Hardware Today: 'Tis the Season to Merge Fiscal Responsibility and Charitable Generosity

By Ben Freeman (Send Email)
Posted Dec 15, 2003


Earlier this month we offered some tips on how to maximize your 2004 server budget to fulfill your holiday CIO wish list. Assuming your requests for new equipment have been granted, the dilemma of what to do with the hardware to be replaced remains. The two obvious choices are disposal or resale.

With Salvation Army Santas ringing their bells on every corner and that new equipment budget sitting on your desk, you may be starting to think about how to spread some holiday cheer. We offer a suggestion: Donate, don't dispose of, your soon-to-be-replaced servers. This week's Hardware Today covers server donation from technical, legal, and security perspectives.

In keeping with the spirit of the season, we offer a third alternative: Donation.

Obsolete hardware that's been deemed "useless" to your organization can be of immense value to the less fortunate. Donating it benefits both the receiver and the planet, and it squarely beats disposing hardware via an asset management company or by illegally dumping it. And for those looking beyond the purely altruistic, the donor enterprise receives a host of tax benefits, to boot.

OTX-West, a Microsoft Authorized Refurbisher, is an organization working as a middleman between donor enterprises and end-user donees. It receives donated computers from PeopleSoft and hundreds of other corporate and government organizations and uses them to achieve what executive director Bruce Buckelew describes as "two major goals ... to keep computers out of landfills and get them into the hands of students and families in Oakland, Calif." To date, Buckelew says, the 10,000 best computers received have been distributed to Oakland high schools; the remainder are available to each of the city's (approximately 12,000) high school students. So far, approximately 3,500 families have taken advantage of OTX-West's program and received an Internet-capable, fully functional home computer. By volunteering, students and their families can earn computer upgrades.

"It's a superb program," says Jim Lynch, computer recycling & reuse program manager for CompuMentor. CompuMentor's comprehensive Ten Tips for Donating a Computer make an indispensable resource for any company interested in donating to a program like Buckelew's. According to Lynch, donated servers are an important contribution to school districts' increasingly complex LANs and WANs. "There is an increasing demand in schools for various types of working servers ..." he says, "not just desktop computers." This is not to say, however, that you should zip down to your old high school with that crusty malfunctioning server you've been trying for months to get rid of in the trunk of your car.

For old or broken hardware, enterprises should use a commercial recycler. For hardware no more than four years old that is in working condition, use a noncommercial recycler or refurbisher that ensures donated equipment arrives at recipient schools and charities in good working order by installing legal software and wiping proprietary data from the hard drives. Check this list for noncommercial or commercial recyclers and refurbishers near you.

In addition to making the disposal process itself easier, donating to non-commercial refurbishers offers fiscal benefits come tax time. Jackie Perlman, senior tax research analyst at H&R Block, shared a few tips on how to best use Section 170 of the Federal Income Tax Code to gain tax credits. Keep the original invoices for all equipment, and remember that you'll need a formal third-party appraisal for equipment valued at more than $5,000. The donee, or receiving organization, must be listed as a qualified charitable organization in the online version of IRS Publication 78, and special rules apply to donating inventory and for C Corporations donating to public schools. Finally, don't be afraid to seek outside help: "If you're thinking of donating equipment," says Perlman, "it is always best to discuss the matter with your tax advisor to see what the tax ramifications are."

When retiring hardware, legal ramifications must be considered along with the tax ones. The EPA's Resource Conservation and Recovery Act (RCRA) aims to ensure that enterprises efficiently dispose of waste. However, according to CompuMentor's Lynch, to date, the Act has had little enforcement with regard to computer dumping. Compumentor's aforementioned and utterly useful donation tips describe the more important software licensing issues from a legal perspective.

One key issue to consider: Many charitable organizations will benefit if the operating system is left intact, so keep in mind that OEM licenses included with pre-installed Microsoft operating systems are valid only on the original installed machine. Where applicable, include original media and proof of license documentation to help facilitate the operating system's legal transfer. When donating Macintosh- or Linux-based systems, also be sure to honor license requirements before donating the machine with the operating system intact.

The prospect of donating hardware with operating systems intact brings us to our final concern: security. Although donee organizations may "wipe" extraneous data in the refurbishment process, that is insufficient protection for most donor enterprises. Therefore, we strongly recommend what should be obvious: Address this issue yourself. Those omniscient CompuMentor guidelines recommend a variety of commercial and freeware disk cleaning programs. We recommend cleaning, then low-level formatting, the drives followed by reinstalling the operating system to ensure no proprietary data gets "donated" along with the hardware. Messing that up will certainly negate any corporate citizen points picked up for taking these ecologically, socially, and fiscally responsible steps.

While the donation process may seem like a lot of work, disposing of hardware has never been simple, and careful donation can significantly help reduce the oft-mentioned digital divide. According to Buckelew, "For many (most?) of our families, this is the first and main computer. For others, it allows the student to have their own computer and use it for school work."

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