Nonprofit Tech Budgeting: Tips and Tricks for Success

We're almost through Q1 2023, and you're in charge of tech for a nonprofit organization. Last year, you had planned to tackle some tech issues, but things didn't go as smoothly as you had hoped. Maybe the solutions you implemented didn't have the desired impact, or you simply didn't have the time or resources to address everything on your list. Now you're faced with the same challenges, and you're not sure where to start. Here’s what I’d do, given my 20 years of nonprofit tech experience.

Why the standard advice might not work in your case

There’s a lot out there about maximizing budgets for tech. If it doesn’t seem like it fits your needs, that’s probably because your budget is smaller than the standard advice is giving you. This means what worked for other organizations might not work for you. For-profit businesses typically invest 3-5% of their revenue in technology. Unfortunately, it's common for nonprofits to fall short in their tech budgeting, with budgets often falling in the 1% or less range of total revenue. So you’ll have to get picky about who to listen to. (See here for a great report from NTEN on Managing Nonprofit Tech)

Create a Strong Digital Culture

Regarding tech budgeting for your nonprofit organization, one key thing you can do differently to maximize your impact: focus on training and development for your staff to develop a strong digital culture. Investing in tech training and development helps ensure your team has the necessary skills and knowledge to utilize technology to do their jobs effectively. It might sound like you’re putting tech at the center of everything, but organizations with a solid digital culture find that tech is in the background, not the foreground. They use it effectively, so they don’t need to focus on it: they trust the data and don’t spend time asking if it’s correct or how to update it. They expect each other to update the system, so they don’t devote staff meetings asking who has or hasn’t updated things. And they trust the reports, so they spend time discussing what actions to take instead of if the dashboard gives them accurate information. Organizations that behave this way focus on technology so that it can fade into the background. 

There Is A Key Relationship For Success

The most crucial success variable for tech success is a strong relationship between a strategic exec and a tactical staff person executing the plan. This is one of the few common patterns that are not size specific. If you've got a tech team in place, get to know them and understand their skills and capabilities. Suppose you need a dedicated tech team. In that case, it may be helpful to find a staff member who is particularly savvy with technology and reframe their job description to include tech responsibilities (aka Digital Voluntold). Building strong relationships between tech leaders and those executing the tactics is vital to tech success. With this relationship, tech investment of any type is likely to succeed. Investing in it might mean a weekly lunch to discuss improvements, co-planning an offsite planning day, or an amazon gift card when the staff person spent all weekend uploading legacy data. Technology has a much higher chance of succeeding when this relationship is strong, so invest in it. 

Invest, don’t spend

It's also important to remember that technology is an investment, not a cost. While it's essential to be mindful of your budget, viewing tech as an investment can help you see the long-term value it can bring your organization. One way to do this is by writing tech training into your program grants and viewing it as a form of staff development. This can help ensure your team has the necessary skills to utilize technology to achieve your goals effectively. When you increase the capacity of your staff to use technology, that investment compounds - quickly. 

Budget Allocation and Adoption

Budget allocation is a key reason that 90% of nonprofits collect data but only 5% use it to make decisions. There is a strong relationship between budget allocation and adoption.

The technology budget should be between 2-4% of your overall budget. So for a nonprofit with $1 million in annual revenue, that's $20k-$40k. For our example we'll average it to 30k. For many nonprofits a tech budget is fairly automatic at this point. The trick is allocating the Tech Budget to include both technical upgrades and digital maturity. If the whole budget goes to technology it leaves little for training and development of staff.  Let's look at this in an example with a low adoption budget and a high adoption budget. 

In the Low Adoption Budget 95% is budgeted for Tech Stack and 5% for Human Stack. That translates to $1,500 for training, digital maturity, and digital culture leaving 28,500 for new tools, upgrades, licenses, and hardware. The mileage may vary, but this is fairly typical allocation. 

In the High Adoption Budget, the budget is allocated 50/50 between the Tech and Human Stack. This allocation would mean $15,000 for training, digital maturity, and digital culture (a 10x increase). Of course that leaves less room for upgrades, new tools, but maybe that's a feature not a bug. Letting the humans catch up to the tools in place will require a slowdown in the tools. 

The benefits of a High Adoption Budget Allocation

If budgets are a window into values then a high adoption budget shows a higher regard for the digital experience of humans through digital maturity and digital culture. What does digital maturity look like? It's moving staff from Resistance to Resilience, and the first order of business is to move people Comfort level and above. 

How to do that? There are a few key areas to consider. Training and development for your staff. This could include tech courses, workshops, or simply setting aside time for tech training as part of their job description. Send a staff member to a tech conference. Send them to a conference to increase their aptitude, grow their learning, create loyalty, and backend this with an expectation that they will return and share their learning with the rest of the team.

The investment should fit the investment, but the main point here is that the tech budget should be divided so that part is spent on the technology itself and part of it is used to increase the digital maturity of users. Digital Maturity is just as "tech" as Tech.  Consider how you can use your tech budget to help your staff effectively use technology to achieve your goals. This might include investing in online courses, an offsite 1-day tech retreat, hosting a monthly tech lunch to train or streamline processes, or bringing in a tech vendor success manager to show your team how to use better a system you already pay for.

Maximize budget and support staff

Overall, the key to tech success for small nonprofits is building strong relationships between strategic leaders and tactical staff who execute the strategy. By budgeting for tech training and development and using your tech budget to help your team effectively use technology, you can ensure that your organization is well-equipped to achieve its goals and make a positive impact, even with a smaller budget.

If you're a nonprofit leader working with a smaller budget, you may be interested in a new online course called "Digital Drivers Ed for Small Teams." This course, designed specifically for small nonprofit organizations, will provide valuable information and insights on effectively utilizing technology to achieve your goals. From digital transformation strategies to practical tips and tools, this course is designed to help small teams navigate the complex tech world and drive positive organizational change. Pre-seats are currently being sold, so if you're interested in learning more, please reach out for more information. This could be an excellent opportunity for small nonprofit teams looking to make the most of their tech budget and drive digital transformation within their organization.