Sometimes 'Free' Is Too Expensive

Here's a price check for donated technology

By Lisa Brandes

Lisa Brandes is president of Education Funding Alternatives, a consulting firm in El Cerrito, Calif.

More and more school people are exploring funding alternatives for technology, but before you go looking for freebies, you need to understand what a donation will "cost" your school. Not all deals are as good as they sound. A good deal is one in which the benefits received from the donation far outweigh the costs to your organization.

In schools, I've found, confusion often arises over what I call a gift's "cost-benefit ratio." Ascertaining this ratio is useful when considering grants, pilot tests, and donations of used equipment. Don't get me wrong: Each is an excellent source for receiving the technology your schools so desperately need. But none is exactly "free."

Grants

The first thing most educators say when they talk about purchasing technology is, "I'll bet we could get a grant for that." Have you ever heard anyone discuss the purchase of textbooks in that way? People seem to assume unlimited money is out there for technology, just waiting to be requested. Unfortunately, nothing could be further from the truth. Most grant funding is difficult to come by and takes a lot of time and energy to acquire.

This might come as a big surprise to first-time grant-seekers, but it takes just as much work to get a grant for $2,500 as it does to get a grant for $25,000. So it makes sense to focus your proposal efforts on larger opportunities and leave the smaller ticket items to other types of fund-raising activities. Parent/teacher groups, for instance, can be an excellent source of funds for projects under $3,000--especially if the groups have moved beyond "bake sale" style fund-raisers.

Making fund-raising efforts pay off is often a matter of investing time (and even money) up front in training. Rather than hiring a proposal writer to put together your grant submission, consider hiring a fund-raising specialist to train your staff and parents on how to develop proposals and approach funders. Like the training approach used in the Peace Corps, this approach teaches you how to raise funds yourself, rather than relying on someone else to do it for you or wasting time on trial and error.

Let me warn you at the outset: It is almost impossible to find a grant that will fund an entire technology project. And from the funder's perspective, that makes perfect sense. Funders assume that if the project or product you want to provide to your students is really important, you will find ways to contribute to its support financially. If you don't, then you've just, in effect, told the funder you're interested in the project only if someone else will pay for it. With lots of other organizations competing for the same grant dollars, funders are likely to focus their efforts where recipients seem most sincere.

Another hidden cost of grant funding is the time it takes you to get the grant. In addition to the time necessary to develop a carefully crafted proposal, it can take as long as 18 months between the time the proposal is submitted and the time a decision is finally made. Obviously, if you are looking for a quick solution to technology funding problems, this might not be it.

Pilot tests

Another area where confusion often arises is pilot testing. The lure of receiving "free" equipment from vendors in return for testing their products is very appealing. And indeed, it can be an excellent way to acquire some of the technology your schools need. Still, you should watch for a number of things.

First and foremost, make sure the materials your schools will be using as part of the pilot test meet your curriculum goals. If not, you're paying in wasted school hours for the equipment the vendor is providing "free."

Second, find out whether you will have full control over the use of the equipment during the pilot test. If not--if the equipment can be used only for the piloted materials, for example--you can't really consider it free equipment.

Calculate the amount of classroom disruption time the pilot test will cause. Include vendors' visits to the classroom, bringing personnel from other school districts to see the installation, and the like. Be aware of how the details of the pilot test will affect your teaching schedule.

Finally, if the equipment will be taken away at the end of the pilot test, remember to compare the benefits of its usage against the cost of renting the equipment for the same length of time, not the purchase price. Is there any advantage to having short-term use of the technology in question? Many consider such arrangements a disadvantage because of the amount of training time invested in the start-up.

Used equipment

Many corporations donate used technology equipment to schools and other nonprofit organizations as they replace older items with newer models. In fact, specialized organizations exist solely to serve as brokers between donors and recipients.

Acquiring equipment in this way has significant benefits, but it has a downside as well. On the plus side, few costs are associated with acquiring used equipment, and it rarely requires the submission of a formal proposal. But you might find you need to purchase a great deal of ancillary equipment to make the donated equipment work for your purposes.

Before accepting used equipment, ask yourself whether it is the exact type of technology you would purchase if you had the money. And find out whether it will limit your software choices or possibly eliminate some kinds of programs. Remember that curricular considerations should drive technology choices. If accepting donated equipment means you can't provide adequate curriculum to your students, then the cost of that equipment is high indeed.

Other disadvantages: Maintenance costs generally are higher on older equipment, and the amount of downtime is greater. These considerations might not be deal-breakers, but you should factor them into your decisions about accepting used equipment.

Calculating true cost

In each of these scenarios, we have been looking at a variation of cost-benefit analysis. Cost-benefit analysis is nothing more than balancing the costs of an endeavor against its benefits and then determining whether the endeavor is worth the effort. Ordinarily, these kinds of analyses are used in business to determine the feasibility of different actions, such as upgrading production equipment, developing a new product, or entering a new market. Many people are discovering, however, that business techniques such as this can be useful in education and other nonprofit enterprises as well.

How do you determine the cost-benefit ratio of a gift? At a minimum, you need to include the cost of any labor required to obtain the item and any costs associated with maintaining it. You should also include in your cost calculations any lost opportunities related to the gift, such as disruption to teaching time.

You then compare this information with the cost of purchasing and maintaining the same equipment for the same period of time, without any contributions. The difference in the two figures becomes your cost-benefit comparison and helps you determine whether the "free" equipment is worth it to you.

For example, suppose a local corporation offers your school 15 used personal computers. At first, you're ecstatic--15 more PCs for your technology lab! But before you accept the donation, you decide to look at the cost-benefit ratio.

The machines are four-year-old 286 personal computers. With an anticipated maximum useful life of about five years, they offer only about a year of productive use. In addition, most of the software your school is using these days requires a 386 machine at least, so the 286s will need an upgrade right away--at a cost of about $500 each. In addition, a maintenance contract on the 15 PCs will run approximately $4,300 a year, and you'll have to hire a technician to install the hardware and integrate it into your existing system--at a cost of about $1,200.

Given these figures, you'll have to pay approximately $13,000 for the "free" equipment--an average of $867 per computer. Instead, why not thank the corporation but decline the donation, suggesting that the company sell the used equipment and donate the proceeds to the school. Then add the same $13,000 to the cash donation, and you'll probably be able to buy 15 brand new PCs that fit your technology plan and will serve your students for the next five years.

The objective of cost-benefit analysis is not to inundate you with data but, rather, to help make sense of those data. And in theory, working through the process for each grant, pilot test, or donation will give you a clear answer. But as you well know, reality often works out differently than theory. More often than not, what emerges are marginal differences in costs and benefits, which means you have to make a judgment call: Is this a good idea or not? When it comes to that, at least you'll have the facts.