Call us at 888.368.2463    CONTACT US
 Back to Blog
technology curve

Technology Matters to Nonprofits: The Impact of Falling Behind the Technology Curve

My wife was recently notified by our wireless provider that her smartphone will no longer be supported. A couple of years ago, when she needed a new cell phone, we made the decision to save some money by buying an older, but not obsolete, model phone. “There’s no reason to spend all that extra money for the latest, greatest model when this one will work just fine,” we reasoned.

Most of us as consumers can relate to this story. Things seem to be changing faster than ever. My teenage children cannot believe that when they were born, we had to take pictures of them using actual cameras because none of us yet had smartphones with built-in cameras. How many movie plots would fall completely apart in a world like today in which smartphones are so ubiquitous?

But are things changing faster than ever? Without question!

In fact, the speed of technological advancement is said to be exponential, not linear. One scholar, Ray Kurzweil, refers to the phenomenon as“The Law of Accelerating Returns”.

The graphic here displays the advancements of technology on a historical timeline:

accelerating growth in technology chart

Source: Asgard Human Venture Capital for Artificial Intelligence

The idea of keeping pace with this speed of technological change is daunting to any of us individually, but even more so to a nonprofit organization. As a firm that has worked exclusively with nonprofits for nearly three decades, JMT knows that nonprofit organizations tend to lag behind the technology adaptation curve. This lag results in part from simple resource constraints, but primarily from the Overhead Myth’, or the false conception that financial ratios are the sole indicator of nonprofit performance.

This mindset essentially boils down to the idea that as much money as possible should be spent on programs, not infrastructure. The noble intention behind the ideal of that statement was taken to the extreme and became insidious in the nonprofit culture, to the point that there was an almost palpable fear of spending money on anything that is not direct program activity. There has been an organized effort by thought leaders, such as Guide Star, and even foundations who fund nonprofits, such as Virginia G. Piper Charitable Trust, for several years to change the mindset and the culture of nonprofits with regard to infrastructure spending. We believe the lag in technology adaptation by nonprofits is shrinking, though there will always be at least some gap.

The combination of the exponential speed of technological evolution and the gap in nonprofit adaptation creates a risk that falls under the category of the ‘nonprofit starvation cycle’, which is discussed in detail by JMT’s friends at BDO LLP in this benchmarking survey. The ability to grow and serve more people is constrained by a lack of infrastructure spending. Paradoxically, the very outcome nonprofits are trying to avoid —less impact on the community– by spending too much on “overhead” becomes the reality when too little is spent on infrastructure!

While my wife and I are merely annoyed that we spent money on dated technology and are now facing the need to buy a new cell phone, it could be disastrous for a nonprofit to make the same mistake with a mission critical system such as a financial management/ERP or a Donor Management system.

I just returned from a technology conference in which it was announced that an ERP system will be using machine learning to automatically scan the general ledger for anomalies and irregularities in journal entries. I’m sure that this amazing feature will one day be something we all assume is part of any ERP, just as we all assume a cell phone has a camera. Don’t be fooled by solutions with recognizable brand names and years in the marketplace—many of them are powered by older generations of technology. It still works, but how long before those solutions will be obsolete and outdated like my wife’s smartphone?

We’d love the opportunity to learn more about your technology needs and how we can help support your organization’s growth and ability to serve others. To chat with one of our nonprofit experts, contact us here.

Related Posts:
Communication Service for the Deaf; A Sage Intacct Success Story
October 2, 2017
Communication Service for the Deaf; A Sage Intacct Success Story

Communication Service for the Deaf (CSD) is a 501c nonprofit organization based in the United States and New Zealand, providing a plethora of services to the deaf.  They recently worked with JMT Consulting Group to enhance their financial management solution by implementing Sage Intacct and Nexonia.  We recently sat down with Brad Hermes, CFO and…

Outputs vs. Outcomes: What’s the Difference and Why Does It Matter?
February 6, 2018
Outputs vs. Outcomes: What’s the Difference and Why Does It Matter?

Donors want to know if their donations are impacting the work of your nonprofit through its mission. Increasingly, this means telling your story through numbers—something that nonprofits don’t always do well. Marc J. Epstein, co-author of the book, Measuring and Improving Social Impacts: A Guide for Nonprofits, Companies, and Impact Investors, says that “The need…

Get a View into Your Nonprofit’s Outcomes with Dashboards
February 26, 2018
Get a View into Your Nonprofit’s Outcomes with Dashboards

Dashboards provide a window into your organization’s performance and financial health. With the increased emphasis on outcomes—defined as a change in skill, knowledge, attitude, behavior, condition, or status—nonprofits must demonstrate the progress of those outcomes in a visual, understandable way. An article in Nonprofit Quarterly notes that a dashboard must: Align definitions of success across…

Top 5 Myths about Fund Accounting in the Cloud
January 15, 2018
Top 5 Myths about Fund Accounting in the Cloud

In the mission-driven nonprofit world, fund accounting software can sometimes slip down the priority list. It’s not always easy to allocate budget dollars to back-office infrastructure that doesn’t directly support the nonprofit agenda and harder to find the time and expertise to make it all work. Some of the obstacles include: Capital investment for software…

 Back to Blog