What’s the Right Level of Non-Profit Technology Investment?

I recently read a blog post and report by Microsoft (their Tech for Social Impact group) that talked about supporter and funder expectations regarding non-profit technology investment. You can access the post here and the report here (lots of nice graphics). One nice thing about the blog post: Microsoft includes a Power BI tool so non-profits can drill down into the data. For instance, you can look at supporter and funder perspectives by region.

I found this statistic interesting. Supporters think non-profits should be spending 16% of their budgets on non-fixed investments (including technology). For funders, the percentage was slightly higher, at 18%.

I spend a lot more time with grantmaking organizations (“funders”) than I do with non-profits. But I’m willing to bet that the technology investment at your average non-profit is well below 16-18% of their operating budget.

Why? Non-profit executives want to direct as much money as possible toward achieving program goals. As with startups, non-profits are trying to maximize their impact and scrutinize every expense against that target. So, it’s easy to underinvest in technology.

Another reason for under-spending on non-profit technology investment has been non-profit executives’ lack of technical depth or comfort. I can still remember doing an Office 365 implementation for a pro bono legal organization. When executive A didn’t immediately see an email sent by executive B, they blamed Office 365. We had to show them that the mail was being delivered, but it was disappearing into a folder, due to mailbox rules they had set up.

I suspect, though, that today’s non-profit executives are much more comfortable with technology. I think this is one of those generational things, where we’ll see more non-profit technology investment as leadership turns over at non-profits.

I’m also seeing more interest/focus on technology by funders. They see technology investments as another kind of capacity development. Funders have long invested in upgrading the management skills of non-profit leaders. I’m now seeing (as one example) funders looking at providing cybersecurity awareness and prevention tools to non-profits.

Enter Cloud Computing

Cloud computing has permanently changed the “buy in” for non-profit technology investments. It’s a common story to hear of a web-based startup that got off the ground with tens of thousands in IT investment, compared with tens of millions in prior eras.

It’s the same with non-profit technology investment. Non-profits can access free or heavily discounted cloud-based services that enable

• Messaging
• Donor management
• Measurement and evaluation
• Accounting and finance
• Project/program management
• Marketing
• (in some cases) program delivery

Non-profits can get started with these services in a very short time, sometimes without outside assistance. And if non-profits need help, there are many organizations that can assist.

Key Takeaways for Non-Profit Technology Investment

What are the takeaway’s here?

• Funders should look holistically at the level and kind of investments they’re making in grantees. Program officers might want to bring in technology managers to provide guidance on what kinds of non-profit technology investment would best support the grantee.
• Non-profit executives should understand that non-profit technology investment can be measured and still deliver best-in-class tools that will benefit all areas of the non-profit’s value/delivery chain.

Cloud or not, it’s still easy to overspend on non-profit technology investment. But it’s also easy to underspend, and that’s not helpful. The technology changes, but the critical question remains: what investments do I need to make in order to build an organization that can do good, now and in the future?