We’re Spending HOW Much on IT?
National Operations 6 Comments 
cei, councils, gsusa, national board
Recently, I fell down yet another rabbit hole, and believe it or not, I did it attempting to give GSUSA the benefit of the doubt for something I’ve railed about for years now. In a former life, I was an IT professional, so this speaks to me. I’ve always been extremely critical of GSUSA when it comes to its IT expenses because I’ve always thought they were enormously expensive. GSUSA’s council-wide technology platform is called CEI, which stands for Customer Engagement Initiative. It’s also referred to as Volunteer Systems 2.0, but I’m going to stick with CEI since that’s what is used in later charts. Yes, there will be charts and dollar figures, so go get a cup of coffee now.
What is CEI exactly? In basic terms, it’s an IT system. It was piloted in 2014 and then slowly rolled out to councils in 2015. From a volunteer standpoint, you use it in the form of Volunteer Toolkit, gsLearn, Volunteer Systems (or MyGS), and possibly some other parts, depending on what your council has enabled. There are other backend components that council staff interact with. Its foundation is based on Salesforce, which is a customer relationship management service (among other things). GSUSA requires councils to be on CEI to fulfill their charters, but before “agreeing” to onboard CEI, councils are obligated to sign a technology agreement (aka a contract). One of the terms is that GSUSA can charge councils whatever it wants year to year. Currently, all councils are on CEI, except for two – Middle Tennessee and Farthest North – but more about that in a future post.
You may be asking as a volunteer, why should I care about some IT platform and how expensive it is? Well, I believe you should because it ultimately involves cookie money and your membership dues. But don’t cookie funds stay local? Yes, they do. They fund the operations of a council. But CEI is considered part of operations due to its functions. And councils are paying huge amounts of money for the use of it (because they have to) on a yearly basis. So ultimately, this is cookie money that’s being shipped up to NYC because those funds comprise a large percentage of a council’s revenue in most cases. That’s money that could be used to upkeep camps or to fund programming. When it comes to membership dues, that money goes straight to NYC too. In 2016, dues were raised by $10, and we were told its purpose was to fund this technology platform.
Now to more facts and figures. Try not to fall asleep because I know this is exciting stuff. In case you’re not familiar with all of this mumbo jumbo, FY stands for fiscal year. GSUSA’s fiscal year runs from October 1st through September 30th of the following year. So FY2020 is 10/1/2019 through 9/30/2020. Costs are divided out into capital spending and operating expense. Capital spending refers to funds that are used to buy, upgrade, and maintain assets that will be used by a company or organization for the long term. Building and developing the framework of the platform would be considered a capital expenditure. Operating expenses would come in the form of licenses and additional development among other things.
I pulled all of the following charts and numbers from the 2017 and 2020 Stewardship Reports, and here they are for your reference:
To summarize, between FY2014 and FY2016, GSUSA spent $38.7 million on IT. For FY2017 – FY2019, GSUSA spent $66.8 million.
So back to why I fell down this rabbit hole. Like I said, I’ve been extremely critical through the years about this subject, so I wondered if perhaps I was being a little harsh and maybe I was even off-base. So I did some research to find out what other nonprofits and companies spend when it comes to IT. Here’s what I found:
In this article titled How Much Should 501c3 Nonprofits Spend on IT Annually? , it states, “As a benchmark, then, steady-state organizations with moderate technology needs and basic service expectations should prepare to invest 2-3% of their annual revenue in technology. Those who are in the midst of significant change or growth, those with very low tolerance for risk, and those who rely almost exclusively on technology to achieve their mission are looking at closer to 4-5% of their revenue.” Just for kicks, I looked up for-profit companies to see how they fare. In this article detailing a study on company size and IT spending, wherein GSUSA would be considered a mid-size company by the study’s definition, “Midsized companies spend 4.1%.”
Comparatively, FY2014 – FY2016’s IT spending took up 14% of its revenue ($275.5 mil). For FY2017 – FY2019, it ate up 19% of revenue ($354.4 mil).
And as I stated before, councils are subsidizing some of this. Between FY2017 and FY2019, councils paid GSUSA a total of $15.9 million which is 24% of the overall IT cost for that same time period. Amounts for FY2014 to FY2016 aren’t available. Additionally, councils were expected to initially invest large amounts of money to upgrade their own systems to be able to support CEI, and their large start up costs aren’t included in these figures.
I also made my own chart because I’m nerdy like that:
So all of this brings me to my many questions:
1) What percentage of a council’s operations budget is eaten up by CEI? Additionally, councils have to make up for the shortfall for features that CEI doesn’t provide by using third party vendors, and that costs money too. Their overall spending should be no more than 4% based on what’s being suggested.
2) Councils are paying a quarter of the cost for something they’re forced into using and have absolutely no control over GSUSA’s spending or decision-making. Is this really fair?
3) What is the return on investment? Are we seeing gains in membership in some form or fashion due to this spending?
4) Why is so much capital being laid out in FY2019 – six years after the initial rollout?
5) Building on the previous question, if it’s due to the anticipation of the Dec 2020 upgrade from 1.0 to 2.0, why is this so expensive starting a year prior to the rollout? I’m scared to see FY2020’s figures.
6) Why is the increase per year so high (with the exception of FY2016)?
7) Why did expenses grow by more than two and a half times in FY2017 and why have they stayed that high since?
8) Why was $6.3 million spent on an app that was abandoned (per the 2020 NCS financial report)?
9) There are reports that CEI is extremely buggy (and I’ve seen it myself as an end user). Why is that the case when we are spending so much? They say you get what you pay for, but is that happening here?
10) From an overall standpoint, why is there so much emphasis on data? Is Girl Scouting really something that can be figured out with numbers and computations?
11) Is the National Board asking these questions? Is anybody?
12) Are we really building Skynet, and will the Volunteer Toolkit become self-aware and send some sort of cyborg back in time to kill me for writing this post?
When it comes to all of this, I’m sure part of GSUSA’s answer would be that they provide revenue to councils via their online store ($12.7 mil to councils FY2017 – FY2019 with a $5 mil investment by GSUSA) and digital cookie ($78 mil to councils over the same time period with a $8.4 mil investment by GSUSA), but this doesn’t answer why the other parts are so expensive or why costs have increased so much, nor does it give an excuse to charge councils exorbitant fees for use of CEI. Leaving out these two components still leaves us with $53.4 million in IT expenses. GSUSA provides other money to councils (pg. 65 of the 2020 Stewardship Report), but it’s for grants and pension relief (that’s a whole ‘nother ball of wax). If you’re curious as to how much your council received, you can find it in GSUSA’s 990s.
To be fair (see, I’m trying!), we don’t know FY2020’s IT costs. But looking at past history and considering CEI upgraded to 2.0 during FY2020, I’m going to guess that costs were probably on par with FY2019. Also I found this quote interesting from the previous study:
“Companies that invest the most in IT aren’t always the best performers. On average, the most successful small and medium-sized companies were more frugal than the average company when it came to spending as a percentage of revenue.
The most successful companies, it turns out, are more effective with their investments. Most top performers are conservative in their approach to IT, avoiding large projects and demanding quick investment payback.”
I’ll just leave that right there.
Now don’t get me wrong – I am not opposed to a council-wide platform by any means. There are definitely large benefits to it. What I’m asking is if GSUSA’s IT spending is out of control, and can it be held in check? At this point, I don’t see where anybody is or can. Volunteers can’t do anything about it because it’s over our heads. Not selling cookies is just going to expedite the sale of camps and possibly the bankruptcy of your council. Councils can’t because they are at the mercy of their technology agreements. National Delegates handed over the keys to membership dues at the 2020 National Council Session. At least there’s a 25% guardrail on dues raises, so I guess that’s something. And I don’t know what the National Board has been doing for the past six years.
Sorry GSUSA. I really did try, but what I found just confirmed what I’ve thought all of these years. All this said, if I have my figures wrong or if someone feels I’ve made some bad assumptions, let me know.
While I would have never thought this would be a primary need in Girl Scouting, I hope whoever is hired as the National CEO has a lot of experience in IT and can get this situation under control.
Addendum 11/15/21: I wrote a follow-up to this post which includes FY2020 and FY2021’s IT spending.
If you had one or two people you most wanted to share this info with at GSUSA, who would it be?
Not just one or two people – the entire National Board. And ask them if this would be acceptable at their places of employment.
Do we know the companies that GSUSA used for IT? Were they selected througha competitive bid process?
According to the FY2020 990, GSUSA paid $5,891,184 to Ernst & Young as the system integrator, Salesforce was paid $4,654,778, Accenture was paid $2,496,137, and SAP was paid $1,625,248. I don’t know if there are any other contractors as those are some of the top 5.
Extremely insightful, well thought post. I hope it gets to the desk of some decision makers.
Cannot wait for the details of the “technology agreement” between GSUSA and the councils. The devil is in the details and I suspect, there are a lot of details that members of the Boards of Directors at the Councils are not paying attention to. Each member of each board is on the hook if anything is in those agreements are against applicable state and federal laws about rights and use of one NFP by another NFP.
$105.5 million spent over the last six years. For a NFP organization of 2.5 million members?
Of that, nearly 28% was spent in 2019 alone – $29.5 million. With 2019 membership stagnating at 2.5 million (1.7 million girl members and 750,000 adult members) – that works out to $11.80 per member just for FY2019. That is almost half (47.2%) of the annual dues paid per member. Or $17.35 per girl, taking adult membership – which includes lifetime members – out of the equation. Misguided and poorly managed technical operations is the only descriptor I can think of. 2020 technology costs should be a doozie with all the Zoom and video meeting platforms that were paid for.
GSUSA is a nonprofit painting itself as a life-shaping program for young women across the United States but at the heart of it is, I am afraid, a money-making organization more intent on promoting cookie sales. Of the money spent the last three years in IT (2017-2019), $19.7 million or nearly 30% was spent to support cookie commerce. Did cookie sales increase sufficiently to cover that investment over the three years?
Perhaps if the organization provided its true SALES FORCE (the girls and their adult advisors who sell the cookies) a better commission structure – 50% instead of a paltry ~16%, the motivation to sell more would sharply increase as the benefit would be to each troop and girl to choose to fund those life-shaping activities it wants to do. Imagine, let the girls earn more, they will sell more thus making more for the council, then spend more at GS camp properties. But no. child labor sales forces are paid substandard commissions so cannot afford may of the life-shaping opportunities they would like to experience.
It is a vicious cycle and when the girls hit the fifth grade and have the capacity to understand what they are really working for selling cookies, poof, they are gone. Digression from IT spend to cookie commission – yes, it really is all tied together. Now, let us see the fine print in those agreements and how the national organization is exerting control over council operations. This one is going to be exciting to watch.