Grantmaking in the Cloud

Cloud computing, or cloud technology, is a hot new technology concept, used to describe a number of processes and software products that many of us already use, whether we know it or not. Experts at Idealware, a nonprofit technology advisor, collaborated with NTEN, the nonprofit technology network, to publish a study, the State of the Nonprofit Cloud 2012, to share details on how nonprofits and foundations are using cloud technology. Their findings confirm that, while cloud computing can be a boon to many organizations, it is not a panacea. As one consultant put it, it’s a mistake to think “the cloud fairy dust has taken away all the problems that ever existed with software.” The following is excerpted from the Idealware study.

Cloud-based software might seem like a new concept, but it’s not—it’s the evolution of software accessed over the Internet, which we’ve used in one form or another for a decade or more. For some nonprofits, however, the mindset with which they approach the software has changed. Cloud solutions provide nonprofits with the opportunity to outsource something—like the maintenance of servers and software—that may not be their organization’s core competency.

As opposed to thinking of IT infrastructure as a fact of life, some organizations are beginning to think about it like electricity—something that you can rent rather than create yourself. You could put a generator in your basement to produce your own electricity, but then you’d have to run and maintain it yourself. In most cases, it’s more cost effective to simply pay the power company for electricity. Similarly, it may be more cost effective to pay a vendor for the use of their servers and software than to run and maintain your own.

One consultant we interviewed said, “Eventually, people will stop saying ‘cloud,’ because everything will be there.” He might be right, but it’s too early to predict the future of cloud computing—it’s not yet ubiquitous, but already it’s more than a fad. Traditional software vendors like Microsoft now offer online versions of many of their products, and in niche areas, like donor management software, new entries to the market have been almost exclusively cloud-based.

Internet security remains a legitimate concern. However, it shouldn’t be a reason to avoid the cloud altogether. Cloud solutions are no less secure than any other computer connected to the Internet. This includes your own servers and computers, which are often far less protected from online and other dangers than you may believe.

Realistically, a vendor who specializes in keeping data secure can do a far better job of it than the typical small- to medium-sized organization. Some nonprofits might even outsource security by using a cloud vendor compliant with any regulations they’re subject to, like HIPAA or credit card PCA requirements.

Major Findings from the State of the Nonprofit Cloud Study

• In the fall of 2011, we surveyed 780 nonprofits. An impressive 91 percent reported that they were using some kind of cloud-based software solution. The most commonly used cloud-based systems were staff email solutions, at 69 percent, followed by broadcast email (57 percent) and office software (44 percent).
• The vast majority of nonprofits we surveyed were using hosted software, but our interviews with staff members revealed that many didn’t even realize those systems could be considered hosted, or “cloud,” solutions.
• In addition, many respondents said they were concerned about security for some hosted systems—especially constituent databases—but were comfortably using other hosted systems for equally sensitive information, such as business email.
• Once a nonprofit starts using one cloud software solution, it’s likely to use more–organizations tended to be satisfied with cloud solutions, and have a more favorable attitude toward others. In fact, nearly 80 percent were using more than one cloud solution, more than 37 percent were using two-to-four, and 42 percent were using five or more.
• Why are they using cloud solutions? More than 42 percent cited “remote access” as an advantage, and nearly 24 percent cited “ease of maintenance.” But many organizations simply choose software that will work for them based on the feature-set, ease of use and cost over time; the fact that it was cloud-based either didn’t factor into their decision, or it was secondary. This is echoed by the finding that many organizations did not rely on technology professionals to help make their choices—many of the software decisions made by the organizations involved in our research were made by program staff or executive directors.
• Many of the people who participated in our research said they were concerned about the security of cloud solutions. A whopping 59 percent of survey participants who volunteered information about disadvantages of the cloud cited some variation of data control, security, privacy or access, and about 61 percent felt that “unauthorized access” and “reliability of access” were major concerns when choosing software. Security is a nuanced issue with a number of facets, but many nonprofit staff members in our research didn’t have a very nuanced understanding of it. The experts we interviewed agreed that nonprofits’ fears about unauthorized access were generally unwarranted, and cloud solutions are typically no less secure than any other computer connected to the internet.
• While very few organizations said they were measuring the Return on Investment of cloudbased solutions, the vast majority of respondents said they believe they have been helpful. Survey respondents and interviewees mentioned that the cloud benefitted organizations by reducing the burden on the IT infrastructure and staff. Such solutions provide nonprofits with the opportunity to outsource something, such as the maintenance of servers and software, that may not be a core competency of the organization.

In the end, cloud software is just software. It is critical to evaluate the cost, features, and value of each individual product rather than make decisions solely on the way it is delivered. Your organization may find, for example, that a particular installed solution has exactly the features you need, while the cloud solutions you look at don’t, or vice versa. In that case, it is irrelevant whether the product is in the cloud or not, as only one solution meets your requirements.