Technology Is Not Just a Passing Fad

Businesses long ago figured out that technology drives success. Or rather the market figured that out for them — companies that did not invest in technology ceased to exist. That message has been slow to reach the nonprofit world, which is notoriously wary of change. By the late 1990s, a large gap had opened up between the corporate and nonprofit worlds, and until recently, technology has been widely viewed as a luxury that most charities should not worry about.

The stories were so commonplace that they didn’t seem shocking: front-line employees using ancient donated computers; stacks of unopened boxes of donated software; unstable, patched-together networks; and archaic, inefficient data systems. More than a few organizations wore their aversion to technology as a badge of honor, while others pleaded poverty.

“We’re about music, not computers,” said one senior arts administrator to a distraught information-technology specialist after vetoing another proposal to replace broken machines.

A decade ago, a few organizations began to buck the trend, putting money into up-to-date hardware, staff training, advanced data systems, and emerging communications technologies. They found that this approach allowed them to work more efficiently, provide better services, reach their constituents, and raise more money. Others have followed, but the gap still exists and may be growing.

With more pressure than ever on charities to deliver results, nonprofit and foundation leaders must take a fresh look at the opportunities technology presents and take measures to close the divide.

Three recent studies suggest that the nonprofit world has advanced, but that progress has been uneven. A 2006 Accenture report, “Identifying Enablers of Nonprofit High Performance,” cited information technology as a commonly overlooked means of improving operations and better using a nonprofit group’s financial resources.

Less than one-third of surveyed nonprofit leaders cited “using IT to reduce costs and create value” among their key operating issues needing more attention. Yet 77 percent identified “expanding the current donor base” as a critical issue for the organization, exposing a connection few of the nonprofit organizations made: Proven technology tools are available for this function.

A 2006 study by the Johns Hopkins University’s Nonprofit Listening Post Project adds another layer to the picture, finding that organizations have large unmet needs for investment capital, and that technology tops many wish lists. More than 90 percent of organizations that responded to a survey cited a need for technology capital, while just 37 percent reported success in securing financing. Nonprofit leaders want to invest, but many can’t find the money.

A recent survey of rural charities by my organization, NPower, supports the conclusions that technology holes persist, and while leaders are increasingly eager to close them, money constraints stand in the way.

While a large majority of rural groups have intact basic technology, such as functioning computer networks, Web sites, and high-speed Internet access, problems are apparent. Many organizations lack data-backup systems. Relatively few groups are taking advantage of reliable technologies for tracking clients and donors.

Only 21 percent of rural groups have a technology plan in place, and 48 percent have no money budgeted for technology. On the other hand, overwhelming numbers seek improvements in the form of technology plans, upgraded Web sites, better tools, and more training for staff members. Affordability and knowledge about potential solutions were identified as the major limitations.

These results show that nonprofit groups are more aware than ever before of the power of technology to increase worker productivity, improve quality of services, raise visibility, and ensure financial sustainability.

Resource constraints notwithstanding, opportunities abound for many organizations to leap forward — without breaking their budgets or compromising services.

The keys to seizing these opportunities are five principles, all of which go against the grain of current conventional thought in the nonprofit world:

Consider return on investment and budget accordingly. While businesses have become comfortable with investing upfront for future gains in revenue, many nonprofit groups have either resisted this approach or taken tentative steps. It’s true that charities have different restrictions based on where their money comes from, and often operate at a small scale relative to for-profit companies. That limits available resources.

Still, if a charity considered the potential revenue gains from upgraded fund-raising technology, to pick one example, it would probably show that failure to invest is a net loss, which hurts the organization and the people it serves.

Even modest technology investments can pay huge dividends. Budget priorities should reflect this.

Approach technology holistically. Many organizations I’ve encountered, including relatively tech-savvy ones, approach technology on a piecemeal basis.

Decisions on financial systems, fund-raising and program databases, Web-site designs, and external communication methods, for example, are typically made independently. This often results in inefficiencies and incompatibilities that hinder performance.

A holistic approach, starting with a technology plan that links technology needs to the organization’s overarching goals, can solve this problem and help nonprofit leaders determine where spending will have the greatest benefit.

Good planning can avoid common pitfalls: cheap or donated software that proves expensive to use; potentially biased information from technology companies with conflicts of interest; and seemingly reasonable choices that have nasty complications down the road. Further, a plan should prescribe training and support services, helping to ensure that investments will pay off.

Make multiyear decisions. Technology investment is a continuous process. Annual budgeting should allow for maintenance and upgrades, not just big purchases when an overhaul is due. More than 80 percent of NPower survey respondents spent less than 2 percent of annual operating budgets on technology. Like failure to do preventive maintenance on a car, underspending on information technology often makes things worse in the future.

Change the organization, not just the technology. Acquiring the right hardware and software is just part of the battle.

Boards and senior managers should realize that most gains will not come from the technology itself, but from changes in the organization. The nonprofit group’s culture must support the adoption and use of information technology, starting with a commitment from the top, and every business process must be scrutinized to make sure new systems will work.

A common story is that of the lone manager who advocates a technology solution, succeeds in getting it into the budget, then finds no support from upper management. The tool is adopted half-heartedly and a year later is deemed a money-wasting failure. But it wasn’t the technology that failed. Technology investments pay off only when set up to succeed.

Grant makers must require and support wise technology investments. Foundations have an opportunity to drive change — and to help ensure that nonprofit groups reap the same benefits that businesses have seen from adopting technology.

To date, only a few grant makers have shown deep interest in this approach. That isn’t adequate. Just as charities must realize that having stable and secure computing is about the music (or whatever the organization’s mission may be), grant makers must take the responsibility of setting up the organizations they support for success.

If charities are not investing in technology or investing unwisely, they are more likely to fail.

Grant makers should insist on technology investment by grantees, scrutinize the technology plans drafted by grantees, and support these goals financially. These are among the surest ways to protect grant makers’ own community investments.

Technology is not a passing fad in nonprofit management. It’s an essential ingredient all nonprofit groups need to take seriously if they expect to meet their commitment to serving society.

Scott Schaffer is executive director of NPower, a national network of nonprofit technology providers that serve charitable organizations. His e-mail address is sc_schaffer@yahoo.com.