Web Options for Nonprofit GroupsMay 26, 2003
By BOB TEDESCHI
The nonprofit industry is big business, with more than $700 billion in annual revenues and $2 trillion in assets. But
unlike other large sectors of the nation's economy, this one has been generally Internet-resistant. And that, some
say, is keeping nonprofits from achieving levels of efficiency they greatly need in an era of philanthropic tightfistedness.
The most recent critics of nonprofits include former Senator Bill Bradley, who, along with two of his colleagues at the consulting firm McKinsey & Company, suggested this month that the nation's nonprofits could save $100 billion
a year if they reduced costs and improved the effectiveness of their services. Internet initiatives, Mr. Bradley and
his colleagues said, could help reach that goal.
Efficiency is certainly a watchword in nonprofit circles of late. With charitable contributions leveling off after 20 years of growth, nonprofits are ever mindful of ways they can better balance costs and services. Legislation recently introduced in Congress would force foundations to give away more money to charities each year, but this potential windfall comes at a time when grantors are increasingly interested in seeing statistical results demonstrating a return on their investments.
While some executives of nonprofit organizations have shown they understand how Internet technologies can create both
improved efficiency and transparency, analysts said a vast majority of charitable groups were not yet wired in even
the simplest ways.
The McKinsey team said, for instance, in an article published in the Harvard Business Review this month that
Web-based fund-raising, among other things, could save significant sums of money. But of the 200,000 largest nonprofits in the United States, only about 5 percent use the Web to solicit donations. And other e-commerce applications widespread in the for-profit world, like client databases, e-mail marketing and Web site traffic analysis, are even less common in the nonprofit industry.
But such applications can be critically important, said David Saltzman, the executive director of the Robin Hood
Foundation, which among other things provides grants and technology support to nonprofit organizations. "There are
an awful lot of foundations, and people providing services, who think the magic occurs when a social worker is there
with a suicidal, pregnant 13-year old," Mr. Saltzman said. "They think, `What's the role of technology in that?' "
But if the social worker had access to a client database, Mr. Saltzman said, "and they understood that the program
they work for is also serving the abusive father, they could be even more effective."
Not all nonprofits are technologically backward, of course. "There's a stratification between the biggest nonprofits,
who can afford the really high-end services, and the small-to medium-sized nonprofits," said Michael Stein, an author
of "The eNonprofit: A Guide to ASPs, Internet Services, and Online Software" (CompassPoint Nonprofit Services, 2002),
and associate director of Groundspring.org, a nonprofit group providing fund-raising and e-mail services to small and medium-size nonprofits.
Mr. Stein said that national nonprofits like the National Wildlife Federation, the American Red Cross and others "are
spending a lot of money on technology, on infrastructure development." But among smaller organizations, which make
up more than 80 percent of the nonprofit universe, "they're probably half a light year behind the corporate world," he
said. "They don't have the money, staff or know-how to do technology investments."
Even if an organization makes the investments, though, technologies often go unused, according to Sheri Saltzberg, a nonprofit consultant based in Brooklyn. "They don't have the skills, the administrative support, a data person or a research analyst," Ms. Salzburg said. "So it ends up being the responsibility of the executive director, who has all these other demands on her time."
Mr. Stein, too, has witnessed this. Of the 1,000 customers who pay for Groundspring's software, 300 do not use it. "That's totally an industry norm," he said.
Nonprofit executives and consultants said one factor that could help change that norm was the emergence of affordable
technology assistance for second- and third-tier organizations. With the dot-com bust and the downturn in corporate technology spending, many information technology consultants can be hired on the cheap, executives said. At the same time, low-cost technology consulting concerns aimed at nonprofits are attracting more funding, and are now offering their services in more markets than ever.
Take NPower, a nonprofit consulting group based in Seattle, and supported largely by Microsoft. The group, which was
formed in 1999 and added a satellite branch in New York in 2001, has since added branches in seven cities, with another three to come this year.
NPower sells annual memberships to nonprofits on a sliding scale, at a maximum of $500, and provides technology
support services to members for about $60 an hour - less than half the going rate in the for-profit realm. It also provides free online diagnostic tools designed to help nonprofits identify their technology needs.
Among NPower's clients is the Urban Justice Center, which provides legal assistance to homeless and mentally ill people, among others, in New York City. The Urban Justice Center has for the past two years been working with numerous nonprofit groups based in New York to log information about food assistance recipients into an online
database. That database, which is managed by a coalition of government agencies and nonprofit funding groups, will help identify areas that are underserved by food assistance programs.
The Urban Justice Center will also use the database to identify common problems in food assistance distribution and, if applicable, mount legal challenges to protect the rights of food assistance recipients. Moreover, the Urban Justice Center will use the database as a model for building an internal database for its project to help the homeless. The thousands of homeless people served by the project each year are now tracked with paper files - a practice likely to end this summer, when both the food assistance database and the homelessness database are expected to go into action.
While NPower, Groundspring and other organizations are helping their nonprofit colleagues get wired, some for-profit e-commerce companies, like GetActive Software in Berkeley, Calif., have also found economic opportunity in the nonprofit market. According to Bill Pease, GetActive's chief technology officer, revenues for the privately held company are growing by 50 percent each quarter, reaching the $5 million range last year.
GetActive provides online fund-raising, advocacy and e-mail services, among other things, for monthly fees that typically range from thousands to tens of thousands of dollars. Most of its clients, Mr. Pease said, are the larger nonprofit groups, including the Environmental Defense Fund, the American Red Cross, and the major public broadcasting organizations.
But some smaller organizations, like Earthjustice, an environmental group based in Oakland, Calif., are also GetActive clients. According to Adelaide Roberts, the director of public support at Earthjustice, the group pays GetActive about $40,000 annually to help create and distribute a monthly e-mail newsletter that keeps members abreast of important environmental issues, and helps them contact legislators.
"It's paying for itself, but our supporters are also becoming more involved in contacting representatives about bills, so it contributes to our program, too," Ms. Roberts said. And to an increasing extent, nonprofit executives say that quantifiable service improvements like these are the fastest way to a donor's wallet.
Late last year the Harlem Children's Zone, a nonprofit group serving families in some of New York's most impoverished areas, rolled out a system that uses bar-code scanners and ID cards to track children in its day-care programs as they move to different activities and to monitor their developmental progress using database and analytical software.
According to Geoffrey Canada, the chief executive of the Children's Zone, the system took about two years and roughly $300,000 in hardware and software, but it has already helped him make significant improvements in services. And when major donors call for progress reports, Mr. Canada said he could quickly generate data and e-mail the results.
"That's been part of our success - our ability to get information back out the door very quickly," he said. "It's helped us get more funding."