Software and the Social Enterprise

This week, Google announced the development and availability of several products in their “Apps” suite that were in beta or available only to select businesses and individuals. SDFF has been using Google Apps for email and calendar-sharing for about six months. This blog analyzes the need for and availability of critical productivity applications, and evaluates the potential benefits Google Apps provide.

Social enterprises (also known as nonprofits) are no different than any other business when it comes to software requirements. In fact, I would argue that social enterprises require more software and expertise than the typical for-profit business does. The reason is because social enterprises have a “triple bottom line” to track and report.

The triple-bottom line requires that you accurately track and report multiple sources of income for individual and multiple programs, report individual and multi-funder financials, report cash and in-kind matches and, on top of all of that, track and report all of the demographic and social outcomes expected from each grant or funding source (except good ole’ earned income).

My background is in the for-profit sector and I can say without hesitation that social enterprises are more difficult to manage primarily due to these reporting requirements. And, oh by the way, very, very few funders will allow their money to be spent on “overhead” like hardware, software and the systems nonprofits so desperately need to actually provide the information funders expect. “But,” as Carl the FedEx presentation guy says, “I digress.” (If you want to read more about that unfortunate situation, please take some time to visit uncharitable.net).

So software is really, really important to the social enterprise, and like any other business, social enterprises gravitate to the industry standard, which is Microsoft. Fortunately, Microsoft products are available to social enterprises at very, very deep discounts. What’s not so fortunate is that Microsoft puts restrictions on the number of titles that can be ordered and the number of orders that can be placed in a certain timeframe. A nonprofit with ~20 or more employees needs:

• A productivity suite - Office 200X
• A collaboration platform - Sharepoint with Client Access Licenses
• A mail server - Exchange with Client Access Licenses
• An operating system - Windows 7
• A server - Windows 2008 Server with Client Access Licenses

Unfortunately, that is more titles than Microsoft will allow to be purchased, and a social enterprise doesn’t have to be very big to exceed the number of total copies of software that can be ordered. This all adds up to the medium-sized social enterprise having to consider other options.

What About Google Apps?

In December of last year, our organization switched from Exchange to Google Apps for mail hosting. I have to admit that I wasn’t completely on board with this idea. I will also admit that I am actually a fan of Microsoft in many ways, and that Microsoft has been good to SDFF.A Microsoft representative has been on our Board since we formed in 1999. But my ambivalence regarding Google Apps wasn’t a matter of being beholden to Microsoft, it had more to do with “if it ain’t broke, don’t fix it.” But our Manager of Tech Services wanted to switch for three main reasons:

1. Reduced internal technology overhead (goodbye Exchange server)
   
2. Bigger mailboxes and less mailbox management
3. Better mobile interface

The migration didn't come without some pain. We experienced delays in mail delivery for a while (some mailed delayed by weeks), the implementation caused some confusion and fairly significant downtime for staff, and most of the value was experienced by the IT department, not the end users (“why are we doing this again?”).

So we come to today and the introduction of Wave for Google Apps, not to mention a slew of other products and services including the Google Chrome Web Store, which makes everything about Google Apps more interesting.

And wouldn’t you know it, the subject of our next Microsoft order is on the front burner. Unfortunately, as mentioned above, we can’t order everything we need, and NOBODY FUNDS OVERHEAD, so something has to go. I guess the plan to move back to Exchange can be dropped.
Needless to say, we’ll be taking a much closer look at what Google Apps can do for us and our customers in the coming weeks.

Related Links

San Diego Futures Foundation
Google Chrome Web Store
Google Apps for Nonprofits
Google Announcements
Uncharitable.net
Stanford Social Innovation Review, Nonprofit Starvation Cycle

The San Diego Futures Foundation (SDFF) was created to help bridge the digital divide in San Diego County. Among it's programs, SDFF provides technology services to social enterprises.

SDFF's Move to Social Media

SDFF has been using online tools and resources including our website, this blog, and eNewsletters to promote our programs and services for several years. To a minor degree, we've used them as a vehicle to raise funds for financial support and to promote fund raisers. Of course, in order for online campaigns to be successful, people need to know they're there. In the past, online campaigns had to be combined with print or other advertising in order to capture as much of your target market as possible. But, thanks to technology and the growth of social media, that need too changing.

Part of our mission is to help nonprofits stay current on technology. To date, our efforts have been focused on networking technologies, desktop PCs, and software. We currently provide network and desktop support to more than 30 nonprofit agencies in San Diego, some of whom have outsourced their entire IT operations to us.

As social media sites like Facebook and Twitter become more prominent as business tools, it makes sense for SDFF to use them more prominently in our own marketing campaigns and to offer our skills and abilities as a service to other nonprofits. As I stated earlier, we aren't new to social media and online tools, so we have experience to offer now, but the value of these online resources is something more nonprofits should know about and take advantage of, and our role is to demonstrate that value and help nonprofits get the most out of it.

Expect to see a lot more use of social media from SDFF, even "firsts" and "exclusives" offered via the various outlets (inlcuding this blog). I would be remiss if I didn't end this post without asking you to follow us now on Twitter and Facebook.

Read This Book

Just about anyone who has worked with me (or had lunch with me) over the last couple years knows how I feel about nonprofit funding and the associated strings.

Nonprofit execs know what I’m talking about. Ninety-nine times out of 100, funders allow minimal or no expenditures on “overhead’, which includes things like rent, utilities, and marketing. Businesses are systems, and “overhead” is an absolutely essential cog in the wheel. Removing it only damages the system and makes it less effective.

Consider what would happen if you went to your favorite department store and, approaching the checkout counter you said, “I really love the clothes you sell here and I believe you are a knowledgeable and trustworthy merchant, but I’ve decided that you can’t use my money to pay for the lights, marketing, staff, or anything else that not directly related to the production of these items.”

And then you put additional terms on the sale. Talking now to the store manager you say, “additionally, I’m only going to give you 50% of the total price of these items. You’ll need to get the other half from someone else. I’m also only going to give you half of my payment now and before I give you the other half you need to give me a report that shows how many jobs were created and saved from this sale, how many total people benefitted, and the demographics of those impacted. On top of that, I also want to know what percent of your salary is being paid from this sale, I want the names of the people paying the rest of your salary, how much they paid, and I want to see what you’re going to provide as an in-kind match to the 50% I’m going to pay you.”

If I told this story to anyone unfamiliar with nonprofits they would think I was completely insane. And yet, this is routinely how nonprofits are expected to operate. Funders almost always have those expectations while, at best, allowing up to 15% of their funds to support all of the resources necessary to generate the reports and provide the information.

Having said all that, I completely agree that funders have a right to know what impact their funding is making and how their money is being spent. But here’s the problem; the vast majority of nonprofits have neither the systems to track the data and generate the reports nor the funding to acquire or develop those systems. It’s virtually a no-win situation and one that sets up nonprofits to have far lesser impact than they otherwise may have. Worse than that, it creates an environment ripe for bad data.

Real Change Can Happen

Last week I was in San Francisco attending the Social Enterprise Alliance's World Forum. On the final day I found myself listening to a keynote that echoed my sentiments and validated everything I had been talking and complaining about. The speaker’s name was Dan Pallotta, and as it turns out, he wrote a book about it called Uncharitable. The Stanford Social Innovation Review says 'deserves to become the nonprofits sector’s new manifesto.'

Now, before I send you off to Dan's site -- and I truly hope anyone who reads this blog visits it -- let me address the most likely argument against this message.

One of Dan’s claims is that nonprofits should be allowed to pay their executives competitive salaries. Competitive to some might be "too much" to others. But Dan suggests that, by limiting salaries of nonprofit staff and executives, the “best and brightest” stay away. He’s right about that. There are some in the nonprofit sector, agencies and funders alike, who disagree, and who feel that salaries and operating expenses should be restricted in order to free up as much money as possible for programs or "the cause". I completely respect this position. It's noble, and I suggest that those who feel that way should simply opt-out of the discussion and continue operating on shoestrings.

The nonprofit sector is evolving. And only when nonprofits begin operating more like for-profits, overhead and all, will true impact be made.

Read the book.