MIT OCW Funding Analysis (and Implications)

In an opinion piece for The Tech titled OpenCourseWare and the Future of Education, Ryan Normandin lays out MIT OCW’s funding breakdown. It’s the first time I’ve seen the numbers shared publicly. He begins by stating that MIT OCW’s budget is $4.1 million per year (though he notes that OCW cut $500,000 in costs for 2009), and then analyzes revenue by source:

Since its creation, 22 percent of OCW’s expenditures have been covered by the Institute, 72 percent has been paid for through grants from the William and Flora Hewlett Foundation and the Andrew Mellon Foundation, and 6 percent has been covered by donations, revenue, and other sources.

(His article states that these numbers are “since it’s creation,” but they’re the best breakdown of numbers I know of. If you know of a similar breakdown for MIT OCW’s 2009 finances, please drop a link in the comments below.)

If we work these numbers out, each year that’s roughly:

– $2,952,000 for 72% covered by Hewlett and Mellon,
– $902,000 for 22% covered by MIT internally, and
– $246,000 for 6% covered by donations, corporate sponsors, affiliate revenue, and all other sources of revenue.

Ryan’s article is an extended argument for why MIT should continue to support OCW after its grant funding runs out in two years. I (and I expect most readers of this blog) agree with the importance he places on the project and the very important public good it has become. More importantly, MIT OCW is terribly important to the broader field of open education.

Because MIT OCW receives such a large percentage of the OCW world’s traffic and media attention, potential problems for MIT OCW are potential problems for all of us.

I keep asking myself how you support a project when 3/4 of its funding is pulled out from under it. Two years is not that far away. And it already feels like I’m getting a “Please remember to donate to MIT OCW” email once a month. On 25% annual budget, what would MIT OCW do? If MIT OCW were to go into stasis (like USU OCW recently did), how would that be viewed by the world?

More importantly, what is Plan B for the broader OER field? Imagine that two years from now MIT OCW announces drastic cutbacks (or temporary suspension) of its program. How do the rest of us argue for open sharing on our campuses then? Perhaps these arguments would revolve around the sharing model, or the way sharing happens – “we’ll do it differently in the following way…” Perhaps they would revolve around business models and using OCW to generate revenue (e.g., by using them to market for-credit online courses). How else do we make the argument for open sharing on our campuses in a post-MIT OCW world?

I’ve already heard “just because MIT can do it doesn’t mean we can” about a thousand times from faculty and administrators. What if that becomes “Not even MIT can do it for longer than a few years…”

7 thoughts on “MIT OCW Funding Analysis (and Implications)”

  1. Hi David

    The thing that I’m wondering about is how much duplication in fixed cost there is across all the different OCW-type / OER sites? If everyone where hosted on the same hardware (branding can still happen) what would the total saving be?

    A little bit of consolidation in the OER world might really help improve a couple of platform solutions significantly and reduce the overall expenditure (certainly on hardware and sys-admins).

    I was pinged a quote recently which implied that WikiEducator will use Connexions for hosting their static courses while doing their editing on their own wiki. Seems like two platforms are being used where only one is necessary, especially seeing as the one has a subset of the functionality of the other in this case.

    Every project is allowed to do their own thing, but at some point OERs need to front up and make an impact and if they can’t because they’ve squandered the financial goodwill building hundreds of different solutions that do 70% of the job it will be really sad.

    I’m not advocating one global OER solution but maintaining some sites with a critical mass of content might require some consolidation rather than everyone wanting their own hacked media-wiki / plone install 🙂

    Sorry – that turned into a bit of a rant.


  2. How interesting that Normandin’s post:
    ) from “The Tech” is posted only one day later than Terris’ post:
    from “The Chronicle”. Both involve MIT groups. Why can’t the approach (or the essence of it) from Terris’ post be used to solve the funding problem in Normandin’s (and your) post?

    What made the solution in Terris’ post (also see hyperlinks referenced in his post) so efficient and (relatively) inexpensive considering resources used? I think the answer to this question is a key part (if not THE answer) to OER funding. Can we get these groups talking to each other? 🙂

    The following are some quotes from a DARPA employee (DARPA is the organization that funded the contest referenced Terris’ post).

    “They got a huge amount of participation from shockingly little money,” said Peter Lee, a DARPA project manager who was one of the organizers of the Network Challenge.

    He said while they were planning the event the DARPA scientists had wondered about the relative effectiveness of different motives ranging from profit to working for the common good.

    “In the final results all of the motives seemed to be effective ,” he said.

    The researchers said their technique could be used for many things, including finding criminals and missing children and halting impending terrorist attacks.

    So why not use “their technique” in funding/developing Open Education? After all, a small change of focus from “i” to “u” turns “finding” into “funding”. And most of the work in “funding” is “finding” it! Then, isn’t it possible that Open Education could become a major factor in solutions to the other problems referenced above?


  3. MIT has a couple of things working against it. First, they started with a lot of money. When you have a lot, you tend to do a lot. And so to sustain their program, they have to continue to find a lot of money. Compare that to a school that starts small, and finds their own money. They may not be able to build as fast as MIT, but in the long run they will be able to sustain their program. I think USU suffered with this, to a smaller degree. USU didn’t need much every year, and had we gone after the recurring money early on, we would have weathered the downturn in the economy. Instead we relied on grant money, and when it went away, so did we.

    Second, MIT has a brand they have to worry about. Smaller schools can get away with selling certificates or enrolling more people in their distance education program. I don’t know if this is a solution MIT can do without diluting their brand.

  4. I appreciate you ringing the alarm bells for us, but the math you’ve applied to the Tech article numbers is way off, and I’d hate for the OER community to walk away with the wrong impression. MIT has over time assumed a greater and greater percentage of the cost of OCW, so while historically the grant support is 72% (which includes a major corporate gift as well), it currently covers just south of 40% of our expenses. We have reserves to cover this part of our budget for FY10-12 as well. And while we have been ramping up our visitor donation campaigns (2 per year + an end of year ask) and visitor donations will be an important part of our sustainability (as they are with other big OER such as Wikipedia), we are certainly not banking on that as the only revenue. If you want to read a better account of MIT OpenCourseWare’s sustainability picture, I suggest

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