Update on MicroEdge Contract and Newly Approved Third Year Plan

Status of MicroEdge Contract

For the past 19 months, the Technology Steering Committee (TSC) and MicroEdge have worked to move forward on the $2.2 million development agreement designed to advance the broader goals of the Technology Initiative/Funding Syndicate related to APIs and CRM.   Based on recent forthright and definitive business discussions with MicroEdge's new management team, the TSC has reached the conclusion, and MicroEdge concurs, that MicroEdge will not be able to complete the development agreement as originally contracted. 

With the full approval of the TSC executive committee and the investor representatives, TSC management is actively pursuing a mutually agreeable resolution that will result in the termination of the agreement.  A proposal for a resolution has been submitted to MicroEdge, and we are awaiting a formal response.  Because of the importance of MicroEdge to many of its investors, the TSC is hopeful that the resolution will lead to other, productive ways to engage the company and its new management in future technology solutions for the field.

Newly Approved Plan for the Third (and Final) Year of the Technology Initiative

Given the uncertainty of the MicroEdge discussions, TSC leadership has been exploring a set of alternatives to enable the Technology Initiative to reach its goals, which are to: 

...support critical technology improvements that build community foundations' current technology readiness, capacity and infrastructure, and ensure the field's core technology system has the open architecture, flexibility and tools to compete effectively in the philanthropic marketplace of the future.

To these ends, on May 9, 2005, the TSC executive committee approved a revised plan and budget for the third year of the Initiative which includes the four components described below.  Combined, these efforts are designed to meet the objectives of the original Funding Syndicate plan, but in new ways that could not have been contemplated two years ago.  Experience gained from the first two years of the Initiative and the emergence of new partners with new capabilities coupled with MicroEdge's limited  progress have contributed to a new set of approaches and a new set of associated risks and challenges.

The Plan's four components are: 

Completion of Current Development Plans and Integration of Each Innovation to Core Systems   The Technology Initiative is on-time and on-budget toward ensuring that the solution providers selected last year successfully complete their respective development projects and that each offering successfully links to core systems   As noted below, however, all integrations will be subject to the challenges associated with individual foundations' abilities to legally access APIs.

Plan for Alternative API's  The TSC will continue to develop alternative "Plan B" strategies whereby various providers will work with an independent third-party software developer and one another to build APIs that achieve the open architecture promised by the initial Technology Initiative plan.  Although technology barriers to APIs are now broadly understood to be surmountable, legal barriers for individual community foundations may still be a serious issue.  Notwithstanding that the TSC will structure API offerings to protect the confidentiality of legacy system source code, individual community foundations will need to be comfortable that the approaches used are compliant with the confidentiality provisions of their individual license agreements with MicroEdge.  The TSC is already deeply engaged in exploring options, both technical and legal, that will help community foundations address these issues over the coming months.   

Analysis of Alternative Integrated Solutions   The TSC will deliver on the promise to identify and analyze alternative integrated systems (i.e. those that include a core accounting system), including exploring a back office outsourcing option later in the year.  An outsourcing option would be especially useful to smaller community foundations that wish to have all of the rich functionality and back office capabilities available to the field at an affordable price point.

Support for Early Adopters   The TSC will allocate resources to promote widespread 'early adopter' implementations of identified solutions. This includes the establishment of early adopter groups in each functional area of the Technology Roadmap.   In addition, the TSC has set a final TSC Solution Summit for July 27-29 that will also include presentations from one or more alternative integrated solution providers. 

Communications

In order to fully inform investors of additional detail regarding these plans, as well as the context and implications of their implementation, the TSC will conduct a series of CEO briefings and on-line discussions.   Representatives from each of the community foundations investing in the TSC are invited and encouraged to participate.