Allocating Your Tech Budget
Unsurprisingly, there is no magic number, or percent, to answer: how much money should my nonprofit budget for technology? The budget that is right for your organization will be different than what is right for another organization. If your organization is looking to upgrade systems you may actually be able to save some money in the long term by switching to a discounted or donated cloud-based system like Office 365 for Nonprofits. But, you will still have implementation and training costs to consider and may have to move some dollars from capital expenses to operational expenses. Adopting a new solution is just one factor that will affect your budget.
The Nonprofit Technology Network (NTEN) released their 9th Annual Nonprofit Technology Staffing and Investments Report at the end of 2015. We recommend you check out the NTEN report to better understand how other nonprofits have dedicated resources to technology. You’ll need to be an NTEN member to download the report.
According to NTEN’s report, the median technology budget as percentage of the organization’s total operating budget across all organization sizes ranges from 1.0%-2.2% while the average budget ranges from 1.4%-4.4%.
When you relate equate dollars with those percentages the ranges of median and average technology budgets may spot on, or far off, compared to what your nonprofit is capable and prepared to spend on technology. The report covers more than just information about how much nonprofits are spending on technology, it includes interesting information about nonprofit Technology Adoption Levels and Tech Effectiveness.
- Surveyed nonprofits were asked to categorize their Technology Adoption Level, a measure of the organization’s approach to technology into: Struggling, Functioning, Operating or Leading.
- Tech Effectiveness was measured by scale, the higher the number, the more effective the organization considers they are at providing the technology, staff, and training they need to carry out their work, and in applying those tools across the various departments of the organization – from programs to fundraising to communications
While budgeting for technology for your nonprofit, we encourage you to think about what Technology Adoption Level your organization identifies with along with how effective you are at using your current technology resources so you can plan strategic investments in the tools and training that will get you to your goal.
The NTEN report outlined some statistics that we were very happy to hear including:
- 66% of nonprofits surveyed include technology in their strategic plan.
- Hosted Software (also known as “Cloud Software”) is the expense category most likely to have seen an increase over the previous year (44% reported increase).
- 65% of orgs reported that technology staff have an influence on strategic decisions.
- The report depicts a strong correlation between higher Technology Adoption Levels, better Tech Effectiveness and budgeting for staff training. 46% of nonprofits surveyed are currently budgeting for staff training.
Before you finalize your technology budget – check out NTEN’s report. Also – join us for our “Budgeting for Technology” webinar on May 10th at 2pm EDT. In this webinar we will review cost savings solutions that are well worth including in your technology plan.