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Salsa Blog

Why Free Isn’t Free: The Unrealized Costs of Free Technology to Nonprofits

by Christine Schaefer, VP of Community and Marketing

After more than a decade of volunteering or working with nonprofits, it is time to come clean. I am guilty for crimes against technology. That is guilty of using technology without paying for it to get things done for my nonprofit. Now, that doesn’t mean I stole it off the shelf at Best Buy. What I mean to say is that either I used software I had bought for another purpose – i.e. MS Excel to manage supporter lists – or, I got a developer-volunteer to build me something using open source code.

What’s so bad about that? Well, the problem is that it isn’t really free is it? Just because I didn’t pay out cash for it, doesn’t mean that there wasn’t an associated cost. And therein lies the trouble. There are unrealized non-cash costs to using technology – often called total cost of ownership (TCO) – especially when it was intended for another purpose or was built-from-scratch by a well-meaning do-gooder. Let’s do some proverbial math on those two scenarios, and I think you will see how free isn’t necessarily free.

Cost Scenario 1: When All You Have is a Hammer, Everything Looks like a Nail
All nonprofit professionals and volunteers have at least one thing in common – making the resources they have on hand stretch to fill as many needs as possible. And, technology is no exception. Many software products come pre-loaded on machines in package deals. So, what do we do? We use them to their fullest extent and then some. Like a contractor with only a hammer in her toolbox, we start figuring out ways to solve every problem with brute force. Buying a tool built for every job is expensive, right? One may think logically that using a piece of software like MS Excel to manage lists saves the cash expenses for a supporter management or CRM (constituent relationship management system). But, what about the non-cash costs?

There are two primary unrealized costs to using software in a way that it was not intended:

  1. Person-Hours Cost Money and Opportunity-Lost

    To make a piece of technology work in a way that was not intended requires extra work be done by individuals to fill the gap. Going back to my MS Excel example, there are a number of things that must be done manually or semi-manually that a CRM would do for you: de-duping lists, tracking supporter activity history, managing communication opt-ins and opt-outs, organizational relationships, segmentation, scoring…the list could go on for awhile. How many hours could be saved if those things were handled by the technology? What’s the cost of those hours – both salary and opportunity costs?

  2. Best Practices Built into Tech Make You Perform Better

    Any tech manufacturer worth their salt builds in best practices for the use of their technology into it. Apple wasn’t technologically more advanced than its competitors; it just did a better job of making their tech easy to use, especially for those functions for which the user needed it most. Now, other tech manufacturers have figured it out. So, any tech made specifically for a nonprofit should have nonprofit best practices built-in. And, those best practices will help your nonprofit perform more efficiently and effectively. Again, back to the MS Excel example. A CRM built for nonprofits will encourage you to segment lists, track supporter history, score supporters on type, time and frequency of activity and more. Research has shown that using just those 3 things in your outreach can improve response rates and ultimately increase actions or donations by supporters. If you are not doing those best practices, you likely have high opt-out rates, low open rates and low click-through rates on email. How much is not using best practices costing you?

Cost Scenario 2: Built Just for Your Nonprofit = Costs Just for Your Nonprofit

There are many talented people who gladly give of their time to support the nonprofits they care most about. Often, they are IT folks who have wonderful ideas on how to help their nonprofit. So, they generously donate of their time to build a custom piece of technology for said nonprofit.

It’s the dream. It’s custom-built to follow your processes so no one in the organization has to change their way of doing things. No person-hours (issue #1 above) were lost. It can even have best practices built into it to overcome issue #2 above. It cost your nonprofit nothing to build. Or, did it?

While I have observed scenario 1 more often, this second scenario is the one that often has the biggest potential of causing issues for the nonprofit. Again, I see two primary issues with this scenario:

  1. A single-point of failure can have paralyzing effects.

    When you are dependent on technology built by a volunteer, you only have one place to turn for training and support. It won’t take long to realize the painful costs of this approach. Maybe they built you a donor management database hooked into a web form they created for accepting donations online. What happens when that page goes down in the middle of your annual fundraising drive and the developer is on vacation? What happens when that person moves across country for a new job and you are left to train the staff and any new developers that come on board how the system works? What does all of that cost you?

  2. Keeping Tech Up-to-Date Requires Investment.

    Technology is being developed at lightning speeds. And, with every new generation of people, we go through multiple generations of technology. Heck, in just a little more than last ten years of my life, I moved from a big, bulky cell phone to a 4G device that tells me how much traffic is between me and work. Which may be great for my commute, but it means my first cell phone doesn’t work anymore on the network. Only steady, constant investment will keep technology up-to-date. Of course, you can keep using the old system for as long as it will function, but it won’t be long before it won’t talk to any other piece of technology in your organization. Is the develop who built your great system going to give the kind of hours needed to keep your technology up-to-date and functioning for the life of your nonprofit?

As the saying goes, “Nothing in Life is Free.” And, neither is technology.

Like most open-ended statements like that, you could debate it philosophically on many levels. I like the way Sunny Davis said it in Protocol. “If you let someone sell you a diamond ring for a dime, you probably don’t have a diamond ring worth a dime.”

If you aren’t convinced by the arguments above, then maybe it is best to explain this through a story. DC Design House has raised hundreds of thousands of dollars for Children’s National Medical Center. It is the effort of more than 200 volunteers each year, all working remotely and coordinating efforts centrally through the main organizers of the event. For years, they used whatever technology they have on hand to make it all happen. They suffered through passing lists back and forth over email, manually coordinating communications and events. Each year, they start all over with new volunteers and technology, and new unrealized costs of inefficiency and lack of best practices. But, it wasn’t until they centralized everything into one system (they chose a SaaS-based online organizing CRM platform with online donations and event management), that they were able to do three campaign-changing things:

  1. have a starting point for the next event including supporter contact information from the previous year,
  2. have a way of training all the new volunteers on how to use the system and
  3. raise funds year-round.

And, that doesn’t even cover all the features that helped them with best practices for list segmentation, automated thank you emails, social media publishing and more.

What does your free technology cost you? If you don’t know, maybe it is time to look into it.

A version of this article previously ran on June 5, 2013 in the Philanthrophy Journal blog.

Topics: Strategy Advocacy Fundraising Marketing