Monthly Archives: June 2013

Small Business Blues: Trying to Get and Keep the Attention of Equipment Vendors is a Challenge

Faithful readers will remember previous posts we’ve written about “Tools of the Trade—What a Grant Writer Should Have” and “Tools, Grant Writing, and Small Businesses: How to Buy a Phone System,” both of which offer advice for finding great equipment. After 20 years in business, I’ve learned the hard way that it’s not always easy for a small business or nonprofit to get the attention of many equipment vendors.

I was reminded of this weird reality once again, as I struggled to get our new main office in the People’s Republic of Santa Monica functioning. The main challenge was our phone system. Over the past 15 years, we’ve had two Partner Mail systems. This system was originally made by AT&T, then Lucent, and eventually Avaya.

When we entered the movie in about 1998, Lucent vended these systems. Originally, however, Lucent refused to sell us a system because our business was “too small.” That’s right: sizism. I had to move up the Lucent food chain over several weeks to find a manager who understood that we wanted the Partner system because it would make up look bigger than we were at the time; it’s unusual for the client to beg a business to sell a product. The whole startup / small-business romance hadn’t saturated the media. Nonetheless Lucent eventually relented and deigned to sell us a system, cost about $6,000—a huge investment for back then.

We made the investment because the Partner Mail system was the gold standard of smaller PBX systems. While they have largely been replaced by VOIP systems, Partner Mail remains very reliable and valued in the used market. Our current system, a Partner Mail ACS 509, was part of the last generation ever made. We bought it new about five years ago for $2,000, demonstrating how the cost of technology has fallen over time. The Partner Mail system serves us well and I saw no need to change when we decided to move the office.

The downside of the Partner Mail system, however, is that it requires a skilled tech to install the interface with the telco landlines, and to program the system and phones, if needed (file this under “obvious foreshadowing”). It’s easy to get caught between the telcos—our old carrier was AT&T and the new carrier is Verizon—and the installer. The system can be installed by Avaya or by an Avaya “partner,” who are small telecom consultants.

When the time came to hitch up the wagons and mosey down the road to Santa Monica, we had to preserve the continuity of call forwarding and “800” service. I decided to use Avaya’s direct employees or contractors, rather than a partner, because I didn’t want to spend the time researching partners. I called Avaya two weeks before the move to ensure that their tech would be in our new office the same afternoon that Verizon got the dial tones working.

The Verizon guy showed up on time and did his thing. Then. . . nothing happened. No Avaya tech. I spent an hour on the phone with Avaya trying to figure out what went wrong. Talking to Avaya is like talking to HUD—the phone reps are bureaucrats, who are uninterested when they learn the caller represents a small business. It turned out that somehow the installation order was held, but no one called to let me know. The process would have to start again, which would mean a two-week delay in getting the system operational. I politely told them to piss up a rope and tried an AT&T 1080 all-in-one system sold by Amazon. That system, however, didn’t have properly functioning voicemail and useless, outsourced tech support.

I returned the 1080 phones and found a local Avaya partner who got the job done immediately. Not surprisingly, it turns there there is an “I hate Avaya” Facebook page, which I have so far declined to friend, but I’m thinking about it.

This also illuminates why most contemporary small businesses are probably better served by VOIP systems, which more companies vend and which doesn’t require tangling with a nasty organization like Avaya.

The Avaya experience reminded me of another negatory experience with a large technology vendor, Xerox, which also happened about 15 years ago. We had an old-world analog Xerox, a stand-alone fax machine, and various low-end printers. Xerox introduced a revolutionary hydra-headed networked digital high-speed copier, fax, printer and scanner, with lots of paper tray add-ons, a finisher and expresso maker.*

I read about this wonder in the Wall Street Journal: it was called a “Docucentre” and code-named “Hodaka,” as the machines were made in Japan. I immediately contacted Xerox sales, who told me. . . wait for it. . . our business was too small.

Another round of phone calls and meetings took place, during which I patiently explained that this device was perfect for a small, document-centric business like ours. The local Seattle reps eventually checked with Xerox central in Rochester and found that, not only would they lease us a Hodaka, but they would make Seliger + Associates the small business national test site for the product roll-out.

We went from “No” to free use of the machine for about six months and overwhelming in-person tech support. It was fun to visit focus group meetings with reps from other demonstration test sites, including Boeing and Weyerhauser. After the test period, we bought the machine at the then-astronomical price of $25,000. About five years ago, we put our Hodaka out to pasture and bought the new version, a WorkCentre 4250. When configured with four trays and a stand, the price came in at about $4,000.

The moral of these tales is simple: a small business or small nonprofit should be ruthless in acquiring the technology they need, even if vendors have to be dragged kicking and screaming to the party.


* The bit about the espresso maker is made up, but I want to see if you’re awake.

June Links: FundRise, America’s Worst Charities, Apprenticeships, Parking, Computers for Low-Income Kids, and More!

* “Own Your Neighborhood: The real-estate crowdfunding scheme that could revolutionize urban policy by destroying stupid NIMBYism.”

* How the ACA (“ObamaCare”) could evolve. The many grant programs created by the ACA should make the evolution of the ACA of interest to many readers.

* America’s worst charities. We recommend that our clients stay off this list.

Moma_Rain_room* Frank Bruni on Amanda Knox and pervasive sexual double standards, with the somewhat inane title “Sexism and the Single Murderess.”

* This should be obvious but for some reason is not, at least in public policy circles: Apprenticeships could help U.S. workers gain a competitive edge.

* Why many streets are ridiculously wide.

* Visualizing America’s absurd parking requirements; this could be seen as a complement to The High Cost of Free Parking.

* Giving computers to low-income kids does nothing to change outcomes. Still, we don’t expect these empirical outcomes to change most of the grant stories about the wonders of computers and iPads we tell in proposals, especially those involving the 21st Century Community Learning Centers programs.

* Hyped Seattle nonprofit “The Genesis Project” devolves into stealing money and / or getting sex from the prostitutes it’s supposed to rescue.

* Unconditional cash transfers may be the best tool for fighting poverty.

* “Solitary in Iran Nearly Broke Me. Then I Went Inside America’s Prisons.” Which are worse in some respects.

* For writers: “To ‘the’ or Not to ‘the’?

* People might be finally catching on to Komen, which we last wrote about in 2010.

* The U.S. has become the kind of nation from which you have to seek asylum—that is, the kind of nation you hide from, not go to for protection.

* How ‘Slut Shaming’ Has Been Written Into School Dress Codes Across The Country.

* A Prolonged Depression Is A Poor Affordable Housing Policy.

* Doing the Best I Can will change your views about the so called “deadbeat dads.”

Health Care Innovation Awards Round Two: ObamaCare, the Gift that Keeps Giving for Grant Seekers and Writers

Another week, another huge ACA / ObamaCare RFP announced. This time it’s Health Care Innovations Awards Round Two. There’s $900,000,000 up for grabs, with grants to $25,000,000. These eye popping numbers are big enough to seize the attention of even this grizzled grant writer.

The purpose of this very attractive RFP is to:

The second round of Health Care Innovation Awards will fund applicants who propose new payment and service delivery models that have the greatest likelihood of driving health care system transformation and delivering better outcomes for Medicare, Medicaid, and CHIP beneficiaries in four Innovation Categories.

This string of policy buzz words doesn’t really say anything other than that applicants are supposed to do something that will somehow lower undefined health care costs born by public insurance programs, while at the same time magically improving undefined outcomes. This is great news for applicants because almost anything can be proposed. It’s even better news for grant writers, as we can wax eloquently in health policy mumbo jumbo while spinning grant Tales of Brave Ulysses (I used this quote before, as well, but it just seems so damn perfect here). Speaking of quotes, I’ve cited the late, lamented Senator Everett Disksen before, but it applies here too: “A billion here, a billion there, and pretty soon you’re talking about real money.” This program is another example of the talk about sequestration and budget deficits having little effect on actual federal grant funding: the grant spigot is on at ObamaCare and it’s a gusher.

Every type of applicant is eligible: nonprofits, IHEs (Institutions of Higher Education, otherwise known as “colleges or university” but in bureaucrat-speak), Indian tribes, businesses and your Aunt Martha, as individuals are eligible applicants. Think of it as another Oklahoma Land Rush of grant opportunities.

As faithful readers know, I’ve been writing grant proposals since dinosaurs walked the earth and I can’t remember another grant program that has had so much money available, so little direction, and so broad an eligible applicant pool.

If your organization or your Aunt Martha have any bright ideas on improving Medicare, Medicaid and/or CHIP service delivery and costs, you should not let this opportunity pass. The deadline is August 15, so, for a change, there’s plenty of time to plan the project concept and write the proposal. A word of caution, however: a mandatory letter of intent to apply must be submitted by June 28. LOIs are easy to draft, so you should work most di di mau on the letter to reserve your place at this incredibly tasty grant trough.

“With Charity For All” – Ken Stern – Book Discussion

Ken Stern’s With Charity for All: Why Charities Are Failing and a Better Way to Give is really about a single, fundamental issue and its implications: funders are the real “clients” of most nonprofits, yet their desires dominate everything that nonprofits do. He says that “The care and feeding of donors who make highly personal gifts can distract from the core charitable purposes and matters of organizational effectiveness.” But in many ways the “care and feeding” of those donors is, or becomes, the organization’s real mission. Organizations that don’t attend to their funding streams aren’t going to keep their doors open.

As a result, With Charity For All is really about reforming funder priorities, especially among foundation, corporate giving, and wealthy individual donors.

That’s a laudable goal. Right now, however, most donors donate based on emotional connections rather than cost-benefit analyses. In one example, Stern describes how “Katrina was a gold rush for the nonprofit community; hundreds of organizations descended on the Gulf Coast.” But most of those organizations weren’t effective—including the Red Cross, as Stern describes in detail. When we judge by intentions more than effectiveness, we don’t actually care about effectiveness, and funders don’t look at what happens to their money after the donations; they’re busy basking in the afterglow. Moreover, Stern says:

For most charities, the story from the front lines is the most important measure of success, one that typically confirms the importance of the work and reassures stakeholders. Empirical and research studies are to be avoided as expensive, distracting, and potentially dangerous. In some ways, the charitable world exhibits and almost medieval aversion to scientific scrutiny and accountability.

Does this sound familiar? To regular readers it should, since we’ve long argued that your grant story needs to get the money and that most funders don’t value evaluations. Most donors and grant makers care only superficially about results. Nonprofits that have embraced “empirical and research studies” have mostly been outcompeted by those that tell happy stories.

That’s a problem from the perspective of those receiving services, however. Using the Red Cross as an example, which couldn’t act effectively after 9/11 and then planned to use 9/11 funds to improve organizational effectiveness, only to be bashed by the press, Stern goes on to say that there is

a bedrock and simplistic assumption that has long shackled the charitable world: that money spent on direct services is the only worthy use of charitable funds, while money invested in organizational effectiveness is to be kept as close to zero as possible. It is an equation widely accepted by the donating public, by the press, by charity watchdogs, by government regulators, and by most charities themselves. To keep overhead costs down, charities forgo necessary investments with devastating and sometimes deadly results.

This is sensational but sometimes true. Still, on a smaller scale than the Red Cross, we see lots of money subtly diverted in various ways into organizational effectiveness: the van bought for one program ends up being used for another. Project staff on one program also spend time working in another. Technically these sorts of things are often against funding rules, but better organizations ignore them so they can get stuff done.

Ignoring funder rules is often rewarded, as we discuss in point three of this post.

With Charity for All is hardly the only book to observe perverse incentives among nonprofits: The Robin Hood Rules for Smart Giving says in its introduction:

The idea behind this book is that philanthropists cannot settle for choosing programs merely because they generate important benefits. They must hold out for funding only those programs that do the most good per dollar of costs. Otherwise money is wasted, which is an unforgivable mistake given yawning social needs.

“An unforgivable mistake?” I won’t be inviting Weinstein and Bradburd, the authors, to dinner, and I suspect a lot of foundation directors won’t either. Still, their take is so similar to Stern’s that it merits a mention, especially because reality on the ground indicates that philanthropists can and do “settle for choosing programs merely because they generate important benefits.”

Despite Stern’s disapproval of current funder priorities, it’s important for organizations that want to succeed quickly learn how to tell happy stories—and when not to. Most proposals submitted to state and federal organizations, for example, are designed to avoid stories about particular individuals; the RFPs tend to be so fragmented that it’s difficult or impossible to tell a coherent story. Moreover, most government programs want a story about (possibly illusory) effectiveness, much more than they want stories about identifiable humans. Remember that these are bureaucrats we’re talking about, not normal people. It’s also not clear how much government spending is actually about solving social ailments, versus accomplishing other goals. I don’t want to say more about that here, because it’s venturing too close to the political quicksand that we studiously avoid, but the point remains and should be obvious to anyone involved with in grant writing and organization funding.

There are frustrating parts of With Charity For All, especially when Stern’s evidence or discussion is thin. For example, he says:

There is little credible evidence that many charitable organizations produce lasting social value. Study after study tells the opposite story: or organizations that fail to achieve meaningful impact yet press on with their strategies and services despite significant, at times overwhelming, evidence that they don’t work.

None of these studies are cited in a footnote. No specific organizations are cited. This narrative is little better than the charities-are-ineffective narrative. Still, charities are organizations that, on a basic level, must take in more money than they spend. Consequently, charities, like all entities, are perfectly capable of failing, and they must adapt to their environment. Like pretty much everyone who looks into this matter, I agree that charities should spend more time genuinely evaluating themselves, but that requires that their funders also become more interested in doing so. GiveWell.org is one effort to do so, and this book is an attempt to raise the profile of profiling nonprofits. Nonetheless, in a discussion about how to measure effectiveness, it’s discouraging to see references to “study after study” only to find zero studies cited.

It’s also not entirely true that “The nonprofit field is extraordinarily stagnant, even though tens of thousands of new charities are created each year and billions of dollars of grants and donations annually flow to American charities.” The word “stagnant” is probably wrong: although tens of thousands of new nonprofits ones are created, tens of thousands of old ones close. As I said above, a nonprofit that can’t take in more money than it spends won’t exist for long, and that’s part of what makes nonprofits dynamic. Now, it may be that funders are rewarding behaviors that may not be optimal in terms of achieving preferred outcomes, but that’s a separate issue that shouldn’t be conflated with dynamism per se.

In a moment of dubious interpretation, Stern writes:

At the core of our charitable system is the notion that charities perform critical social functions and thereby save the government and the taxpayer the effort and expense of providing the service. But the charitable sector is filled with organizations doing things that no government would care to do and that would scandalize taxpayers if they understood they were underwriting this effort.

I’m not sure “the notion that charities [. . .] save the government [. . . ] effort and expense” is at “the core of our charitable system:” is there a “core of our charitable systems?” Core isn’t the right word, or mental model; we have a series of post-hoc rationalizations. One of those post-hoc rationalizations is a larger sense that government can’t do or think of everything that should be done on a not-for-profit basis; groups of individuals should be able to come together to do stuff that’s worth doing but that won’t necessarily return money to “shareholders.” Not everything worth doing needs to be provided by the government and not everything provided by the government is necessarily worth doing.

Those are statements of general principle, however, and Stern goes on to describe how the college football bowl system consists of dubious nonprofits running, for example, “the Allstate Sugar Bowl” and making a lot of tax-free money in the process. Big-time college sports in general have only the flimsiest patina of amateurism left in them, and by now they should be spun off from their nominal university owners and made to pay players just like every other employers.

The idea that big time football or basketball schools (like Isaac’s favorite, the University of Kansas Jayhawks) should pay their coaches millions of dollars and their players “scholarships” is ludicrous, but those specific examples don’t necessarily mean all organizations doing things government shouldn’t should also be treated and taxed like conventional businesses. For example, the Mozilla Foundation provides an open-source web browser and is dedicated to freedom on the Internet. I don’t necessarily think the U.S. government should start its own web browser division, but most people would probably agree that Mozilla is a reasonable charitable endeavor.

(Regular readers have noticed that this post is a bit different than most of our posts: we’re reviewing a book instead of discussing direct experience, telling stories, or writing about RFPs. We’d love to hear your comments, and, if you know of any other books we should be reading, let us know about those too. Although we’re mostly content producers, occasionally we leave our iMacs, retire to a comfortable chair, and enjoy a book, along with a well-made cocktail or three.)