July 26, 2012

Sharing Back-Offices in the Cloud: The Case of TS4NP

  • Nonprofit shared back-office provider
  • One paid staff member
  • 15-18 client organizations

Five years ago, two groups of nonprofit workers and leaders came together in Danbury, CT, to find a way to provide technology infrastructure to the areas large community of nonprofits.

There were a number of nonprofits with people who were dedicated to their missionstuff for homeless shelters, food banks, AIDS research, the environment, whateverbut didnt know about anything about technology, said Howie Berger. These nonprofits would reinvent, to the best of their ability, some technology infrastructure. Everyone was reinventing the wheel and trying to do the right thing, and you had no tech infrastructure.

One of the groups was made up of banks and other funders looking for ways to support the nonprofits, while the other group was made up of local tech expertsbusiness knowledge coming together with IT knowledge, Howie said. United, they formed a nonprofit called Technology Solutions for Nonprofits (TS4NP).

Their idea seems straightforward, but at the time, finding a way to implement it still posed some challenges. Lets provide a standardized software offering to nonprofits at a price point they could not equal by doing it for themselves, he said. Lets remove the tech problem they have and give the people trying to do good a fair and equal footing and take their technology problems away from them.

You had all this back office that was just repeated over and over again, and all these techniques that were repeated, Howie explained. How do you leverage this so that these orgs that arent competitors can share all this?

The answer was to create a solid backbone of tech infrastructure and provide it for a low monthly fee. By standardizing all the products member organizations would use, without customization, it would make it easier to provide training and support. TS4NP chose Microsoft Office and the Microsoft Outlook mail client, QuickBooks for accounting, and GiftWorks for donor management. It also decided that a hosted solution would minimize the organizations need to manage their own infrastructure.

The first part of the solution was realized when Western Connecticut State University offered to provide remote hosting for the organizations servers, including rack space and a firewall. The school played a role in the second part, tooit recycled its old computers through IBM and donated them to the client nonprofits for use as thin clients.

From a user perspective, its as simple as logging on and accessing a remote server-based desktop through a sort of Virtual Private Network (VPN) rather than through a browser, Howie said. That eliminates the need for an on-premise infrastructure beyond the basic dumb terminal setup. With the thin clients, theres no storing data on the machinesits all stored remotely, he said. Everyone gets the same thing, so theres universal support.

Once the model was established, TS4NP began to investigate pricing. We wanted community funding, but we had a long discussion about how much skin should the nonprofits have in the gamewhat should it cost them? Howie said. There was a local hosting service doing hosting for mid-sized companies, and they were on our board. We looked at their services, and they were charging about $500 a month, which was too high for the nonprofits we were focused on.

We kind of worked our way backwards to a business plan, he said. Instead of finding a way to generate money, it was volunteers doing a good thing and wondering how low we could go. We got it down to $250 a month, a flat fee, for everything, including installation, training and support. You cant make money on this, but you can probably cover your cost within reason.

TS4NP pays a single employee to maintain the systems, with help from students at Western Connecticut University, and there are some hardware-related costs, but largely, the organization relies on donated services and refurbished hardware.

This is not a model that youd use if you were looking to start a business, Howie said. Its close to self-supporting, but its what Id call a community-committed model.

Such a model ultimately benefits funders, too. If an organization requests funding, in this case its clear to the funder exactly what the money is buying. From the funders standpoint, if you give money to an environmental organization because thats the cause you want to fund, you know the organization youre supporting is freed up to do the kind of mission-related work you wanted to support, Howie said.

Along with the office software, clients also get Cloud storage and data backup. TS4NP began providing service to its first client two years ago, and since then membership has grown to around 18, with more in the works. It also expanded service to nonprofits in other parts of Connecticut.

Howie said the one-size-fits-all solution doesnt actually fit all sizes. Bigger organizations with sufficient funding dont need this solution.

Dont solve a problem that doesnt exist, he said. And some organizations that have [Health Industry Portability and Accountability Act, or HIPAA] or health-related concerns, theres a HIPAA-related database component that one nonprofit had to have, but that would be so custom that I think wed shy away from that. Or if you had a custom application that your model required to work, wed shy away from that, too.

In some cases, the change is dramatic. During the data assessment period TS4NP conducted to investigate the nonprofits existing technology infrastructures to better determine the improvements that could help them, it found practices that might have led some of the organizations into trouble.

We had people backing things up onto a single flash drive they carried around in their pocket, he said. What happens if they lost it? We had a server covered in so much dust, its a testament to Dell that it was still running. They shouldnt be doing this stuffthey dont know how, and they should be focusing on their missions. Weve eliminated the need for them to call support, too, because we take care of all that. We give them the same tools that a startup would have if it had good money.

All in all, its been a success.

Weve taken the burden of the back office from them, and given them the ability to access their data and do reporting for funders and for their boards, Howie said. Our goal was to not be flashy, not try to be the front endwe just wanted to organize the backend and keep them in business.

Editor’s note: This case study is part of an NTEN research series on Nonprofit Shared Back-Offices in the Cloud, which was conducted in June, 2012, and prepared by Idealware. You canread the overview article for this study here, and find the other case studies in this seriesin our case-study section.

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Chris Bernard