The Divide: Why Digital Inclusion Needs a New Funding Model

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At a Glance

• Why funding for digital inclusion is needed and thoughts on the Digital Equity Act’s life, death & semi-resurrection (03:45)
• Discussion of the Alt Funding Field Guide and how the model differs from existing methods of funding digital adoption (14:00)
• How the co-investment model applies to telecommunications and why digital inclusion is a ‘business imperative’ (20:25)

In this episode, we hear from Samantha Schartman, director of philanthropic programs at Connect Humanity, a nonprofit impact investor and emerging Community Development Financial Institution (CDFI); and Mark Colwell, executive director at Mission Telecom, a nonprofit telecom provider.

They join the podcast to discuss the importance of funding digital inclusion initiatives and, specifically, the recent publication of their Alt Funding Field Guide, which outlines an approach to building sustainable funding for digital adoption.

The guide is designed to present a new funding model for digital inclusion initiatives, which frequently fall victim to temperamental funding cycles. Whether due to corporations pulling back philanthropic contributions, or politicians decreeing on social media that funding digital inclusion is somehow unconstitutional, or both, the result of such inconsistency is an unsustainable source of funds for an ever-growing need to help people connect to and use digital devices and services.

That’s where Connect Humanity’s alternate funding model comes in. In its new guide, the group – which published the guide with support from Mission Telecom – is arguing for a system of co-investment in digital inclusion from six specific sectors that explicitly benefit from digital inclusion to achieve their outcomes. Those include education, healthcare, housing, local government, telecommunications and workforce development.

As an intro to the guide explains: “Connect Humanity’s framework inverts the usual logic. Instead of starting with available grants and designing programs to fit, it starts with what communities actually need (the uses of capital), identifies who captures the value when those needs are met (the repayment streams), and only then designs the funding mix to match (the sources).”

That approach has the endorsement of Blair Levin, an analyst and former FCC official who led the creation of the National Broadband Plan in 2010:

“Connect Humanity has brilliantly clarified how we need to adjust our mindset and how these programs are funded to help all Americans have an opportunity to thrive in the information economy. It points to practical and financially rigorous ways that multiple stakeholders can participate in creating those opportunities,” wrote Levin in a foreword for the series.

Six sectors:

As noted, the Alt Funding Field Guide specifically drills into how this co-investment model would work within six sectors, with specific chapters – written by various field experts – broken out on education, healthcare, housing, local government, telecommunications and workforce development.

“Ultimately, each of the chapters goes through what is the economic value proposition to each sector – healthcare, workforce, etc. – in supporting and co-investing in programs that drive digital adoption and use of adjacent technologies,” says Connect Humanity’s Schartman. “So it’s like, if a program were to train someone on how to use a telehealth portal … what economic benefit does the hospital system, the managed care providers, the insurance company derive from that activity? How do you identify where those savings accrue, and can we capture some of those to reinvest in the programs that continue to drive those savings? That’s the idea.”

Looking at the chapter on telecommunications, for example, Mission Telecom’s Colwell, who contributed to the chapter, notes there’s an “extreme benefit to telecom” to help co-invest in broadband adoption and usage through partnerships with sector stakeholders. The chapter explores potential pathways to such partnerships, including benefits and drawbacks.

“While few network owners have actively invested in digital inclusion initiatives, their businesses are ultimately dependent on successful digital adoption,” states the Alt Funding Field Guide’s chapter on telecom. “Subscriber growth, customer retention, and successful use of service are integral to financial performance across the sector. Service affordability, effective onboarding, technical support, and digital skills development all create real economic value for telecommunications providers and their partners. That makes digital inclusion less a charitable concern for this sector than a business imperative.”

Indeed, viewing digital inclusion investments as strategic is largely the idea behind “flipping the script on traditional grant work” with this alternative model, as Connect Humanity’s Schartman explains on The Divide.

“It’s a much more business-minded framing. We’re not saying that people wouldn’t use grants as a mechanism for moving money between organizations, but we are talking about the change in framing from being a charitable contribution to a business investment,” says Schartman.