TechSoup Sees Upside for Nonprofits in Downturn

March 22, 2009, San Francisco Chronicle — Social entrepreneur Daniel Ben-Horin, whose multimillion dollar San Francisco business TechSoup Global connects charities to computer companies, sees an upside to the economic downturn.

Ben-Horin, who launched his company in 1987 as stock markets around the world collapsed, believes today's recession will prompt laid-off workers in technology and finance to volunteer more and companies to increase donations.

"I'm a child of the '60s and I believe in the phenomenon of a social zeitgeist," Ben-Horin said last week. "This is a time that will actually be good for nonprofits. It's a time that will be good for reinvention. It's a time when a lot of talented people will reexamine how they spend their time."

For TechSoup ( www.techsoup.org), which charges an administrative fee to make donated technology affordable to charities and public libraries around the world, it is a time of growth.

The company has expanded from 20 employees in 2000 to 170 today, and has seen its income rise 17 percent this year over the same period last year. It manages product donations of commercial hardware and software to more than 80,000 organizations in 23 countries.

"We are looking at the world now and seeing how we can expand our basic platform," said Ben-Horin, who shares the title of CEO with Rebecca Masisak, who manages the company's growth and corporate donations, and Marnie Webb, who focuses on systems technology and research and development.

In light of the depressed economy and high unemployment, Ben-Horin has begun exploring the idea of establishing a "technology peace corps," with TechSoup serving as matchmaker between skilled technologists looking to volunteer and nonprofits in need of systems help.

"This idea makes a lot of sense to me," Ben-Horin said. "People are talking now about public service. There might be funding we could get from the stimulus package. There is a field of people who want to help on a technological level, but right now it's totally aggregated. It's like when a disaster hits, everyone wants to help, but there is no coherence to bringing everyone together."

TechSoup also is on its way to becoming the nation's clearinghouse for U.S. grant makers who want to fund organizations in other countries. The charities would be certified by TechSoup after meeting a set of 501c (3) equivalency standards being worked out with the Internal Revenue Service.

"We have a formal application in to the IRS to create a standardized methodology for approving equivalency determination for charitable organizations," said Masisak. "These are steps we will go through to make sure that money going across the border is really going to a charitable endeavor." TechSoup was selected as the repository agency by the Council on Foundations through a competitive bidding process.

At the same time TechSoup is branching out in new directions, it is working with existing corporate clients to find ways to give more efficiently and meet heightened demand.

"Adobe and Intuit recently increased their donations through us because they realized that now more than ever, social benefit programs need more tools," Webb said. Adobe plans to increase donations this year by 50 percent, and Intuit by 250 percent.

Tess Reynolds, executive director of New Door Ventures, which helps at-risk youth in San Francisco, said her nonprofit has spent less than $500 to receive about $5,000 worth of donated technology through TechSoup.

"It's fantastic to have access to these products and, as a nonprofit, not to have to settle for second best," said Reynolds, who has received Microsoft Outlook and Office and Adobe Acrobat.

The San Francisco Food Bank is another local organization that relies on TechSoup. Information systems manager Ben Bear said, "We've gotten tens of thousands of dollars worth of software through them for a small fee. If we had to spend retail on these things, it would mean we would have less money to purchase food."

Bear also uses TechSoup's community forum, which offers a weekly e-mail newsletter, blogs, surveys, social networking, and experts available to help on anything from new marketing to utilizing Web 2.0 technologies.

Ben-Horin, the self-proclaimed child of the '60s who launched his company with $2,500, chuckles that he is now asked for advice on how to build a profitable social enterprise.

"People ask me, 'What's the business model? What's the secret sauce?' " he said. "My answer was to find a company that makes a product that everyone in the world needs and that allows you to donate it and charge a small amount."

He also believes in the importance of looking for opportunity in times of turmoil. When the dot-com boom went bust in 2000, Ben-Horin watched as responses to job notices went from five per posting to more than 300.

"A whole group of talented people got liberated," Ben-Horin said. "A certain number of those people welcomed what happened. There was this increasing feeling that something was missing, that selling toothpaste on the Web was not enough. I see something similar happening today, where giving is a way to validate your role in a world in financial turmoil."