I agree that for non-profits a well executed cloud program like Google Apps can be a great asset with not having to manage servers, location, etc. yet having the full power of a professional back-office.
The biggest complaint I have heard concern about Google's privacy snooping. Plus some non-profits I work with are not technologically savvy so using a "cloud service" seems scarier than the traditional version which they have at least some experience with. The second is Google Docs to MS Office compatibility.
One thing that helps me talk with people about it is that I use Google Apps ("free") version for my family. Limited to 10 mailboxes and I have to register a domain ($10/year through Google), but other than that it is plenty for my family and gives me ultimate control over the kids' accounts.
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