Hard Times Force Some Organizations to Scale Back on Technology Plans

Just when nonprofit groups are finally having an easier time competing with for-profit companies for

highly skilled technology employees — thanks to the collapse of the dot-com boom — economic uncertainty is leading some charities to scale back or postpone their planned technology projects.

Several technology-assistance groups report that small to medium-size charities, particularly social-service groups, are putting off projects as they wait to see how state budget cuts, smaller United Way allocations, and foundation endowment losses on the stock market will affect their organizations’ bottom lines. To be sure, other technology-assistance groups say that while they too were bracing for a slowdown, they are as busy as ever and haven’t seen a drop-off. But the evidence that some charities are holding back is a significant departure from the optimism with which nonprofit groups have pursued technology projects in the past several years.

The Metropolitan Center for Independent Living, a charity in St. Paul that provides services to people with disabilities, is one of many nonprofit organizations that have found their technology efforts hamstrung by the current economic climate.

The center has a contract with the local Veterans Affairs office to provide computer and Internet training to disabled veterans. So far, the training has been one-on-one, but the center hopes to build a computer-training lab that would allow it to help more veterans and offer training or use of the lab to other organizations, such as schools, group homes, and disability groups. For now, though, those plans are on hold while the center tries to raise the $200,000 to $300,000 it would need to build the lab, so far with little success.

“The foundations just don’t have the kind of money that was available a year ago,” says Taylor Kearns, an independent-living specialist at the center. “You couple that with state and federal funding being cut in many programs, and you’re confronted with a much larger barrier to doing the things that you want to do.”

As it rides out the effects of the economic slowdown, the center has also delayed plans to improve its own technology systems and equipment. Mr. Kearns says that the time he and his colleagues spend trying to fix outdated computers and software when they don’t work is time that could be spent on the organization’s mission, and that the hassle hurts morale.

“Everyone is stretched thin in terms of the time that they have to do the things that they need to do, and when you add to the mix problems with your computer, it’s very disruptive,” says Mr. Kearns.

Not Undertaking New Projects

Edd Gulati-Partee, lead technology consultant at NetCorps, an organization that provides technology help to groups in Durham, N.C., says that early this year NetCorps started to see charities holding back on their technology efforts. Last year, he says, many of the groups with which the organization works were eager to move to the next phase of their technology plans, but that a state budget shortfall in North Carolina and expected cuts in United Way funds have made some charities reconsider.

“Often it’s the smaller groups that are being hit hardest,” he says. “Those were the groups that were latecomers into technology anyway. It’s the last thing in, first thing to go.”

David Perry, communications director at the Management Center, in San Francisco, which provides consulting help to charities in a variety of areas, including fund raising, human resources, and marketing, says his group saw similar patterns. “A smaller organization has a smaller budget with which to work, so they’re going to cut their consulting budget lines right away,” he says.

The Management Center first started to see a decline in requests for technology assistance late last summer, a trend that Mr. Perry says was exacerbated by the September 11 terrorist attacks. The decline was so drastic that after adding staff members in 1999 and 2000, the center eliminated its four-person information-technology consulting group and laid off five other employees throughout the organization in December.

“We just did not have the requests to support it,” says Mr. Perry. He says the organization hopes eventually to offer technology services again, but points out that for several months the Management Center went without a technology-support person itself.

The economic slowdown has led another assistance group in the Bay Area to cut back its technology offerings. The Center for Excellence in Nonprofits, in San Jose, has decided to discontinue its Wired for Good program. Since 1999, the nine-month series of intensive workshops helped charities develop technology plans. Local technology companies provided money to run the program and employees to teach the workshops.

Joni Podolsky, program director for Wired for Good, says that it was a difficult decision for her organization to make, but one that was necessary because it was having trouble finding corporate support to finance the program and because local charities don’t have the resources to devote to technology projects right now.

During lean times, charities cut operational expenses to try to maintain programs, says Ms. Podolsky, even when they know that technology can make those programs more efficient. “When you’re in economic crisis, you’re just busy trying to keep providing those services, and taking that long-term look at things is more difficult to do,” she says.

Avoiding New Spending

Sheldon Mains, director of technology services at the Management Assistance Program for Nonprofits, in St. Paul, echoes Ms. Podolsky’s point. He believes that many charities facing difficult financial decisions are looking at their technology infrastructure and making choices.

“It’s very common for people to say, ‘Well, that server can limp along for another year,’ or, ‘We haven’t been networked ever before, we don’t need to be networked this year,’” says Mr. Mains.

Yosemite National Institutes, an environmental-education organization in Sausalito, Calif., is one group that has made just such a calculation.

Despite having 180 employees spread over four locations, the organization has no staff members dedicated to technology. Instead, “accidental techies” at each of the organization’s three campuses located in national parks deal with technology problems as they arise, in addition to handling their other job responsibilities.

The organization’s piecemeal approach to technology has led to workers throughout the organization using different software and hardware. As a result, it can be difficult for staff members to share files, says Marcia A. Hodges, vice president of operations. Too often, she says, instructors end up “re-creating the wheel” because they don’t know what staff members are doing at the other campuses.

This spring Yosemite National Institutes finished an 18-month planning process during which the organization assessed its technology needs. It developed a plan under which it would hire an information-technology employee, spend $120,000 on upgrading hardware and software, and offer additional technology training to employees. The organization had hoped to pay for the improvements out of its operating budget, but a $300,000 increase in the cost of benefits and workers’ compensation coverage has made that impossible. For now, the group’s technology plan is on hold until it can raise the money through foundation grants.

“We’re functioning OK with the technology that we have,” says Ms. Hodges. “It wasn’t going to make us or break us in terms of being able to continue to function as an organization, but it’s not going to assist us in being efficient in how we fulfill our mission.”

Going Forward

Not all charities, though, are slowing their technology plans.

CompassPoint Nonprofit Services, a management-assistance organization in San Francisco, surveyed participants at its annual technology conference, “Thriving as a Dot-Org,” in May. Of the 70 participants surveyed, 43 said that their organizations would be spending more on technology in 2002 than they did in 2001. Nineteen said technology spending would remain level, while only eight said that their organizations would be spending less than they did in 2001.

Tom Battin, CompassPoint’s director of information-technology consulting, acknowledges that a survey of participants at a technology conference may not reflect the views of all nonprofit organizations, but he believes it serves as a valuable barometer to show that many charities are moving ahead with technology projects despite uncertain economic times.

The participants in the survey are the people making decisions about what technology to use in their organizations, says Mr. Battin. “They would be the first to say, ‘Oh, yeah, our executive director said across the board, no more tech projects,’” he says.

‘Healthy Skepticism’

TechRocks, a national technology-assistance provider in San Francisco, is one of many assistance groups that have not seen a drop in requests for their services.

Michael Ward, a senior consultant at TechRocks, says that what he and his colleagues have seen is a change in the types of projects that charities are bringing to TechRocks.

In the late 1990s, many nonprofit groups didn’t think twice about spending $30,000 on their first Web sites, even when they weren’t quite sure what they wanted the Web sites to accomplish, says Mr. Ward.

Now, organizations have “a little more healthy skepticism” about big Web projects, and are directing more of their energy to building databases and e-mail systems, a development he sees as evidence of greater sophistication on the part of nonprofit managers when it comes to using technology.

Says Mr. Ward, “That period really was marked by a keeping-up-with-the-Joneses mentality about technology, and now it’s marked by getting real return on your technology investment.”