Data Sharing Systems - Why Have Data Sharing Systems Failed? | Part 5 of 7

With so many efforts over so many years, why haven't more data sharing systems succeeded? The answer comes down to a fundamental economic problem: the value a successful system would create doesn't accrue to the people who would have to pay for it.

Many organizations are enthusiastic about the concept of a data sharing system in the abstract. Far fewer are willing to commit real time, money, or organizational priority to building, implementing, and maintaining one. There are several stakeholder groups involved, and each faces a different version of this problem.

• Nonprofits. Any reduction in the time and stress of applying to grantmakers - or reporting after a grant - would be genuinely welcomed. Nonprofits are also eager for better tools to discover which grantmakers are realistic opportunities, so they can stop spending time on applications that were never going to succeed. But nonprofits can't change this on their own. They depend entirely on grantmakers to simplify their processes. They are the primary beneficiaries of a successful data sharing system, but they have the least power to bring one into existence.
• Grantmakers and GMS providers. Our experience as a GMS provider has been that grantmakers often say they want to make nonprofits' lives easier - but when it comes to actually making purchasing decisions, data sharing has never been a deciding factor. We don't believe any grantmaker has ever chosen or rejected a grant management system based on data sharing capability. For grantmakers already using a GMS and asking their provider to add this feature, the question becomes: who pays for it? Adding and maintaining data sharing capability is not free. Most grantmakers have built their processes so tightly around their existing GMS that they can't easily switch providers, which means they can't threaten to leave as leverage. That leaves two options: the GMS provider does it out of altruism, or the grantmaker pays for the development. Neither has proven reliable. GMS providers might invest in data sharing if they believed it would give them a competitive edge - but as noted above, it doesn’t seem to be a meaningful factor in buying decisions.
• Data sharing system providers. Who actually builds and maintains the platform? If it's left to open-source volunteers, that's a fragile foundation for something the sector is supposed to depend on. If grantmakers fund it collectively, how is that cost shared equitably? What long-term funding commitments ensure the platform stays operational, secure, and supported? Someone has to host it, keep it private, back it up, monitor it for failures, support users whose data is stored there, and make ongoing governance decisions about the structure and use of the data. These are real costs, and they don't go away once the software is built.

The deeper issue is that the people who would benefit most from a successful data sharing system - nonprofits - have no budget for it and no leverage to demand it. The people who could fund it - grantmakers - don't see it as a priority. And the people who would build it - GMS providers - have no business incentive to do so unless their customers are willing to pay. Altruism can carry a project through an initial phase, but it is not a sustainable funding model.

Until the economic equation changes - either through grantmakers deciding to actively fund data sharing infrastructure, or through nonprofits finding some way to make it a true priority - the pattern of enthusiastic launches followed by quiet fadeouts is likely to continue.