Funding for Nonprofit Technology

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How technology investments are made determines outcomes for staff as well as programs. Who funds technology? The following guidelines consider funders to be those who provide direct financial funding for nonprofit organizations. This includes nonprofits, grantmakers, corporate sponsors, and vendors. There are also many guidelines here that apply to all organizations, whether they are nonprofits or foundations. Ultimately, technology is not an isolated investment and needs to be acknowledged in budgeting and investing as an integrated part of an organization.

Funding Guidelines

Invest Appropriately in Technology

Technology is a fundamental operational support of nonprofit life. Funders and organizations must invest in it appropriately.

  • Grants should be inclusive of comprehensive expenses (including technology). Programs and services cannot operate void of the technology used to communicate with participants, manage their data and participation materials, provide them with resources, and more.
  • Fund technology capacity building and staff skill-building, even when there is not a specific project.
  • Investments should reflect the need for all aspects of successful technology use  (training, change management, support, etc.).

Spend Intentionally

  • Organizations should budget yearly for technology expenses at approximately 3–5% of the operational budget.
  • Organizations should include technology budgeting as part of every planning process.
  • Technology must be justified in terms of their benefit to constituents and staff. Do not invest in technology for the sake of technology or at the direction of a grantmaker, sponsor, or external advisor.
  • Decide if extensive use of technology is required for the success of your mission. If it is, make technology planning and budgeting a priority at every level of your organization.
  • Organizations should track technology expenses separately from office supplies or other equipment.

Technology Should Be Considered a Program Expense

Technology supports service delivery and should be considered an integral part of all program funding and budgeting.

  • Include technology expenses as part of program budgets (including a reasonable percentage of operational needs like internet and technology support).
  • All grants should include funding to support technology, not only for applications to technology-specific grant programs.
  • Grants with significant data collection or evaluation requirements should support that work with additional funding for technology and data analysis staff.

Fund Inclusive Decision-Making

Deciding on the right off-the-shelf tools or designing new tools is difficult. Technology projects should be funded with enough support for iterative and participatory processes.

  • Organizations should not be expected to know the correct technology tool before receiving funding. Funders should provide support for selecting and implementing new systems and training for all staff to be successful.
  • Implementation costs should include support for participatory, iterative processes. Include all staff levels in designing new systems. Include constituents when designing and implementing constituent-facing systems (and compensated them for their labor).
  • Funders should not mandate specific technologies or approaches. Organizations should have the freedom to select the right systems for their use.

Support Experimentation and Failure

Technology has the potential to open up radically new approaches to nonprofit service delivery. However, these approaches are experimental and come with risk. Organizations must be supported in taking risks.

  • Organizations should experiment with new ideas and solicit funding to support new approaches. Failures should be accepted and shared broadly.
  • Funders should provide general operating funding for organizations experimenting with new technology-supported service delivery models. Funding should be significant and provided with the knowledge that the organization’s attempts and learnings will likely include iterative prototyping and experimentation.
  • Funders should not penalize failed technology projects. Failure is how we learn.
  • Organizations should get technical support in participatory design, rapid prototyping, and software development practices. These are new skills for some organizations.

Corporate Funding

Do Not Conflate Product Donation With Cash Funding

Donations of software, hardware, and services do not replace the need for cash funding. Donation strategies should focus on nonprofits’ long-term sustainability and be part of a larger plan for supporting organizations.

  • Do not require nonprofits to use your products to receive funding. Fund the implementation of competitor’s products if it will best serve the nonprofit.
  • Always provide adequate cash funding to support the implementation and support of any product donations. Product donations shouldn’t come with additional costs.
  • Provide general operating support to nonprofits as part of an equitable corporate giving strategy.

Give for Impact, Not Visibility

Corporate giving and volunteering programs are a necessary and valuable effort to reinvest in communities, especially where the commercial benefit has been gained. However, an investment must be made for change, not to signal your brand’s generosity.

  • Do not use a position of power to pressure organizations into accepting volunteers or pro bono consultants. Only pursue volunteer opportunities when there is a clear benefit to the organization and community. Otherwise, make cash donations.
  • Nonprofit organizations should proactively create a gift acceptance policy with clear guidelines about types of gifts and funders that will be accepted.
  • Volunteers should be accompanied with the funding necessary to manage them and ensure efficient use of their time.
  • Be cautious when using nonprofit constituents in publicity campaigns — the inherent power dynamics are difficult to navigate. If the stories of nonprofit constituents are used, get informed consent. Compensate constituents at a rate that fairly reflects their role and at least matches your staff’s hourly rate.
  • Define internal processes for ensuring corporate accountability in giving practices. Do not give donations for the publicity and then abandon the organization.