It might sound counterintuitive, but there's good money to be made from nonprofit organizations. Resellers and consultants who specialize in providing technology to foundations, philanthropies and other 501(c)(3) organizations are some of the most profitable around. Yet many of them aren't in it just for the money. Like the clients they serve, these solution providers are on a mission to do good.

There are almost 2 million nonprofit organizations in the U.S., according to Rem Hoffmann, president and CEO of Exponent Partners, a consultancy that advises nonprofits on the use of Salesforce.com software. He estimates that it's at least a $50 billion market. "But it's so fragmented, it's extremely hard to access," he says. "You have a small number of rather large well-known philanthropies, like the Red Cross and Save the Children, then it very quickly drops off to tens of thousands of very small organizations," he says. "About 80 percent of the organizations are less than $500,000 in revenue, which in a commercial sector doesn't even register as a real company."

Indeed, most nonprofits are like small businesses. According to a recent survey by the Nonprofit Technology Network (NTEN), an organization of nonprofit professionals involved in technology, only 35 percent of nonprofits have an IT department. The rest put IT in general operations, finance or have no one with official IT responsibility. IT sometimes ends up in the marketing and communications department. "Those are the folks that are trying to leverage the technology the most, so they take ad hoc ownership," says Holly Ross, NTEN's executive director.

Solution providers can play a vital role in helping nonprofits get the right technology and get the most out of that technology, particularly when it comes to software. "A nonprofit may buy a software package, or might even get one for free, but (it may not have) the inhouse capability, rigor and vision to map that software to its business processes and an understanding of what it needs to make it work best for the organization," says Ross. "That is where value-added resellers can provide a lot of service to the nonprofit sector."

A Deeper Understanding
In order to do that, however, a solution provider must understand nonprofit culture in general as well as the particular mission of its nonprofit client.

"What the nonprofit cares most about is whether the partner understands its mission," says Steven Johnson, vice president of partners at Blackbaud Inc. "They need to feel that affinity." Blackbaud has a healthy business selling donor engagement, donor management and accounting software to nonprofits. Founded in 1981, the company has revenue of more than $300 million a year. While most of its sales are direct, it also sells through resellers and consultants.

Affinity with a client's mission is what helps CGNET Services International, a 30-employee company that provides telecommunications and networking services to nonprofits in developing countries around the world, win contracts over huge competitors such as IBM and AT&T.

"If it's in international development, we have a real understanding of what these people in the nonprofit organizations actually do," says Georg Lindsey, president, CEO and founder of CGNET.

One aspect of the general nonprofit culture that can be difficult for solution providers is the long sales cycle. Decisions are usually made by boards of directors consisting of volunteers, says Johnson. "Unlike many small organizations where they can make a decision quickly, nonprofits can take extra time." CGNET offers an extreme example. For one project, "it was two years from (them) urgently wanting to do this, to coming up with a contract even for a pilot project," says Lindsey. Even then, the pilot project was only $50,000. However, it ultimately became a $500,000-a-year opportunity that lasted for many years, he says."

Dramatically Underserved Exponent Partners is another example of a solution provider that combines business with philanthropy. Although it turns a profit, Exponent Partners has a mission that involves more than money, says Hoffmann. "We see our organization as a social venture that's designed to improve the adoption and use of technology in the nonprofit sector," he says. "The nonprofit sector writ large is pretty dramatically underserved in technology."

There is no margin on the software product, because the Salesforce.com Foundation donates the software licenses. However, Exponent Partners makes money by advising nonprofits on how to use the Salesforce.com product. "We think the right business model for nonprofits is what used to be called on-demand software; now it's called hosted or cloud computing," Hoffmann says.

Helping nonprofits achieve their mission is also part of the business goal of Chris Booth, president, CEO and founder of Consistent Computer Bargains Inc. (CCB). As a member of the Software Publishing Council in the 1980s, Booth helped convince software makers to give academic discounts to educational institutions. A few years later, Booth experienced "personal involvement in people needing help" from nonprofits. He started lobbying software makers in 1991 to offer discounts to nonprofits similar to what they had done with academic licenses. While not every vendor agreed, Booth eventually was able to secure "charitable pricing" from about 30 vendors, and his company became one of the few resellers nationally authorized to offer this discount to nonprofits.

About eight years ago, Booth convinced Ingram Micro to start its own program for nonprofits.

"Chris opened our eyes to how many nonprofits were out there and why we needed to build a program for them," says Bob Laclede, vice president of business development at Ingram Micro.

Today, CCB works with more than 25,000 nonprofits across the U.S. It not only serves its own customers, but also works with other resellers that have nonprofit customers. CCB arranges the discount licensing and also will source hardware for the reseller's nonprofit customers. "We do most of the work in sourcing the product, but the reseller retains the relationship with the client," says Booth.

Booth says his goal is to partner with more resellers in order to reach more nonprofit customers. He estimates that over the past 18 years the charitable discounts have saved $250 million for nonprofits. "Nonprofits help others who can't help themselves," says Booth, whose business is to help them.