12 month process and will cost $1,000-$10,000 in administrative and legal fees. Don’t go this route in a rapidly evolving emergency.
Selling as a Non-Profit
If you have the opportunity to accept large donations, but the donor wants them to be tax-deductible, it is possible to “shelter” under an existing nonprofit as an independent project. This process is called fiscal sponsorship in the United States, and many countries around the world offer similar “nonprofit piggybacking” structures.
Over the last several months, many have asked if they are allowed to sell products with their 501 (c)(3) designation, and the answer is YES! Non-profit organizations still have bills to pay, such as facility costs, utilities, staffing, etc. and they are allowed to finance these through the selling of goods. Upcounsel shared a blog post that expands on this topic.Along the way, you may also find that your organization is in need of insurance or advice on selling your products. Will Holman, Executive Director of OpenWorks in Baltimore, Maryland, shared details on his experience of obtaining product liability insurance and selling products as a non-profit in the U.S. in this segment of “Sustainable Business Models for Medical Supply Production” (also linked above on this page).
Integrating Supply Production Into Makerspace Business Models
Makerspaces are community centers that attract people from all walks of life, and can often have deep connections to local communities, local businesses, local and state governments, and other spaces. These connections can be extremely helpful in creating resilient networks and communities in the challenging times to come. They are also uniquely positioned to help direct fast and immediate aid in their communities, and to help facilitate meaningful supply production in small quantities. However, they are relatively poorly positioned to create mass quantities of supplies long-term.
Here are some ways makerspaces have managed to benefit from medical supply production efforts:
Addressing Budget Shortfalls
If organizations are willing to charge more for supplies (whether to grantees, or customers themselves) than it costs to produce them, supply manufacturing could help offset these budget shortfalls. Grants and donations, or proceeds from sales, can help offset the drop in membership revenue that most makerspaces have experienced during the pandemic.
Giving Your Members Purpose Through Volunteering
People are now looking for community more than ever, especially after months of being under shelter-in-place orders. Whether online or in person, PPE and medical supply production as community service or volunteering can be a great way to build community cohesion It gives your members purpose and intention that may be missing after months of shelter-in-place and can allow for community congregation in socially-distant ways if you set up your space correctly.
Hardening Your Own Space
Most physical makerspaces will need to be reconfigured in order to reopen sustainably. They will need to adopt social distancing measures, they will need members to wear masks, and more. Your production efforts can focus inwards to help prepare your space for operation throughout the pandemic. Production efforts might also require new tooling — it could present a unique opportunity to fund new equipment as a result of a supply production fundraising campaign or grant.
Branding and Customization
Cloth masks, face shields, and other supply items are blank canvases. You can put messages on them, you can put logos on them, and you can brand them. PPE can become a source of local pride for your makerspace and community. As prototyping shops, makerspaces are uniquely positioned to create branded PPE and other custom-manufactured items for their local businesses.
Support From and For Local Business and Schools
Many makerspaces are surrounded by local businesses and school districts that want to support their own community ecosystem. Businesses and schools will be looking for PPE and other manufactured items (i.e., “sneeze guards” and other custom furniture) needed in order to reopen. Now is the time to go speak to district and school officials as well as local businesses and see if they’d be interested in your (custom branded and fabricated!) supplies.