Some Tips for Charities Looking to Lease Software

By NICOLE WALLACE

Charities increasingly are receiving offers from companies, and even some nonprofit groups, that tout the option of leasing software systems that can be used via the Internet.

Those groups, known as application service providers, or A.S.P.’s, offer charities an alternative to buying software outright and installing it on their own computers. Such products could prove to be a good option for some charities, particularly those that have a small budget for technology and limited technical expertise on their staff. But gathering information about those providers to make an informed decision can be challenging.

Nonprofit technology experts offer the following advice to help guide charities:

Develop a plan. The first step, say technology observers, is for nonprofit groups to examine what exactly they want to do with technology, and then decide whether an application service provider might help them achieve their goals.

“Organizations should not start with the solution. They should start with what their needs are,” says Ted Hart, president of the ePhilanthropyFoundation.Org, a nonprofit organization that offers charities advice on Internet fund-raising activities. “When you start with the solution, then you start trying to make things work.”

Ask about privacy and security. Charities should proceed cautiously before storing important data on a third party’s computer server, experts advise. Groups worry that outsiders might be able to gain access to donors’ names and addresses or that data critical to their work, such as information about clients, could be lost if there is a technological mishap or the company goes out of business.

Before signing up with a provider, Mr. Hart encourages charities to ask questions such as: What security steps does a company take to protect an organization’s data? How often is the data backed up? Who owns the data, and who has access? And how easy is it to get to the data once the information is entered into a software application?

But he is also careful to note that those issues are ones charities should be thinking about whether their data reside on a server in another state or just down the hall.

“You need to be concerned about security — not because it’s Internet-based and because it’s an A.S.P. — but because you ought to be concerned about security anyway,” he says. “Don’t be lulled into a false sense of security because it’s sitting on a server in your office.”

Realize speed matters. High-speed access to the Internet is vital for nonprofit organizations that want to use leased software efficiently. “These are high-end applications. They take a lot of time to load, and you’ve got to have high-speed access,” advises consultant Marc Osten, founder of the Summit Consulting Collaborative, in Amherst, Mass. He recommends that charities making use of Web-based software invest in high-speed Internet access via a D.S.L. or cable modem, but he points out that those services aren’t yet available in some areas.

Talk to references. Asking for a list of customers and talking with those organizations about their experiences should be a standard step when evaluating any company and its products.

Michael Stein, a technology consultant in Berkeley, Calif., says charities will glean the most from discussions with organizations whose activities or structures are similar to theirs. “If you’re a nonprofit that runs 100 food shelters across the state, try to find another customer that does work in that issue area or that has a similar organizational structure, so that you can compare apples and apples,” he recommends.

Look closely at fees. When Children Now, an advocacy group in Oakland, Calif., went looking for an A.S.P. earlier this year to provide the technology to help the group coordinate its online advocacy work, comparing the prices of different systems proved to be difficult.

“It wasn’t always crystal clear what the fee structure was and what you got within that fee structure,” recalls Colette Washington, Children Now’s Internet coordinator. “We figured out that some of them didn’t include everything for the price, and they didn’t really bother mentioning that, so you had to dig down a little deeper.”

Because many prices are determined by use, Mr. Stein encourages his clients to estimate how many donor records they will have, e-mail messages they will send, online donations they will accept, hours of technical support they might need, and such — and then use that information to compare how different companies’ fee structures would affect them.

Think long term. A major concern of charities thinking about hiring an application service provider is that the companies providing the services, many of which are new, could go out of business.

Technology experts say examining a company’s business model to see if it makes good financial sense is key to picking an A.S.P. with staying power.

Molly Smith Watson, a fund raiser at Planned Parenthood Federation of America, reasons, “If you’re not paying them any money, they can’t afford to give you any service, and they probably can’t afford to stay in business.”

She adds: “Ultimately, you can’t get the best brains in technology for $700 a year.”