Evaluating ROI for Technology in Nonprofits

No Two Nonprofits Are Alike in Their Tech Needs

Early-stage organizations tend to focus decision-making on price, while more mature orgs will make more deliberate decisions based on a specific strategy. But this isn’t universally true. Attitude toward technology is key.

Boards Should Evaluate Software with a Purpose

Don’t just blindly jump into demos when considering software to purchase. Form a team, determine your objectives, review your current situation, and define potential solutions. Once you’ve selected a solution, focus on implementation and adoption.

Tailor Your Pitch to Your Organization Leadership

While doing so, remember that every individual has different priorities. Sell them on the technology’s benefits, not its features, show budget and ROI calculations, and include a call to action in your proposal to show the technology’s value.

Webinar Recap: Karen Graham, nonprofit technology strategist, consultant, and founder of Karen Graham Consulting, explores technology strategies for nonprofits and how to determine ROI.

It’s no secret that technology is evolving rapidly. It’s changing the way organizations across all sectors do business – including nonprofits.

The right technology can help nonprofits solve existing problems, and it can open up new opportunities. Yet, all too often, nonprofits view technology as an expense rather than an opportunity.

Recently, we sat down with Karen Graham, nonprofit technology strategist, consultant, and founder of Karen Graham Consulting, to discuss the power of technology for nonprofits – and how these organizations can evaluate the ROI of different technology solutions.

The session explored topics including:

Steps to take to evaluate new software
The importance of implementation

The costs and benefits of technology – both the obvious and not-so-obvious.

Here, we share key insights from this session.

Digital Maturity Looks Different at Each Nonprofit

A quick Google search will yield several examples of digital maturity models for nonprofits. While each is different, they all outline different stages of maturity that organizations typically experience in order.

In the early stages, organizations are reactive, and many of their decisions aren’t connected to a strategy. According to Graham, a lot of decisions at this stage are based on price.

As organizations mature, they make more deliberate technology decisions. “It’s not just that strategy is guiding their technology decisions,” Graham said. “Technology is their strategy. It’s what they’re using to differentiate themselves from their peers to multiply their impact.”

While it’s easy to assume digital maturity is directly tied to an organization’s age, size, or resources, this isn’t always the case. “I’ve seen very small, young organizations achieve a very strategic approach to technology and a digital-first mentality, sometimes because the people who have founded and work in those organizations are digital natives,” Graham explained. “Sometimes, they’re leapfrogging over other organizations that are older, more mature, and better resourced because of their attitudes.”

Innovation Requires a Solid Foundation

The right technology can deliver big benefits to nonprofits. As such, some organizations are eager to dive right in.

“A lot of organizations want to jump to doing things with technology that’ll transform the way they deliver services,” said Graham. “That’s great.”

However, she cautions that certain foundational elements must be in place first, which include:

Reliable high-speed internet
Basic cybersecurity
Functioning computers
Basic technology skills and digital literacy

“If an organization is thinking about a technology investment and one of these things is a mess in the organization, they should focus on fixing those first.”

Certain Steps are Required for Effectively Evaluating Software

When it comes to technology, many organizations want to jump right into scheduling demos and selecting a solution. However, there are several steps they need to complete before scheduling a single demo.

Graham shared the following steps for evaluating new software:

State objectives
Form team
Review goals and context
Review current situation
Define desired state
Define solutions and investments
Implement and monitor

Don’t Overlook Implementation

Choosing a solution is an important step. However, it doesn’t mean the work is over. Next, the organization must focus on implementation and ensuring adoption.

“[Many nonprofits] rush through and don’t think about change management as much as they should,” Graham said.

Often, it’s understood that implementation needs to be done, but organizations aren’t quite sure how to do it or who’s responsible for it. “If it’s everyone’s job, no one’s going to do it,” cautioned Graham.

Her recommendation is to form a team that represents different perspectives in the organization. The team should have a product owner, who is accountable for the success of the project, as well as an executive sponsor. In addition, the team should include “cheerleaders” who can “help spread enthusiasm for the new tools and processes.”

Finally, in some cases, it also makes sense to include a member who is a contrarian. According to Graham, “it can be a great way to win that person over and to benefit from their skepticism and their questioning. You have a devil’s advocate on the team that’ll help you get to a better result.”

Technology Comes with Costs and Benefits

Any technology solution comes with costs and benefits. It’s important to list those costs and benefits – then prioritize for each audience.

While some costs and benefits are obvious and easy to measure, others are “hard to put a dollar sign on.” Graham shared many examples of each.

Possible benefits: Cost savings, time savings, additional revenue, additional capabilities, increased reach, more people served, better quality of service, better outcomes, improved security, more reliable data, happiness
Possible costs: Hardware, software, support, training, staff time, opportunity cost, disruption, morale

Don’t Overlook Risks

Technology has the potential to deliver big benefits to nonprofits. However, it’s important to remember there are also risks. Graham advises nonprofits to consider the following questions:

What are the risks associated with adopting this technology?
What are the risks of not adopting it?
How will you mitigate risks?

While there are risks of adopting a new solution, there are also risks of taking no action. “Doing nothing has its whole set of costs and benefits as well,” she said.

Tailor Your Pitch to Your Audience

Once you’ve determined your challenges and found a solution that fits your needs, it’s time to make a pitch to those within your organization who hold decision-making power.

Remember: a pitch shouldn’t be “one size fits all.” Rather, Graham advised attendees to “Differentiate the message to different audiences. Each has different priorities. Each needs different things.”

With that in mind, Graham shared these steps for creating a pitch tailored to your audience:

Clearly state your problem and its impact
Capture top pain points and connect it to your goals
Explain benefits rather than features
Show budget and ROI calculations
Detail steps to choosing this solution
Describe the implementation project
Include a call to action

Technology is a Common Gap on Nonprofit Boards

Often, nonprofit board members are recruited for their financial capacity or connections. In addition, some are recruited for the backgrounds in a specific area of need – such as marketing or human resources.

While technology is increasing in importance across all sectors, Graham notes a “huge lack of technology skill among nonprofit boards.” “I’m not seeing board members recruited for their technology skills.”

Technology plays a growing role in the way nonprofits run. As such, it must be on board members’ radar. “Boards have a huge responsibility to be looking at technology risk and ethics,” Graham said. “That’s part of the director’s responsibility to the organization.”

Boards should focus their recruitment efforts on finding potential directors with technology experience. “I think that’s a huge opportunity that can help organizations get to a higher level of maturity, faster,” she concluded.

Are you starting to learn more about board evaluation and annual planning strategies that will help set your board up for success in the year ahead? Save your spot for our next ATLAS Leadership webinar, Navigating the Future, with Dr. Donna Hamlin, CEO and Founder at BoardWise.

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