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Project Description
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Introduction
In its fullest conception, Indiana Online will be a large and complex project, both editorially and technically, with an estimated ten-year development cost of $10 to $12 million and a sustaining endowment of $5 million. Editorial and technical staff salaries and benefits will be the biggest expense, averaging $700,000 annually. Equipment rental and upgrades, space rental, and contractual services will range from $350,000 to $380,000 annually, and administrative and other support from $300,000 to $325,000 each year.
These costs are averages and will not be spread evenly throughout the project. Phase I (Years 1-4) likely will be the most expensive because of the heavy investment in system design and implementation, application development, and equipment. A major cost during this phase will be designing a system that builds upon and interoperates with other educational resource technology systems currently under development throughout the state and beyond. Content creation also will be a major expense, though less than in future phases. Publicity and fundraising will be a large expense as well.
The allocation of expenses will shift during Phase II (Years 5-8) as content creation and user support emerge as the largest cost centers for the project. Both the editorial process and the development and/or expansion of supporting materials for specialized audiences (e.g., educational curricula, county reports, etc) will require a large commitment of time from scholars and project managers alike. Technical support also will be a large expense, with time spent to manage and improve the system and to develop new functionality. Finally, user support services will emerge as significant cost of the project, and fundraising/publicity costs will continue to be significant.
Expenses for the final phase will be heaviest in technology upgrades and improvements, new audience development, additional content creation, user support services, and fundraising. By this point, operational or sustaining expenses should begin to be assumed by the institution(s) that will host the final system, and the project should move into its sustaining mode (e.g., core staff, subscriber base, etc).
The 10-year project budget based on the proposed implementation plan is included below, along with the same budget divided into major expense categories. The cost estimates will be most reliable for Phase I. The implementation budget does not include costs for sustaining Indiana Online beyond the ten-year development phases, but these funds should be solicited at the same time as implementation funding. It would be prudent to establish an endowment for Indiana Online. A $5 million sustaining fund with a 10 percent annual return would provide $500,000 each year for updates and maintenance.
Sources of Income
Indiana Online will require a complex financial model to meet its anticipated $10 to $12 million development budget, with income from foundation grants, state appropriations, local government support, federal grants, corporate gifts, private donations, member subscriptions, and ancillary projects. In-kind contributions from partners and corporate sponsors may offset some direct expenses, especially costs associated with data development and content creation.
Foundation grants will constitute approximately 60 percent of the funding, or $6 to $7 million, required for Indiana Online, with Indiana foundations expected to contribute all of this sum. The state’s major foundations--Lilly Endowment, Cummins Foundation, Ball Foundation, DeHaan Foundation, Ruth Lilly Foundation, Nina Mason Pulliam Charitable Trust, Allen Clowes Fund, and Tobias Family Foundation--are all strong candidates for solicitation. Some of these foundations may require matching gifts. In addition, the state’s community foundations (90) should be approached for funding to support the development of content about their counties, with a minimum target of $1 to $2 million from these sources.
State appropriations will be an important source of income and may be required by some or most of the state’s major foundations as a match for their grants. Given current and anticipated funding problems faced the state, the income model should assume no more than $1 million in direct appropriations. Other sums may be available indirectly in the budgets of various state departments and agencies for development of special resources or applications, especially from the departments of Education, Natural Resources, Environmental Management, Commerce, and the Commission on Public Records. A reasonable target would be $500,000. County and local governments also should be solicited for support of development of content about their localities, with a target of $500,000.
Federal grants are not likely to be important sources of unrestricted or general income, except for the $400,000 available from National Endowment for the Humanities. It will be possible, however, to seek federal funding for new and innovative initiatives that are part of the encyclopedia project, including but not limited to creation of digital materials, development of curriculum resources, user support services for disadvantaged populations, and the like. With the NEH grant as a base, Indiana Online should anticipate no more than $1 million from all federal sources.
Indiana Online will be a highly visible project that delivers useful and interesting content about the state and thus will appeal both to corporations with headquarters or a large presence in the state and to citizens who take special pride in Indiana history and culture. Corporate gifts are likely to range from $1,000 to $25,000, with a few possibly coming in the low six figures. These gifts, which should be targeted at $2 million, will take up to three years to work through the corporate funding cycle. Private donations also will take considerable effort to cultivate, but the experience of other encyclopedia projects suggests that a successful campaign can expect to raise $2 million over the ten-year life of the project.
Subscription fees offer another potential source of income for Indiana Online, although this strategy might require access to some premium service. Also, the fee structure could not exceed what libraries and other institutional users pay for similar resources. A market study would be required before moving in this direction, but an average annual fee of $100 for only half of the 2,200 libraries in the state (e.g., public, school, and special libraries) would generate $110,000 in income each year. These fees would more likely be available to sustain the project than to fund its development.
Finally, ancillary projects undertaken by IOL staff in association with other institutions--e.g., development of digital collections, creation of online exhibitions, packaging of anniversary materials, etc.--is another potential source of revenue. In addition, these projects would create materials for use in the electronic encyclopedia, thus offsetting some expense for content creation. Based on the experience of the Encyclopedia of Indianapolis, which used a similar strategy, ancillary projects could return as much as $500,000 net over ten years.
Cost Models
Over its anticipated ten-year development cycle, Indiana Online can expect to incur expenses in the categories below by implementation phases, as outlined in the planning document. Both models include annual 5 percent adjustments in salary and fringe benefits. Also, university administrative overhead (indirect costs) are figured as part of each line item. Although a detailed work plan governed the calculation of Phase I expenses, costs for Phases II and III are rounded estimates based on reasonable expectations rather than a fully developed cost model.
Development Strategy
For its long-term success, Indiana Online likely will require a professionally prepared development plan and, for several years, the full-time attention of a professional development officer. Even so, it will be important for the online encyclopedia project to receive early endorsement and support from a wide constituency if its full-scale fund-raising efforts are to achieve long-term success. This support will come initially in at least three ways: the recruitment of influential advisory boards and committees; the creation of materials, including demonstrations, that convey the scope and look of an online encyclopedia; and the successful implementation of the counties part of Phase I.
One of the quickest ways to demonstrate public interest and establish a funding base will be though an approach to Indiana community foundations in support of material specific to the counties they represent. More than 90 community foundations exist in Indiana, covering most though not all of the state’s 92 counties. Average grants of $25,000 from each foundation, with individual foundation funds designated specifically for the development of information about its county, would raise almost $2 million in support of Indiana Online and enable it to meet its editorial goal of having significant information on each county available by the end of Phase 1. (Although grants can be expected to average $25,000, in fact the requests for funding would be tiered by size of county and/or foundation.) This approach would also permit IOL to create materials in a preliminary way for two other early target audiences, business and education. Both the data desired by business and the information required to support the educational standards, especially for 4th grade Indiana history students, can be developed through a county strategy, although community foundation funding will not replace the need to solicit funds from these other two audiences.
It also will be necessary for IOL to gain some first year implementation funding from major philanthropic sources, such as Lilly Endowment Inc. A first grant of $500,000 to underwrite first year operations would enable IOL to hire staff, create informational materials and launch fund-raising efforts, recruit section editors and writers, and move the entire effort quickly toward its goal of initial implementation by the third year. Upon meeting its first year objectives, IOL can approach philanthropic and other sources about the larger grants that will be required to meet its ambitious ten-year goals.
In-kind Contributions
Indiana Online will seek in-kind support whenever possible to offset the need for direct support. Discussions have already begun with the IUPUI Library and the Indiana University Digital Library Initiative to serve the encyclopedia and create digital materials. In this instance and others--e.g., use of technology students to develop part of the application packages required for IOL, state university contributions of graduate assistantships, etc.--in-kind contributions can serve both IOL and the partner’s institutional interests, if structured and managed appropriately. During the first year Indiana Online will seek these in-kind contributions aggressively, developing memoranda of understanding (MOUs) to govern the relationships that are established. Over the ten-year life of the project, it is reasonable to expect in-kind contributions to exceed $1 million, though in some instances these contributions may increase direct costs of management and administration. Also, in-kind contributions may come as a result of ancillary projects, especially those to create digital materials of interest to IOL. |
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