Investing in Infrastructure: What Holds Foundations Back From Funding Technology?

Today 1400 foundations received a letter from 22 organizations that support nonprofit infrastructure. The letter urges those foundations to commit to directing at least 1% of their grantmaking budgets to support the infrastructure upon which the nonprofit sector is built. I believe that the majority of grantmakers already understand the importance of infrastructure—yet that understanding isn’t often reflected in their grantmaking. Why is that? And will a letter like this make any difference?

Last week, I had the privilege of dining with some program officers. They came together specifically to talk about how grantmakers can advance the use of technology at nonprofit organizations. A lot of grantmakers are allergic to technology, but not them—these people get it. Even so, they admitted that they struggle with how to make funding decisions and whether technology funding aligns with their foundations’ priorities or will satisfy their trustees.

Based on conversations I’ve had with grantmakers, here are the top three reasons why they are reluctant to fund technology.

“I don’t know enough about technology.” 

One program officer had a bad experience funding a CRM system. The project failed because the grantee and the grantmaker both were naive about software selection and implementation. They missed early clues that the organization was not ready for a technology change of this magnitude. They also neglected to conduct a thorough software selection process and therefore chose a product that was a poor fit. Now the foundation is cautious about funding other technology projects. Its program officers simply don’t feel confident in their ability to differentiate the good investments from the bad ones. I want grantmakers to know that understanding technology well enough to make good funding decisions is not so far out of your reach. There are a lot of resources available and in relatively little time you can understand just enough to know what questions to ask and to be able to engage in an open conversation with grantees.

“It’s too risky.” 

Technology is often an important facilitator of innovation. I hope funders will accept that in order to foster innovation you have to be willing to fail with technology. But although failures can occur, there are many ways you can use your funding to reduce the risk. Can you fund self-assessments, training, or consulting services that improve grantees’ capacity to make good decisions about technology and manage a successful implementation? Can you start by piloting a new technology on a small scale?

“It doesn’t align with our funding priorities.” 

Well, maybe your funding priorities are wrong. Even though it might not be exciting or sexy, funding basic infrastructure is one of the best things that you can do to make an organization more effective at achieving its mission. Technology infrastructure is a prerequisite for performance management, innovation, and sustainability. If this letter helps foundations see that truth, then I’m all for it.

You can read the letter for yourself here. It’s inspiring to know that so many of my peers, as well as funders, are concerned about this issue. I hope we can continue an open conversation, and I hope infrastructure—including technology—becomes the priority that it ought to be.

Have technology questions or want to learn more about how Tech Impact can help your nonprofit?