The concept had a lot going for it, including a lot of money—but that doesn’t matter anymore, because it’s shutting down.

The nonprofit corporation inBloom, a data collection firm that had $100 million in backing from the Bill and Melinda Gates Foundation and other donors, drew much attention and interest upon its launch for its big-data-style approach to improving K-12 education.

But the organization, founded as the Shared Learning Collaborative in 2011, ended up announcing its shutdown this week, after parents and educators raised privacy concerns. The saga provides a cautionary tale for nonprofits in new spaces. Among the lessons:

The grassroots can push back: The iBloom database identified individual students by name, address, and sometimes Social Security number and stored specific educational information like test scores and attendance and, in some cases, personal data like family situations or disabilities. That level of detail led to questions about privacy and whether school districts were being too quick to hand student data over to companies selling educational products and services. In April 2013, a number of New York City parents, including City Council candidate Jelani Mashariki, loudly pushed back against the program at a town hall. “You’re not going to give out my child’s information to a third-party corporation to do whatever it is they want to do,” Makarishi said, according to The Village Voice. “The people are not going to have it and we are going to fight back.”

Building first is a bad idea: In his statement on the demise of inBloom, the company’s CEO, Iwan Streichenberger, noted that the database technology was in place before it had public support. “We stepped up to the occasion and supported our partners with passion, but we have realized that this concept is still new, and building public acceptance for the solution will require more time and resources than anyone could have anticipated,” Streichenberger wrote. The failed rollout has led to questions about timing, as well as the student’s place in data collection practices. “Perhaps the task of gauging ‘public acceptance’ should have been considered before the $100 million investment was made,” Nonprofit Quarterly‘s Ruth McCambridge wrote. She linked to a piece by Funny Monkey blogger Bill Fitzgerald, who suggested that “our educational system is more outcome-centered than student-centered.”

Poor messaging can hurt momentum: At the time of the Shared Learning Collaborative’s launch in 2011, the potential for data integration in apps seemed to draw excitement, and by the time its successor, inBloom, emerged in February 2013, several states were onboard with the concept, including Colorado, Delaware, Georgia, Illinois, Kentucky, Louisiana, Massachusetts, New York, and North Carolina. But support from the states dissipated quickly as parents (and then legislators [PDF]) raised the privacy concerns. Most notable was the situation in Louisiana, where parents discovered that Social Security numbers were being used to classify students in the database. Soon states began dropping out of the program, with the final nail being a bill in New York, which effectively banned services like inBloom from using data in the way the nonprofit had planned.

The result is an idea that’s going back to the drawing board.

Has your organization ever struggled to sell an idea to a skeptical public? What advice would you give others in similar situations? Offer your take in the comments.

Bill Gates, a high-profile public backer of inBloom. (Photo by Sean Gallup/Getty Images)