Deciding Between New and Used Technology

Print Share on LinkedIn More

Most nonprofit leaders seem to agree that the new information technologies (computers, cell phones, fax machines, the Internet and World Wide Web) have transformed the way they do business.1 Rapid and continuous advances in hardware efficiency and sophistication, plummeting production costs and purchase prices, and the fairly widespread belief that technology is “important” or “essential” to carrying out program operations shape the current upsurge of computer use in the sector.

Yet there is mounting evidence that many smaller nonprofits lack the resources to take advantage of the new technologies, falling into what the Kellogg Foundation has termed the “organizational divide.” 2 Constrained by budgets that barely cover program costs, the notion of significantly expanding their technological capacity remains the stuff of dreams for some—especially in a period marked by growing economic uncertainty and certain government cutbacks.

For years, the donor-market in used computers has attempted to bridge this chasm. Depending on whose figures you use, somewhere between 14 million and 40 million computers are retired by U.S. businesses annually. As the volume of donations from corporate sources increased, a host of nonprofit computer recycling organizations emerged to extend hardware access to every corner of the sector. More recently, major computer manufacturers have begun offering refurbished equipment at bargain prices through factory outlets.

But industry insiders caution that donated or re-conditioned equipment can present a mixed blessing for the unwary.

“Recycled” is generic shorthand for used equipment—whether donated or purchased through a company outlet or third-party source. It also refers to harvesting parts from obsolete equipment, as well as the steps necessary to safely dispose of equipment that has exhausted its usefulness. This broad category includes “refurbished” computers, returned merchandise, and equipment recovered from the lease market.

Noting that a new computer system, complete with accessories, bundled software and a modest degree of factory tech-support can be readily found for under $1000, Marc Osten, an advisor and writer on strategic technology use, recommends caution when considering recycled equipment. He likens it to buying a used car, which “may run fine at first, but still has a few thousand original miles left by the previous owner and it’s likely that chronic, performance-related problems will crop up.” Given an average lifespan of three years of worry-free operation, the specter of frequent maintenance and a corresponding drop in staff productivity are the hidden costs of used computers.

“New is always better than used,” says Scott Douglas, executive director of the Greater Birmingham Ministries (GBM), an inter-denominational social justice organization. “We recognize that planned obsolescence means that some of the newer software will only run on new machines, so we try to keep up with developments.”

Still, there are other voices.

With a four-person staff and several volunteers, Cooperative Artists Institute (CAI), an arts and education organization based in Boston, is among the 43 percent of nonprofits with an annual budget of less than $150,000. Like most small nonprofits, CAI is constantly weighing program needs against available resources; for them, the accepted notion of earmarking a fixed percentage of their budget for technology purchases seems completely impracticable.

“I don’t know how we could have managed our programs without donated computers,” confides Susan Porter, senior program developer and a co-founder of CAI. “Our first computer purchase was a new Mac/SE, way back in the late 1980s, but everything since then—a second SE, a brace of Apple IIs, and now our network of Power PCs—has been donated.”

Charlie Thompson is the founder of MindShare, a Massachusetts for-profit providing technology consulting, network design and support, and low-cost refurbished computers to nonprofit organizations. For the last four years, MindShare has managed the nonprofit Notre Dame Computer Initiative to distribute refurbished and upgraded computing equipment to low-income families as well. Thompson believes the quality of today’s donated equipment has risen steeply as corporate donors, among them Shaw’s Supermarkets and Dunkin’ Donuts, leapfrog from Pentium IIs to Pentium IVs. Moreover, as technology improves, fewer donated machines are arriving cannibalized for parts. Previously, replacing missing soundcards, CD players, modems, and other accessories might add as much as $400 to the cost of refurbishing.

“Face it, probably 95 percent of the day-to-day computing needs of most nonprofits will not require the processing speed of a Pentium IV chip,” Thompson insists. “If a machine will run the Windows 98 operating system, there’s no pressing reason to upgrade just because Bill Gates wants to sell you his latest product.” He’s also quick to distinguish between the quality of the high-end equipment he receives from donors and the low-cost clones that have flooded the retail market in recent years.

“We’ve been really fortunate with the quality of our donated machines and with consistent access to volunteer technical support that keeps everything working,” Porter adds.

Recycling groups such as NDCI grew out of the response to community needs and the charitable impulses of corporations. In contrast, Thompson notes, manufacturers were spurred into the refurbished market by a government lawsuit brought against Packard-Bell for selling computers containing parts salvaged from damaged machines as “new.” Broadly interpreted, the ruling has included merchandise returned for any reason. As a result, in addition to factory-reconditioned equipment, demo units and items with “minor cosmetic blemishes” are turning up at discounts of five to 25 percent. Major dealers, such as Dell, Gateway, IBM, Compaq, Hewlett-Packard, Apple, and Palm, do a brisk business in online sales.3 Before buying, check out the details of the warranties: where Dell offers a one-year standard warranty with an option to extend up to three years, IBM offers only a 90-day warranty on its refurbished products.

Finally, in the last several years, computer leasing has been suggested as a partial solution to the questions of acquisition price and technological obsolescence. Admittedly, leasing can put the latest top-shelf model computer into your office tomorrow. You might even consider this option if you’re really cash-strapped, or if you only need a temporary replacement for downed equipment. However, long-term leasing, even with an option to buy, will also saddle you with finance charges of as much as 20 percent.

Computers are tools. Building the technology capacity of any nonprofit organization, regardless of size, involves understanding the potential contribution of these tools to improvements in overall program performance. According to Osten, a detailed appraisal of the total value and costs of technology to the organization is the center of a well-considered technology-acquisition strategy (see the spring and summer 2001 issues of the Nonprofit Quarterly). But the initial hardware purchase is merely the most obvious expense. Arriving at the total cost of ownership4 involves assessing the useful life of the equipment, the immediate and long-term costs associated with training and maintenance, systems and software compatibility, and the availability of tech-support. These criteria apply whether you opt for the latest product on the market or go trolling for bargains or donations.

New or used? The expectation is that technology will contribute to organizational performance. Should you decide to forego the assurances of buying new in favor of the initial cost-savings (and long-term gamble) of recycled equipment, the next step is finding a reputable refurbisher—a factory outlet or nonprofit intermediary for corporate donations. Unlike fine wines, older is not better when talking about computers.

Shop with a critical eye: can the equipment run your current business software applications, fit your networking demands and allow for future systems expansion? Is the operating system intact and can you obtain the original licenses, documentation and media (CDs, floppies, printed manuals)? How about the software for other applications? Is the system complete—does it have a keyboard, mouse, monitor, printer, and modem? Remember, upgrading systems and applications software often requires a product serial number and valid authorization code—and anything not provided will have to be purchased separately. Can you get a warranty? And what are your realistic options for securing some kind of tech-support?

Recognizing the unfulfilled needs of smaller organizations, CompuMentor’s TechSoup has recently launched an online tech discount store, assembling donated hardware, software and training resources for nonprofits (www.techsoup.org/DiscounTech). The site also has useful advice on recycled equipment, as well as a list of specific “Tips for Acquiring a Donated Computer” (www.techsoup.org/recycle/acquire.cfm).

Bear in mind that, in the final analysis, you may not always get what you pay for, but you will certainly pay for whatever you get.

1. Princeton Research Associates. 2001. Wired, Willing and Ready: Nonprofit Human Service Organizations’ Adoption of Information Technology. Washington, D.C.: Independent Sector. December.(www.independentsector.org/ media/wiredwillingreadypr.html)
2. Robertson, Bethany. 2001. Beyond Access: A Foundation Guide to Ending the Organizational Divide. Washington, D.C.: National Committee for Responsive Philanthropy. December. See (www.independentsector.org) and (www.cisco.com/news).
3. See Dell (delloutlet.com), Gateway (gateway.com/remanPC), IBM (ibm.com/products/us), Compaq
(compaqfactoryoutlet.com), Hewlett-Packard (hpshopping.com), Apple (store.apple.com), and Palm (palm.com/outlet).
4. Summit Collaborative. 2000. Total Cost of Ownership: The Hidden Costs of Technology, CompuMentor. (www.techsoup.org/articlepage.cfm?ArticleId=295&topicid=11)

According to estimates by the National Safety Council, 500 million obsolete PCs, constituting 7.5 million tons of potentially hazardous toxic waste, have been trashed since 1997. The National Recycling Coalition calls it “electronic waste,” pointing out that carelessly discarded computers introduce more than scrap metals and plastic to your local landfill—a monitor adds glass and significant amounts of lead and other heavy metals. Improper disposal may expose offenders to sanctions under various state and federal hazardous waste regulations. For information on applicable regulations check the federal Environmental Protection Agency’s Web pages (www.epa.gov/wastewise/pdf/wwupda14.pdf).

NRC suggests that extending the life of older products through reuse is the environmentally preferable alternative to the landfill. TechSoup offers an extensive list of organizations accepting donations, as well as guidelines for donors and recipients of used equipment at its Web site (www.techsoup.org/recycle). For electronic equipment too old or damaged for reuse, recycling is a viable second choice and NRC maintains a national database of recyclers at its Web site (www.nrc-recycle.org/programs/electronics).

Finally, there is a growing industry trend toward addressing the disposal question at the point of design. Called “design for environment” (DFE), it involves designing components to be more easily upgradeable and reclaimable. A number of major manufacturers, including IBM, Dell and Compaq, are already applying DFE to some extent.

Ty dePass is an associate editor with the Nonprofit Quarterly.