This week, I was invited by Andrea Levere of CFED to speak with Jim Fruchterman, CEO of Benetech and ZeroDivide boardmember, in a conversation on technology and community development at the Corporation for Enterprise Development’s board of directors meeting in San Francisco.

Jim had a characteristically enlightening story about the genesis of one of his projects. A few years ago, his then 14 year-old son had installed a music exchange program onto their home computer. It was experiencing Napster that sparked an idea in Jim about how peer-to-peer content exchange could work for blind and visually disabled people.

Instead of music, what if there were a place to share books? It turns out that there is a provision in copyright law that allows distribution of books in an accessible format to people who are blind. Thus, Bookshare.org was born.

His original name for it? Bookster.

Since my son is only 5, I don’t yet have the same stories to tell.

But from the vantage point of grantmaker and technology analyst, I suggested that one of the toughest challenges of a technology enterprise is comprised of the three parts. In order for you to succeed, you need to have a social model, a business model and a technology model that work together.

(My viewpoint is that the technology model is the easiest, especially if you have the other two worked out. Not that it’s easy, of course.) However, if any one of the three fails, your enterprise fails.

Look at it this way: you need all three parts to be helping you meet your mission, generated profits or sustainability, and utilizing technology to create repeatable systems or scale so that you can grow in scope. For profit corporations have the luxury of not worrying about the social model, right?

In many respects, that is why it can be difficult to fund in the community technology space—and for ZeroDivide, the challenge of helping our grantees implement business models is another layer of complexity added to the mix. Most nonprofits have their social model in place, but often have unformed or misdirected business and technology models.

This is not limited to just the social sector. Others point out that the shutdown of the Philadelphia municipal wireless project was a business failure and not a technology one by EarthLink. And Google’s profits derive from advertising, not search, which is what it’s original technology model was all about.

But far from steering away from technology initiatives, I would encourage nonprofits such as CFED to think smartly about how to implement enterprises:

• Use agile development practices. Keep your scope small, prototype, get feedback and implement another feature. Lather. Rinse. Repeat.

• Prove your business model as soon as you can: the corollary to my first point is that you cannot keep projects going unless you are generating money. Since it is hard to create income, keeping your project lean and small will make it easier to do so.

• Know if you are a B2B or B2C business: It is hard to shift from having other businesses as your customers versus having consumers as your customers. Very few companies—much less nonprofits—can serve both well. Apple, characteristically, has been a consumer facing company and not a business one.

• Leverage open APIs, open source, and open standards: There are many reasons why Google is a $170 billion company. One of the reasons is that all of its technologies are built on open source software. While you may not be a Google, even the littlest nonprofit can leverage and contribute to openness and reuse in their own way. Use an open source content management system such as Drupal, like we do. :)

The board and staff of CFED are smart, engaged, and learning about the role of technology for their work. It was fun learning from them and a special treat to listen to Jim, who is a great storyteller in his own right.

My thanks to Andrea Levere and Bob Friedman, CFED’s general counsel and board chair and my fellow board member at the Earned Assets Resource Network, one of the most innovative and fastest growing asset building programs in the country.