Why Tech Adoption Is Crucial for Accountability in the Nonprofit Sector

One of the clearest trends in the nonprofit sector over the past several years has been the decline of small- and medium-sized donations. While this is an issue the sector needs to address, nonprofits can't wait to adapt. If an organization has to invest a comparable amount of effort in soliciting a $10,000 donation versus a $100,000 donation, it will pursue the latter — but this comes with certain requirements.

With the increase in large-scale giving, transparency and accountability are more important than ever before. Large grantors are on the lookout for evidence of effectiveness, the ability to communicate clearly and frequently with stakeholders, and internal capacities that allow organizations to scale sustainably. In other words, nonprofits need to keep pace with changes in the giving landscape.

This is where technology comes in. Although grantors are increasingly demanding transparency about how their investments are being used, many nonprofits aren't tracking concrete performance indicators and relaying that information. They often fail to do so because they think they lack access to the digital resources necessary to measure and report impact, but this isn't the case — these resources are more available than ever.

Nonprofits Are Behind on Tech Adoption

Nonprofits have to work harder than ever to earn ongoing support from grantors — especially when those grantors invest significant sums into their organization.

Large grantors want to work with nonprofits that can provide access to information about programs and outcomes whenever they need it. According to a 2019 study in Nonprofit and Voluntary Sector Quarterly, "donors value outcome and impact indicators more than output information." In other words, they want to know if their contributions are making a measurable difference in their communities.

But 62% of nonprofits don't fully communicate the impact of their programs. According to a NetChange survey, just 11% of nonprofits say they manage digital resources in a "highly effective" way, while a report published by NTEN found that a mere 20% of nonprofits consider themselves leaders and innovators in tech adoption.

These are the reasons why it's no surprise that, according to a study conducted by BDO, nonprofits report that their top three challenges to reporting outcomes are: "No consistent framework for measurement and recording"; "Not enough human resources to gather data"; and an "inability to gather statistics on [the] impact of programs." These are major impediments to the cultivation of strong relationships with large grantors, but nonprofits need to recognize that they're self-imposed.

Resilia recently interviewed Philip Hackney, a professor at the University of Pittsburgh School of Law who focuses on the nonprofit sector, and he pointed out that "Nonprofits often don't imagine that they should have the same capacities as for-profits, like the latest tech. But as nonprofits take on more and more responsibility in communities, they need to reimagine their roles and what they can accomplish."

Technology Can Facilitate Accountability

The shift toward larger and more consolidated donations is consistent with the greater demand for transparency and accountability. Large grantors don't support organizations based on their missions and goals alone — they expect concrete evidence of impact.

There are affordable and accessible digital platforms that allow organizations to gather and share data on their effectiveness, communicate and collaborate with grantors and other stakeholders, and address a wide range of logistical challenges. Cloud-based data storage can give everyone in your organization access to the same information at the press of a button; digital reporting tools provide grantors with real-time access to data on projects, operations, etc.; and digital accounting services help nonprofits track regulatory and legal compliance.

Despite the slow rate of tech adoption among nonprofits, there are some encouraging signs that the sector is moving in the right direction. According to a report by BWF and Groundwork Digital, 87% of organizations plan to increase their investments in digital donor engagement. Nonprofits are also recognizing that they should look to grantors for assistance in tracking and reporting outcomes — a survey conducted by Grantmakers for Effective Organizations (GEO) found that more and more grantors are offering capacity-building support. The capacity to better track and report outcomes should be at the top of the list.

Technology is a powerful tool for accountability because it can help organizations gather data on their programs' effectiveness while streamlining the process of reporting those data to grantors and other stakeholders. When nonprofits are under more pressure than ever to demonstrate their effectiveness, it's time for them to make tech adoption a top priority.