Preparing for the 2000 Bug

As computer woes loom, charities brace for the worst, hope for the best

Scores of volunteers and non-profit organizations around the country are teaming up to combat the so-called millennium bug, which they say threatens to create havoc with countless computer chips and software programs in little more than a year’s time.

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In places like Clearwater, Fla., Ithaca, N.Y., Medford, Ore., and Sonoma County, Cal., citizens are taking on the challenge of helping to insure that their communities take steps to minimize any social disruptions caused by computer-chip malfunctions — and to gear up to handle any emergencies that do arise.

After a slow start, several national non-profit groups have also become alarmed about the potential implications of the computer glitch, and are now trying to educate their members and the public about the issue. Uncertainty and confusion on the topic abound, since experts disagree strongly about how severe the problems are likely to be.

Foundation officials and other non-profit leaders have begun meeting this fall at the White House with John A. Koskinen, who, as chairman of the President’s Council for Year 2000 Conversion, is coordinating the federal response to the problem. A group representing non-profit and philanthropic organizations now meets regularly with the council to discuss strategies.

By building partnerships, exchanging ideas, showcasing workable projects, and providing credible information to the public, the coalition members hope to forestall panic and to promote instead the view that the wisest course of action is to help one another.

“Volunteerism is going to become a critical issue” as more people are alarmed about the potential for major social disruptions, says Lois R. Saboe, staff director of the National Y2K Civic Leadership Initiative. “Non-profits can help channel the energies that are raised when people get really concerned about things. They know what the best practice is in community organizing or neighborhood building.”

The civic-leadership group is one of several loose coalitions formed recently to work with the White House, government agencies, businesses, and non-profit and civic groups to promote public discussion and contingency planning in cities, towns, and hamlets around the country.

“Everybody has gotten a late start on this,” Ms. Saboe says. “It had been perceived as an information-technology problem up until a few months ago.”

That is beginning to change. A growing number of non-profit leaders are beginning to believe, she says, that “this is a national emergency and should be treated as such.”

The year-2000 (or Y2K) problem, as many are calling it, arises because much of the computer hardware and software still in use today identifies years by only their last two digits. Those older systems — along with thousands of computer chips embedded in everything from railroad switches and elevators to medical equipment — may malfunction when faced with the year 2000, which they tend to confuse with 1900.

Examples are already occurring. Such problems have frozen account information on some credit cards with expiration dates after 1999, for instance, and baffled security systems that were being tested for potential malfunctions. Diagnosing and fixing the problem can be expensive.

Some analysts say the problem has been hyped by companies and consultants that stand to make huge profits by selling fixes. Those analysts predict that isolated equipment failures will be easily remedied and will have no broad repercussions for society.

Others see the global economy as so complex and interconnected, and the computer bug so pervasive, that they are forecasting a global recession, with widespread business failures, interruptions in food and energy supplies, telecommunications breakdowns — and, possibly, even civil unrest.

Finding no consensus among experts, many non-profit officials say the most prudent course is to prepare for the worst and, by making strenuous efforts to insure that critical services are maintained, strive for benign results.

Among the steps that some non-profit groups are taking to deal with the year-2000 issue:

* Independent Sector, a national coalition of charities and foundations, is trying to galvanize its members to collaborate at the local level with government agencies, businesses, and other non-profit groups to make sure that communities cover their most critical needs in the event of any disruptions.

* The Council on Foundations is preparing a “tool kit” for foundations to use, which will provide information on what grant makers can do both to insure their own smooth operations and to help their communities.

* Gifts In Kind International, an organization that distributes donated corporate products to charities, is conducting a survey of non-profit groups to determine how aware of the problem they are, how they plan to deal with it, and what help with technology they might require to quash the millennium bug. Early next year the charity plans to present the results to officials in the high-tech industry and encourage them to help support whatever needs are identified as being most critical.

* United Way of America has prepared a 64-page technical guide to help United Ways and other non-profit groups determine their risks and discuss ways to cope with the issue.

* The Nathan Cummings Foundation, in New York, has prepared a booklet titled “The Year 2000 Challenge” that suggests socially responsible roles for grant makers and other non-profit groups.

* The Ewing Marion Kauffman Foundation plans to invite at least 1,200 Kansas City non-profit organizations to a February 5 seminar to discuss how to collaborate on a citywide response to the issue.

Despite those and other measures, a growing contingent of non-profit leaders says that too few organizations are paying serious attention to the full implications of the computer bug, which could affect the non-profit world in a multitude of ways, from fund raising to program operations to investment strategies.

In the coming year, those officials say, grant makers and non-profit executives must make extraordinary efforts to educate their constituents and the public about the ramifications of the problem. They say the stakes are too high to assume — as do many organizations preoccupied with other pressing needs — that the problem does not affect them, or that computer technicians, software companies, or government agencies will resolve it in time.

“We are facing a leadership and management challenge of the highest order,” says Charles R. Halpern, president of the Nathan Cummings Foundation. Mr. Halpern, who is trying to drum up support for a more focused and aggressive philanthropic response to the issue, last month convened a meeting of some two dozen foundation officials with Mr. Koskinen at the White House.

“You’re going to be a group that people increasingly are going to look to for leadership and response as this problem becomes more visible,” Mr. Koskinen told the foundation officials. Grant makers, he said, must take advantage of the credibility they have not only with grantees but also with politicians and government officials, newspaper editors, business executives, and civic leaders, all of whose sustained support will be needed in any broad-based collaboration to tackle the problem.

As a result of that meeting, grant makers have created the Project on Y2K and Society as a central information clearinghouse for foundations. Its organizers hope that it will receive grants from other foundations that it can quickly channel to groups and individuals who are working on remedies to the problem. The Cummings Foundation has committed $200,000 to help get the project running.

“It is critical to get foundations active and mobilizing their resources,” Mr. Halpern says. The new project gives foundations an easy vehicle to help poor and vulnerable citizens, he says, without their having to do their own research into which people and organizations around the country are doing good work.

Many efforts have been started by a handful of citizens alarmed at what they see as a lack of leadership from government or business. Paloma O’Riley, a Colorado activist, says that “no one was looking at public-health and safety issues” a year and a half ago when she started the Cassandra Project, a popular Web site that deals largely with the millennium bug and emergency preparedness.

Governments and businesses were focused on fixing their own systems, she says, rather than on the prospect of people’s not receiving their Medicare or Social Security checks, for example, or being denied health care because of computer snafus.

Apart from citizen activists, “no one else has been out there saying that the public needs to know about this: It needs help, information, and guidance,” says Ms. O’Riley. “That’s not coming from business or government.”

Many non-profit groups are also likely to suddenly have their hands full if the kind of system failures that some analysts are predicting do come to pass.

“To whom will people turn when they can’t find food or a warm place to sleep?” asks Sara Melendez, president of Independent Sector. ‘They’ll turn to their local non-profits — and we need to be ready.”

But most non-profit organizations are far from ready, say some observers. Many groups have not even begun to determine whether the millennium bug affects their own equipment and offices, let alone whether their clients, accountants, banks, and other business partners are also dealing with the issue successfully. Even fewer have begun to focus on how the world at large may be affected.

”Many non-profits still have their heads in the sand, unfortunately,” says Phil Ferrante-Roseberry, program director at CompuMentor, a San Francisco charity that helps non-profit groups use technology more effectively. “People are in total denial.”

The cost of remedying the computer bug will be substantial. Governments and corporations are spending billions of dollars to correct the problem; the aggregate cost has been estimated at up to $600-billion — and perhaps twice that amount if the cost of anticipated litigation is added.

Some non-profit groups face steep bills as well. Independent Sector, for example, has budgeted $200,000 next year to upgrade its non-compliant payroll system, while other groups also plan to buy computers or software that can handle the new millennium, or to modify their current equipment to do so.

Time is running out for implementing major fixes, however. Analysts say that there is not enough time to repair everything that needs fixing — and that some systems will inevitably fail.

When that does occur, philanthropy has a vital role to play, say some non-profit leaders.

“We are the sector of the community that thinks about the most marginal, the least competent, the most vulnerable, and by bringing their interests into any community dialogue about how to prepare for this problem, we have a very important contribution to make,” Mr. Halpern told his colleagues at the White House conference. “But if we are to be effective in an optimal way, we have to get out of the business-as-usual mindset.”

Many foundations still treat the millennium bug as primarily a technical problem, focusing on insuring that their own computer systems will not be daunted by dates beyond 1999.

Yet some grant makers now find themselves in the role of trying to generate interest among their grantees and other non-profit groups, few of whom so far have sought their help in dealing with the problem.

The deliberative process by which foundations normally conduct their grant making is too slow for a challenge where success or failure will be measured in weeks or months, not years, some grant makers at the conference observed. And foundations may have to think and act outside their normal boxes if they are to exert much influence on the year-2000 problem — overcoming, for example, their usual reluctance to make grants for activities outside their program guidelines.

“The big foundations have looked at the problem much too narrowly,” says Mr. Halpern. “The right first step is for them to look at their own systems and make sure they will function. But they then have an obligation to provide the information and support that their grantees need, and to anticipate dislocation in the lives of the people they serve.”

While foundations and large charities can cover the costs of replacing or repairing their equipment, small non-profit groups are likely to have fewer resources at hand.

“Given non-profits’ propensity to have older, outdated computer systems, it’s more likely that the systems on their desks aren’t Y2K-compliant, and that they don’t necessarily know how to figure out if they are,” notes Rob Stuart, director of the Rockefeller Technology Project, in Philadelphia. Many groups rely on volunteers to keep their systems running and have little expertise in computer technology.

To close that gap, CompuMentor plans to distribute early next year a free protocol for non-profit groups to follow that will help them identify year-2000-related problems in their computer equipment and critical software. “We’re trying to design it at a level where somewhat tech-savvy organizations can do it on their own,” says Mr. Ferrante-Roseberry.

Where that is not possible, CompuMentor’s network of some 2,500 volunteers will use the methodology when non-profit organizations ask for help in determining whether their systems are compliant.

Not all older computers may need to be upgraded or replaced, since word-processing and some basic data-base programs do not depend on dates. But those who ignore the problem may be doing so at their peril, some experts warn.

“There are 650,000 registered charities in the United States,” notes Mr. Ferrante-Roseberry. “A lot of them will cross their fingers and step into the next millennium and see what happens. Some will be lucky. Some will encounter problems that will mess them up for a week or two. And others will really regret it. They’ll find they can no longer access their client records, or their accounting system may shut down completely.”

Non-profit groups that turn to foundations for help upgrading or replacing their technology systems may get a lukewarm response, since many grant makers have been leery of financing computer systems for their grantees. Those who have done so, however, say that providing grantees with new technology can pay big dividends in their morale and effectiveness.

Family Service Mid-Peninsula, in Palo Alto, Cal., is typical of many small non-profit groups in using outdated technology. Most workers use 1980s-era personal computers known as 286’s and 386’s. “Our billing system expired about four years ago, though we’re still using it,” says Jeanne Labozetta, the chief executive.

After deciding that the charity needed foundation support to modernize its computer system, Ms. Labozetta submitted a joint grant application with two other charities in the area, so as to benefit from bulk-purchase discounts and increase her chances with grant makers.

The Peninsula Community Foundation, Charles and Helen Schwab Family Foundation, and Sobrato Family Foundation this year provided a joint grant of $300,000 to the three institutions, while the David and Lucile Packard Foundation provided $60,000 for training on the new system.

Although the year-2000 glitch was not the main motivation for seeking to replace the computers, Ms. Labozetta says, it did help pique the interest of grant makers, and also dictated the schedule for switching to the new system — which is expected to come on line next year.

Alexa Cortes Culwell, executive director of the Schwab fund, says the joint grantees traditionally viewed one another as competitors, but now work closely together. The new technology and the close collaboration, she says, will allow the groups to better serve their clients and compete for contracts.

That kind of collaboration — multiplied through communities around the country — may generate something positive from a computer bug that is already giving some officials sleepless nights.

“The silver lining in this is that if communities do this, they’re going to be stronger after this is all over because they will have set up systems of contingency planning for communitywide problems,” says Ms. Melendez of Independent Sector. “Until now, there has been pretty much an ad hoc approach.”