March 10, 2015

What Is Nonprofit Technology?

For the past 14 years, I’ve been working for nonprofits. I’ve also become active in what we call the “nptech” community—”nptech” being shorthand for “nonprofit technology.” But nonprofits, which comprise about 10% of all US businesses, have wildly diverse business models. To suggest that there is a particular type of technology for nonprofits is akin to saying that all of the businesses in downtown Manhattan have similar technology needs. So what is nonprofit technology? It’s less of a platform and more of a philosophy.

Are nonprofits unique snowflakes?
It’s often said that each nonprofit is unique, like a snowflake, with specific needs and modes of operation. However, nonprofits do not use any technology that is 100% unique to the nonprofit sector. Fundraising systems operate exactly like sales systems, with leads, opportunities, campaigns and sales/donations. Similarly, advocacy applications are akin to marketing software. What nonprofits call Constituent Relationship Management Systems are called Customer Relationship Management systems everywhere else. Technology used by nonprofits is analogous enough to what for-profits use to be nearly indistinguishable.

Most businesses operate under tight margins. They keep overhead to a minimum. They make decisions based on a scarcity of funding.  Nonprofits are not unique in their lack of sizable technology budgets.

No margin for investment
The most significant difference between a nonprofit and a for-profit, from a business perspective, is this: A for-profit holds to tight budgets in order to maximize profit; a nonprofit holds to tight budgets in order to remain funded.

Of course, for-profits can go under by getting their overhead ratio wrong. But where they have room to move and, say, invest 30% in overhead one year in order to boot up a long-term, profitable strategy, they can. They can make the case to their board. Their customers will likely not even know how much they spent on technology, marketing, or extra staff.

If a nonprofit decides to boost the overhead rate by 30% for a year in order to boot up a long-term, mission-effective strategy, then GuidestarCharity Navigator, the Better Business Bureau, and their own website will tell their donors that they’re a bad investment, and the drop in donations might well sink them. 501(c)(3) nonprofit organizations are required to publish their financial statements for public review annually, and this is the data on which they are primarily assessed. The effectiveness of their strategies is harder for nonprofits to qualify than it is for a retailer or manufacturer.

Customers don’t care how a Target and WalMart run their businesses; they care that they can buy anti-bacterial wipes at competitive prices. Constituents care deeply about how much of their donation is going to the people or cause that a nonprofit serves, as opposed to the operating expense of the nonprofit.

All businesses want to minimize expenses and increase profitability (even nonprofits!). But nonprofits must minimize those expenses; they have no strategic breathing room when it comes to funding operations.

Management is not the priority, fundraising is.
So, for a nonprofit, a CEO’s primary job is to maintain the funding. In many cases, this means that the qualifications of a nonprofit CEO have a lot to do with their networking and fundraising skills. Many nonprofits are run by people who don’t have extensive training or experience in business management.

Nonprofit IT staff aren’t your typical techies

Nonprofits have lower IT budget and staff ratios than a typical for-profit. The average nonprofit IT budget is 1% to 2% of the entire budget, per NTEN Staffing Survey; average for-profit is 2% to 3%, per Gartner). IT Salaries are consistently below the market rate, and they vary wildly, with some nonprofits paying far below market, others at market. A common scenario at a nonprofit is for the technical staff to include, if not be totally made up of, “accidental techies.” This is more common in smaller organizations, but it can happen anywhere that the administrative staffing is a small percentage of the overall staff and/or the CEO doesn’t know to hire IT professionals.

Is that a bad thing? Yes and no. Accidental techies are often the people who had good, strategic notions about how technology could be applied to achieve objectives. They tend to be smart, autonomous, good learners and teachers. But they are more likely to be reactive and opportunistic in there approach to their work. IT also benefits from planning and consistency. Truthfully, you need both styles on a healthy IT team.

So what is “nonprofit technology?”
It’s both a class of software and an approach to technology deployment.

Nonprofits use fundraising, advocacy, grants management and other applications to support their primary technology needs, such as donor management and promotion of causes. In some cases, the same systems that salespeople and marketers use can suffice, as evidenced by the popularity of Salesforce in the nonprofit space. But the nonprofit sector has its own terminology around revenue processes, so, if commercial software is used, it’s modified to address that. In the Salesforce case, a nonprofit will either use a fundraising application that was developed for the platform, such as Roundcause or Blackbaud’s Luminate. Idealware, a nonprofit dedicated to helping nonprofits make good software choices, publishes a booklet listing the types of software that nonprofits use.

Outside of those specialty applications, nonprofits use fairly standard stuff from Microsoft, Adobe, Google, and other big companies. Many of these companies offer charity pricing, and further discounts are available to 501(c)(3)s through TechSoup, a company that provides a transaction layer for vendors who want to donate software to charities. A seasoned IT staffer knows how to cut through the front-line salespeople and find the person at a company that might make a donation or discount software or hardware.

But purchasing software is actually the easiest part. Deploying it is the challenge, with little IT staff and less time to focus on how systems should be implemented, technology rollouts are often done on the fly. Where a for-profit might invest significant time up front analyzing the business processes that the system will address, such as evaluating products and training staff, these steps are a hard sell in an understaffed environment where people always have at least five other things to prioritize.

Taking the NPTech Challenge
So if you are thinking of working at a nonprofit as an IT implementer (System Manager, IT Director, CIO), take heart: the work is rewarding, because the motivations are broader than just bringing home a paycheck. The people are nice, and most nonprofits recognize that, if they’re going to pay poorly, they should let people have their lives nights and weekends. There are opportunities to learn and be creative. The constrained environment rewards inventive solutions. If you’re a tech strategist, you can try things that a more risk-averse for-profit wouldn’t, as long as the risk you’re taking isn’t too costly.

That said, if you don’t like to talk to people, and you don’t think that marketing should be part of your job, think twice. Successful technology implementations at nonprofits are done by people who know how to communicate. The soft skills matter even more than the tech skills, because you will likely be reporting to people who don’t understand what tech does. If you can’t justify your projects in terms that they’ll understand, they won’t consider funding them.

You should be as good at the big picture as you are at the small ones. NPTech is all about fixing the broken routers while you configure the CRM and interpret the Google Analytics. You have to be good at juggling a lot of diverse tasks and projects, and conversant in multiple technologies.

Creativity trumps discipline. If you strictly follow the best ITIL policies and governance, be afraid. Strict adherence to for-profit standards requires staffing and budget that you aren’t likely to have. Good technology governance at nonprofits is a matter of setting priorities and making strategic compromises.

Collaboration and delegation are key. Nonprofits have a lot of cross-department functionality. If you are all about IT controlling the systems, you’re going to have more work on your plate than you can handle and a frustrated user base to work with. Letting those who can do tech do tech—whether or not they have the credentials or report to you—is a key strategy towards getting it done.

NPTech is not just a job, it’s a community.

If some of what I’ve described above sounds discouraging, then know that the challenges are shared by a community of tech practitioners that is welcoming and relatively free of ego. Nobody has to take on the battle of improving nonprofit technology alone. Search the #nptech hashtag on Google or Twitter and you’ll find groups, blogs, and individuals who see this challenge as a shared one for our sector. Make the time to check out an NTEN Tech Club meeting in your city or, better yet, attend their annual Nonprofit Technology Conference. Read all of the articles at Idealware. Join the forums at Techsoup. If this work is for you, then you are one of many who support each other, and each other’s organization’s missions, and we’ll help you along the way.

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Peter Campbell
By day, Peter Campbell is the CIO at Legal Services Corporation, America’s Partner for Equal Justice. At other times, he can be found blogging and talking about all things nptech at Techcafeteria or on Twitter.