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The Nonprofit Starvation Cycle

According to a recent study conducted by NTEN, 3.2% of the average nonprofit organization’s budget is spent on IT and IT projects. This is roughly the same as the last study and, by some measures, a third less than similarly sized for profit businesses.

Nonprofit organizations famously under-spend on infrastructure and other strategic investments for fear that they are taking funds away from critical programs and services. ‘If we replace or upgrade our [system], we’ll be taking $ away from participants who really need our services.’

Mission-focus is absolutely critical and valuable in any nonprofit organization, but most board members and donors would agree that long-term vision, including building a solid foundation for sustainability and growth, is a critical aspect of meeting the mission.

At JMT, we see three trends emerging among the most forward-thinking of our nonprofit clients:

  • They are accelerating their departure from being in the IT business. They don’t want a server room. They don’t want to be in meetings to talk about scheduling upgrades. They don’t want to worry about Operating System compatibility issues. They just want to run their organization and stay focused on the programs and services they are providing to their clients.
  • They want predictability to costs. Major capital expenditures for hardware and software upgrades are difficult to plan for and wreak havoc on budgets when things don’t go as planned. As much as possible, IT should be an operating cost with predictable annual costs and as few variables as possible.
  • They expect business applications (finance, donor management, membership, program) to be consumed as a service, not something that is owned, managed and maintained as an asset of the organization. Buying a perpetual license for software that you install on your own servers and maintain, upgrade and manage with internal IT is rapidly becoming an anachronism.

JMT regularly provides advice to clients about alternatives that exist for the various business systems and processes within their organization to help stretch the IT dollar further. If you are going to spend any money on IT projects, let it be to lay a foundation for sustainability and growth, and let your management and staff keep their focus on the organization’s mission, where it belongs.

A great place to start is with  a Business Process Review. Understanding the current state of your systems and identifying the opportunities for improvement can help your organization create a strategy that will save you time, money and frustration.  Find out more about our Business Process Review HERE.

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