Celebrate Technology: Emerging Venture

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Newdea brings free market ideals to nonprofit sector

Troy Stremler spends his days keeping nonprofit organizations accountable to their donors.

Newdea Inc., which Stremler founded about four years ago, is a Web-based service that gives the nonprofit access to existing and new donors, and allows the donors to retrieve information about where their money is going.

Newdea has won the Emerging Venture Award for Celebrate Technology 2004, which is awarded to the company with the most “innovative” business model.

Newdea leases software over the Web, hosting servers to manage projects, data and communications between potential and current donors, and the charitable organizations represented there.

“Nonprofits spend very little money on effectiveness and efficiency. Donors can only judge nonprofits based on operating budgets, not results and outcomes,” Stremler said. “There’s no free market enterprise system, no efficiency models in the nonprofit space.”

Stremler, who spent 14 years working for Mission Builders International as a consultant-one of his duties was wining and dining the high-net worth donors-said he found a lot of similarities among the wealthy philanthropists.

“They started talking about how they would find projects that intrigued them-such as a medical clinic in an Indian slum-and then they would start talking about how would they know that these nonprofits were effective? There was nothing to make them confident in their gifts.”

It may sound harsh, to question the abilities (or motives) of humanitarian organizations. Yet Stremler is a passionate advocate for donors-people whose deep-seeded desire to help the disadvantaged-and wants them to feel certain of their ability to change the world.

“Donors would actually increase their giving,” Stremler said. “Nonprofits would spend money a lot better, and donors would give more because they have more confidence knowing what their gifts are going toward. Newdea is the gatekeeper to the donors, and drives the efficiency model.”

Newdea is clearly a needed tool. But making the idea reality hasn’t been easy, despite a lot of support from wealthy backers.

“There’s $1.3 trillion just in the United States in the nonprofit space, a huge, huge market where not a lot of people are focusing. Over 70 percent of software development is done in-house-and they’re terrible at it,” Stremler said. “Software vendors try to change the organizational structure to fit the software rather than having software that fits the organizational structure.”

Four and a half years ago, Stremler’s team began interviewing 2,000 donors and 200 nonprofit leaders. It took two years to develop a model that would work for both sides.

Another two years was spent on research and development.

For just three months, Stremler’s team has been going out to market their service.

Stremler, who lives in Colorado Springs, moved the office to Englewood, south of Denver, because he said investors are harder to get in Colorado Springs-a “Unix-type of town”-whereas Newdea is Microsoft all the way.

The problem that Stremler set out to solve is an ancient one. It’s a problem of communication.

Whereas donors are results-oriented, nonprofits are relationship-oriented. Donors feel lost in the “grand proposal process”-feeling antsy and concerned about what they funded, and often not finding out where the money went for a year, or longer.

Nonprofits spend most of their time and energy searching for donors-and that constant search leaves nonprofit employees frustrated and strapped for time to actually make that money count.

“We wanted to create a system in which the two talk to each other, looking at different things, but using data to create a common language,” Stremler said.

Among Newdea’s users are the federal government, businesses and religious organizations, along with donors in every field imaginable.

No software is installed. Instead, interested parties on either side receive an access code. People from places as far-reaching as Uganda and England and Afghanistan all can access the same data.

“About 40 to 60 percent of projects that get into the system are not public on the site, because nonprofits themselves are finding out that the projects are not worthy from a donor’s standpoint,” Stremler said. “Some nonprofits say they can’t afford to be on our system because they think they would lose donors, because they know their projects aren’t successful. They’re wasting millions because they can hide it from the donors. We see that as a positive thing, because these nonprofits will either die out or be exposed.”

The nonprofit sector has been left behind, technology-wise. Too busy spending a tremendous amount of time and resources writing grant proposals to the federal government and other major donors. Stremler said he hopes to change that. So they’ll have time to make the donors’ money as effective as possible. “We’ll take their project and put it into the system. We’ll update them on a weekly or monthly basis-whether they’re making goals or getting the funding they expected. They can print the report at any time,” he said. “They could get alerts, create a link for their friends. We’re creating communities online around certain causes-whether it’s AIDS in Africa or inner city schools-so people can partner and see and share the results.” Stremler, 40, is married to Jina, and has two children, Tyler, 4 and Brooke, 2.