Despite the increasing popularity of email, social media, and other online networking tools, organizations still depend on the telephone for a good portion of their communications. But technology has also brought dramatic changes to telephone service, and the options for purchasing a new voice communications system are more numerous than ever before—and more confusing. 

If your organization is considering a new phone system, should you go with traditional service or Voice over IP (VoIP)—and what does VoIP even mean in this context? Should you buy hardware to manage multiple phone lines, or one of the growing number of other software-based solutions?

We talked to a number of nonprofit IT specialists about the best choices for affordable, reliable phone systems and compiled the information and recommendations they shared in this article to help you decide. Remember, when considering the right solution for your organization, it’s important to understand how each option can meet your communication needs.

Let’s look at the different factors and options one at a time.

Getting Connected: Phone Lines

These days digital telephone service—a telephone system that digitizes calls into data and sends them over data lines or the internet instead of telephone lines—is almost as common as Plain Old Telephone Service, or POTS (an actual, common acronym in an industry rife with acronyms). Exactly what it sounds like, POTS is a phone system that uses the same telephone lines strung between poles that have been delivering phone service for decades.

Even though the prices are comparable (around $25 per line for either a POTS or digital line, depending on your region), any sizable business is more likely to be using digital than POTS phone lines. Why? Because digital lines allow for more flexibility in allocating these lines, and more advanced features. On the other hand, POTS lines are more straightforward for a small organization to understand, and a number of the inexpensive phone systems outlined below require a POTS line in order to work. In addition, while VoIP lines require an internet connection (and power) to make and receive calls, POTS lines receive power from the phone company, and will continue to work even if the power in your office goes out.

If you have VoIP at home, it likely shares a digital line with your internet connection. A business phone, though, should always use a separate digital line; otherwise, if multiple people are using the phones or the internet—especially for high-bandwidth activities, like downloading video—calls might get dropped or garbled. Skimping on a mission-critical piece of infrastructure like phones is almost certainly not worth the savings.

If you’re comparing digital lines, check whether the line will depend on the internet or go straight to the phone provider. A direct connection is likely to be more expensive, but won’t be dependent on the quality of your internet service, which could be a critical factor in more rural areas. You’re not likely to notice a small millisecond outage in your internet service when you’re browsing the web, but that same outage would disconnect a phone call, creating havoc with your operations if it happens frequently.

How many phone lines do you need? The answer depends less on how many staff members you have than on how many are likely to be on the phone at the same time—potentially far fewer than the number of extensions, or even phone numbers, you have. For example, if you’re a two-person organization you’ll likely need two lines, or you can’t both use the phone at the same time; but a 10-person organization may only need five-to-seven lines. A 100-person organization could only need 20 lines or so.

If you’re a small organization, you’ll also want an extra line to put people on hold or for call waiting, so be sure not to underestimate, either.

Coordinating Extensions

Coordinating phone lines is done through a PBX, or Private Branch Exchange, which routes calls and transfers and manages voice mail on different extensions within an organization. Traditionally a PBX was a box mounted to a wall in a utility closet with all the phone lines physically plugged into it, but these days a PBX is equally likely to be virtual—software that provides the same functionality as the hardware once did.

Do you need a PBX? You do if you want to connect your phone numbers into one central phone system to do any of the following:

  • Route phone calls from a central “receptionist”—either an actual person or an automated system that helps callers dial the right extension for whomever they’re trying to reach.
  • Manage phone traffic so multiple people can use the same set of phone lines—for example, if a 10-person organization has five phone lines, the PBX plays “traffic cop” so each person (up to five at a time) can get phone calls.
  • Allow employees to forward calls, put them on hold, or reach each other by dialing only an extension.

In addition to these “routing” features, many PBXs offer additional features like voicemail, caller ID, and call forwarding as described in the Features section below.

Smaller organizations have three primary choices in PBXs. First, you could buy a small phone system with the equivalent of a PBX built in. For example, some cordless systems—like the Panasonic KX-TG4500B (—have a base station with inputs for up to four different lines that can be routed to remote units around the organization. This type of phone/PBX combination starts around $200 or $300, plus about $80 per handset. These low-end models often require POTS lines. More complex and expensive models like those offered by BizFon ( can handle eight to 12 users, but cost more. This solution is better-suited to smaller organizations, as the phones offering limited range can only expand to a certain, finite point.

The second option is to use a low-end virtual PBX. This type of software—such as OneBox (, AvayaLive (, Grasshopper (, or (—acts as a “virtual receptionist” and connects extensions. For example, callers dial a central phone number for your organization and press 1, 2, or 3 for extensions mapped to specific phone numbers—an office phone, a cell phone, a home phone, or a phone somewhere else entirely—and the PBX routes the call to the appropriate number.

These systems typically offer voice mail (often with transcription to email), dial-by-name directories, and other features, all of which are managed through an online dashboard. They’re reasonably priced, some as low as around $20 per user, per month, with additional costs for handsets, but many charge by the minute for incoming calls. You’re allotted a fixed number of minutes per month, and overages can cost from $0.04 to $0.06 per minute, which adds up fast.

Larger organizations might consider a virtual PBX package like those offered by business-focused phone and digital services companies like ShoreTel (, which lump digital phone service (remember to make sure it is separate from the internet line) with a managed-PBX service. Packages are customizable, so you’d work with the provider to define the number of lines and phones for your organization and they’d quote you a price. Some let you access functions through an online dashboard, but many require that you go through the company for such changes as adding an extension for a new employee.

The third option is best-suited for those with dependable IT support: Organizations with the right resources might consider a hardware PBX, also called a “switch.”

These days, if you’re going to buy a physical PBX, it almost certainly makes sense to buy an “IP switch,” which routes calls using the same ethernet cables you use to wire your network. You could also buy a server to act as your switch and install open-source PBX software like Asterisk ( on it. The software is free to download, but you’ll need to buy the server, and it will take someone skilled with phone systems to get it up and running—which is why this solution is not for everyone, especially the technically timid.

Who will be updating and maintaining the physical phone system? If you purchase a system from a retailer, they’ll be able to set it up for you and provide support, but if you’ve bought your system secondhand, you’ll either need someone on staff knowledgeable enough to implement it, or you’ll be paying a contractor for setup and ongoing support.

A Phone for Every Desk

You’ll need a phone for each employee’s desk, and the options available to your organization vary widely—you can find entire stores dedicated to phones. Decent consumer-level models start around $40. A phone is a phone, and if all you need is two lines for staff members, there’s no reason not to just buy the same type of phone you might use at your house.

If you’re shopping for a combined phone system and PBX, as discussed earlier, you’ll just need to buy a phone handset for each staff member—in many cases, cordless units. However, these systems tend to support only four to 12 lines, and won’t expand to support more.

Business-class phones are often intended for use with digital phone lines and specific PBX systems; before you invest in them, make sure they will work with your infrastructure. Most provide features that make it easy to transfer, put callers on hold, and access other PBX functions. For these types of systems, buying a new phone for each staff member can be quite an investment at retail prices—potentially $200 to $300 per phone. However, used or refurbished office phones can be found at a discount through online resellers like (, or through Amazon ( or eBay (

Many VoIP or virtual PBX solutions don’t even need a physical office phone. Instead, you can use an app on your computer (sometimes called a “softphone”) or smartphone to make and receive calls, which can be especially useful if you have staff members who frequently work outside of the office. With these options, it’s important to think about call quality and bandwidth—and for smartphones, reception—as well as thinking through or defining an organization policy for using personal smartphones as your work phones.

Phone Features

Finally, there are a certain number of features that people have come to expect from their phones—for instance, a voicemail box and caller ID. Perhaps you’ll want to forward your calls to a cell phone or ring a colleague’s desk if you’re not there. These types of features are often provided by the company that provides the phone line, the PBX, and the physical phone itself; as a result, features aren’t likely to factor highly in your decision. If you’re dead-set on buying a physical PBX and installing it yourself, however, keep in mind that for many physical systems you’ll actually need two separate units: the PBX, for managing the phone lines and extensions, and the voice processing system, which provides voicemail functionality.

Choosing the Right System

To choose the right phone system for your organization, you need to mix and match from the available options. Different configurations offer different advantages; choose the one that meets most of your needs and your budget.

For a small organization with only a single office, it may well make sense to use POTS phone lines and a low-end phone or PBX combo. This is a bulletproof and familiar solution that’s not going to require much support or knowledge. For four lines—sufficient for six or seven employees—you might pay around $700 for a base unit and cordless handsets, plus about $100 per month for four POTS phone lines (at $25 per month for each line). The drawback to a physical PBX is the cost of setup and maintenance. If you don’t already have the internal knowledge or experience to implement and maintain the system, you’ll need to hire a contractor to handle those issues. If you anticipate your organization growing and adding more staff members, you may also run into problems scaling up the system. With a physical PBX, you may be able to purchase and install an expansion card to add more extensions, but with the combined phone and PBX solution described earlier, you may need a new system altogether.

Another option would be to have a POTS or digital line for each employee, and use consumer-level phones connected to a virtual PBX. For a six-employee office, expect to pay about $240 up front for phones, plus about $270 per month ($20 per user per month for the PBX, $25 per month for each line). This virtual PBX system could handle remote employees as easily as those onsite. If your organization is more geographically-dispersed—for example, if you have multiple offices across the country—a virtual PBX using VoIP will likely make more sense than using POTS lines, and could save money on long-distance calling between offices.

Before you make a decision, check with your local phone and broadband providers. Chances are they offer packages that include digital phone service and a virtual PBX. This will probably be more expensive, but also more robust, than the first two options. Again, make sure your digital phone lines are separate from the line you’re using to access the internet, and that you have enough bandwidth to handle both the phones and your office internet.


Setting up an office phone system is deceptively complicated. While we’re all familiar with phones, as soon as you want to support more than a couple of employees, you quickly enter a baffling realm of acronyms and options. Before selecting your phone system, you have to think about the size of your organization several years down the road. That low-cost solution that worked fine for two staff members probably won’t be able to scale up if you grow to six or more people.

It’s important to think ahead in terms of the system itself, as well. With a hosted or virtual PBX, will the provider still be around five to 10 years down the road? For physical systems, can you still get handsets, parts, or expansion cards for the system in five years? Especially if you choose to purchase an older system and install it yourself, as the years go on, compatible phones may be harder to find—the same goes for manuals and people with the knowledge to maintain the system. If you don’t have ongoing support from someone who really knows phone systems, keep it simple. Phone systems shouldn’t be exciting, just dependable.

For More Information ( An at-a-glance features comparison of virtual PBX providers for basic, mid-level, and corporate needs.PBX Info ( Info provides discussion forums for users of phone systems from most leading manufacturers.

Many thanks to TechSoup ( for the financial support of this article, as well as the I professionals who helped with the original 2010 article and this update:

Peter Campbell, EarthJustice ( (2010 and 2013)

Gavin Clabaugh, Charles Stewart Mott Foundation (

(2010)Evan Desjardins, RoundTable Technology (

(2013)Matthew Latterell, Netcorps (

(2010)Larry Velez, Sinu ( (2010 and 2013)