Rethinking Technology in the Nonprofit Arena: New Models of Strategic Deployment

"Commercial entities and nonprofits view strategic investment in organizational capacity very differently on the administrative side of their organizations. Unfortunately, this is where the technology component usually lies. Commercial entities understand that to use technology strategically to meet objectives they must make the appropriate investment in organizational infrastructure. This investment is viewed as one of the critical components necessary to achieve IT related goals. By contrast, investment in infrastructure in the form of administrative support has historically been viewed by the nonprofit sector often as a necessary evil."   (Syndicate List, February 2001)


Deployment of technology in the nonprofit and for-profit sectors is similar in many respects. However, it fundamentally differs in some important ways as well. From the strategic planning perspective many nonprofits define their mission and view organizational capacity building differently than their for-profit counterparts. This impacts significantly on success and level of information technology ("IT") deployment. The differences outlined in this article are generalized for the two sectors. Individual organizations in both sectors may differ in approach.


The overarching strategic goals for deploying technology in both the commercial and nonprofit sector are similar. They involve effectively meeting mission objectives by increasing efficiency and productivity and/or reducing overhead costs. Tactically, the deployment of software, hardware and training are similar as well. For example, implementing software in either the for-profit or nonprofit environment still entails the basic project lifecycle of design, programming, data conversion, testing, documentation and training. More hand holding and user support is generally required in the nonprofit sector for reasons outlined later in this article, but the various elements underlying a technology deployment are the same. What differs are the two sectors' approaches to IT strategy. This article outlines the differences and offers a number of newly emerging models of IT deployment in the nonprofit arena designed to better deal with these differences.


Interpreting The Mission

Successful commercial entities have clearly defined bottom line goals and objective measurements to determine if they have met them. Strategies to meet these objectives tend to be just as crisp and clear. By contrast, successful nonprofits often have missions that are subjective and open to interpretation, even by the staff who carry them out. Objective metrics are also difficult to come by because success is often dependent on the extent to which individual lives are affected over the long term. It's no surprise therefore that nonprofit strategies flowing from the mission tend also to be subject to interpretation and difficult to measure.


This difference has clear ramifications on IT deployment, particularly on the software development and implementation process. The building blocks of successful software deployment are dependent upon clear business and technical requirements that adequately define needs. Commercial operations often have this clarity of vision and the requisite business and technical requirements to go along with them. If they do not, they make the capital investments in training and development to insure they get them. Nonprofits start out with a more complicated set of issues related to software development because their business and technical requirements tend to be more subjective as well. In most nonprofits, implementing accounting systems is one of the easier IT software deployments. That is because accounting systems do follow clear AICPA standards. Implementing mission-based systems is significantly more difficult because of the subjectivity of any standard rule base. In the binary world of 1's and 0's clear requirements are an imperative. Nonprofits therefore need more time and resources than for-profits do to insure their requirements can be adequately refined before achieving a successful software implementation. Unfortunately, they tend to invest less in the necessary resources.


There is another element of organizational psychology that is an outgrowth of the interpretable mission and the humanistic approach to management NGOs take that directly impacts the deployment of IT. IT implementation efforts are usually rather disciplined affairs. Their success is dependent upon significant personal investment by both the users and technical implementers. Without this discipline, there are many places where a technology effort can go significantly wrong and cause an expensive disaster. Nonprofits are more likely to manage by stakeholder consensus then for-profits do. The opinions of skeptics who interpret the needs differently in this environment may be given more weight than their for-profit counterparts even if they have less experience with successful technology deployments. In my experience, a well-placed skeptic in a nonprofit technology deployment has far more potential to derail the effort than one in a commercial context. There are only two effective ways of short-circuiting this problem. One is to engage in the same management approach that for-profits take to such dissent after a decision has been made. The second is to focus on systems deployment only with that part of the constituency that wants to implement new systems and to bring the skeptics in once a success is achieved.


Investing in Capacity

Commercial entities and nonprofits view strategic investment in organizational capacity very differently on the administrative side of their organizations. Unfortunately, this is where the technology component usually lies. Commercial entities understand that to use technology strategically to meet objectives they must make the appropriate investment in organizational infrastructure. This investment is viewed as one of the critical components necessary to achieve IT related goals. By contrast, investment in infrastructure in the form of administrative support has historically been viewed by the nonprofit sector often as a necessary evil.


Given the choice between upgrading a computer and inoculating ten more children, most nonprofits opt for the latter, much more compelling need. Most do so even if choosing the computer might result in feeding or inoculating 100 more children one year down the road, simply because the current need is so pressing and mission focused. This attitude is reinforced by funders who support specific nonprofit projects that meet their guidelines while doing their utmost to limit funding of overhead or administrative costs. Few funders support IT capacity building for nonprofits as a portfolio item. Even fewer support nonprofits experimentation or R&D with technologies that may potentially be unsuccessful. On the other hand appropriate capacity building and R&D funding is a staple of IT deployment in the commercial context.


Commercial entities have been investing in technologies since the 60's to support their back office functions. In recent years new technologies have facilitated adoption of mission critical applications (sales, marketing, customer service, etc.) by the front office of many businesses. These technologies have been more easily adopted by the commercial sector not just because they are willing to invest more but because they have already had a long history of technology use and the efficiencies it afforded them. By contrast, nonprofits have not had this history. The expense of technology to fulfill back office functions was often seen as a luxury and supplementary to meeting strategic mission objectives. Now that mission-critical technology components are available to nonprofits, their lack of historical use of these tools makes them more reticent to invest in adopting them.


If one had to rate the most important components of technology deployment in terms of software, hardware, personnel and training, personnel would probably rate first or at least tie with training. Technology personnel are generally much more expensive than other nonprofit staff. While they are a critical component of any IT deployment, often nonprofits' donors do not make the appropriate investments in them. This rather dangerous strategy puts any hardware or software investment in significant jeopardy in terms of both implementation and future maintenance. Ironically, this problem is directly related to the commercial sector's understanding of how important technology personnel are to successful IT deployment. By valuing their skill sets so highly they drive up their market price.


There is an inherent catch-22 involved in NGO reticence to build capacity that it cannot support presently, even if it results in enhanced operation that might support the capacity in future. Lack of IT capacity often leaves senior management in the nonprofit sector without a technology advocate in the organization. Many commercial entities launch into new technology initiatives because they have the staff on hand to design, sell and execute an initiative internally. Unless senior management in a nonprofit have this understanding or can rely on a non-tech advocate to sell a technology approach, new initiatives simply do not occur except where current technology is so outdated that it begs for change. Technology efforts are often reactive rather than proactive in the nonprofit sector.


Training as a Capacity Issue

User training also rates far higher in the successful deployment of technology than either hardware or software. Commercial entities tend to view IT training as just another critical component of proper investment in the successful deployment of technology initiatives. By contrast, nonprofits have a hard time justifying training in anything but issues directly related to their mission. Aside from funding, time is the other critical element in shortest supply in the nonprofit environment. The following profile is similar in most successful nonprofits: dedicated, overworked and underpaid people who see their work as a mission rather than a job.


Nonprofit personnel will often complain they simply do not have time for supplementary training. This is particularly true for technology training which is often not intuitive, unfamiliar, scary to the computer phobic and not clearly related to meeting the mission. Nonprofits often have very high turnover because salaries by necessity are lower than in the commercial sector. There is often little strategic thought given to career advancement initiatives. So people move on to more lucrative careers in the private sector or better jobs at other nonprofits. Investing in training in this environment often has the additional negative of expending limited resources on people who might not be around to use it for the benefit of the organization. While this is a very shortsighted strategic approach, it is not surprising given the limited exposure of most nonprofits to the benefits of technology in enhancing their core mission objectives. There tends to be the mistaken belief that simply having the new hardware or software is enough without investing in the requisite training to incorporate it effectively into one's job function. Proper training in the use of technology is an imperative. In fact, any investment without it as key component is a waste of both time and money. Documenting a process correctly (e.g. written training) also ensures that if staff turn over, another person can more easily pick up the task.


The Cycle of IT Investment & Benefit

The same inducements that drive for-profit entities to invest strategically in technology are not there for nonprofits. Commercial entities invest in technology to meet clear objectives and generate more revenue. This allows them to reinvest in order to achieve even greater efficiencies and revenue growth. There is a clear cycle of benefit that reinforces proactive investment in technology.


By contrast, nonprofits that invest in technology may very well become more productive and efficient, but this does not necessarily translate into generating revenue to continue making IT investments. Unfortunately, these investments often need to be continuous once made because of the pace of change. Nonprofits may attract more donors because of their efficiency or efficacy but not necessarily more dollars to support their technology investment. Those who understand they can use technology to generate sustainable income may also encounter the problem of funders who indicate they want to see sustainability, but conversely cannot support social ventures that generate income. If a nonprofit can generate savings or income from technology investment, and can justify even further efficiencies from future investment, it is best to reinvest any internal gain. The alternative is relying on outside funders to support this activity. They tend to do so only if the technology investment is directly related to fulfilling the objective of a project they wish to support.


Rethinking Non-Profit IT Investment

There will always be well-funded nonprofits or nonprofits that see technology as a way to achieving their objectives most effectively. They will make the appropriate investments and commitments to it. However, these nonprofits represent the vast minority of a very large global sector, many of whom share similar issues and missions across geographic boundaries. Lower entry costs, and more mission-related technology applications like the Internet will influence a larger majority of nonprofits to embrace at least some investment in it, certainly more so than when IT investment was primarily a back office function. However, it is too much to expect that the majority of nonprofits will start making the proper technology investments to build the appropriate IT capacity internally. Twenty years from now, technology and technologists will still be costly items for a significant proportion of the nonprofit sector to afford.


Even if the cycle of benefit differs between nonprofit and for-profit technology investment, it is still important for nonprofits to make these investments if they allow them to work more effectively and efficiently to meet their missions. Because the differences with for-profit IT investment lie in some key strategic thinking related to capacity building and mission definition, alternative paradigms must be sought to address and leverage these differences effectively. If much of the problem lies with limitations of investment in IT capacity building within a nonprofit organization, then solutions that foster the development of IT capacity outside of individual NGOs should be seriously examined.


Nonprofits are influenced by "trusted source" relationships with other organizations in their sectors who share their missions and beliefs. They are also influenced by the interests of their funders. The nature of many nonprofits to trust their peer organizations and share resources needs to be better understood and leveraged by both nonprofits and their funders in the IT space. Sharing resources not only reduces the costs of IT deployment, but naturally creates a set of standardized requirements, making implementations that much easier.


NGO IT Support Organizations:

Related to capacity building and training, the fairly recent emergence of organizations like the APC, NPower, Compumentor, Netcorps, Harbinger, etc. all bode well for nonprofit technology assistance. These organizations are themselves NGOs dedicated to providing different forms of IT assistance from technical support to training to application hosting for various sectors and geographies of nonprofit groups. The better organizations are staffed by highly competent technologists and associated skill sets. The interesting twist here is that as NGOs, they have the trust of nonprofits who trust that they are sensitive and understanding of their needs. Because these groups operate on sustainability (rather than profit) paradigms, overhead is lower and therefore IT assistance to nonprofits is provided at lower costs. These organizations can demonstrate solid examples of effective IT use to their client constituencies in a compelling manner that they both understand and relate to. Unfortunately, the same trusted-source relationships are not as easy with for-profit IT service providers because the profit versus mission focus tends to create a certain arms-length relationship.


Funders are much more likely to support IT funding for nonprofit technology assistance groups whose mission it is to provide this service to hundreds of nonprofits. It is far less costly and more efficient than funding hundreds of individual organizational requests to build IT capacity. These organizations represent a natural distribution channel to insure that online shareable resources created for the nonprofit environment reach large, medium, small and grassroots organizations worldwide.


Application Service Providers (ASPs)

The emergence of ASPs dedicated to developing and hosting software on the Internet that dispersed constituencies in an organization can access for a reasonable fee is also an important IT development for nonprofits. It enables them to forego costly up-front investments in technical infrastructure to deploy a viable system internally. It may also allow them to more effectively share resources across organizations. The ASP paradigm offers another interesting benefit as well. Some organizations get hung up in the design component of their software development effort. They point to their uniqueness as a reason for defining requirements that are so sophisticated that only costly and complicated systems can meet them. The nature of an ASP's ability to share information across even a dispersed organization may necessitate less sophisticated requirements in the first place. The lower entry costs also provide a compelling argument for standardizing some needs around what the system offers in order to accrue its many other benefits. By contrast, if an organization is paying a substantial amount up-front for an in-house software development effort, there is far less impetus to settle for anything less than 100% conformance to requirements however over-individualized or complicated.


There are issues still to resolve in the ASP approach including privacy, security, bandwidth, offline clients, customization, ASP switching and training. However, a number of the nonprofit technical support organizations also have ASP projects in various stages of development using open source tools and licenses that allow the type of flexibility required. This coupled with their other support and training services offer a compelling and interesting future for better IT adoption by the nonprofit sector.


Content and Resource Aggregation

Another interesting development is nonprofit sites that aggregate content, for nonprofit constituencies like oneworld.org, mediachannel.org and civilrights.org. A number of other excellent examples exist of nonprofits sharing content on line and linking to form sectoral hubs that people can enter regardless of what single site in that sector they visit.


Specialty IT information support, services and online tools for NGOs provided by sites such as helping.org, techsoup.org, npower.org, socialecology.org, techrocks.org and others are a hybrid aspect of all these phenomena aggregating various online IT support services to the nonprofit sector.


What all of these efforts have in common is that they are managed by nonprofit organizations that understand the impact of technology and have invested in developing resources on line to help similar constituencies. They are using the Internet's natural collaborative tendencies to leverage IT deployment across their various sectors and for the benefit of many organizations, not just themselves.


Summary

Taken as a whole, all these new structures offer nonprofits a way to invest much less significant amounts up front to access stable and reliable IT software, infrastructure, training and support services. Just as importantly, it allows them to share information and organize effectively across organizations. I use the term 'invest less' for a reason. Investment and commitment is still very much required.


Funders should be seriously cognizant and supportive of the aggregation efforts, online software tools and IT support organizations currently working or being developed. They provide cost-effective funding opportunities to foster significant systemic change in the way nonprofits take better advantage of IT to meet their mission objectives. While not a panacea for solving the nonprofit technology investment conundrum, it certainly affords a practical alternative to the current paradigms that require significant internal capacity building as a prerequisite.


Most of the efforts already mentioned are still disjointed, or more accurately tied to particular sectors and geographies. They are not necessarily well-marketed to all the constituencies that could benefit from them. Moreover subsidies for many organizations to take advantage of these services are still required. Technology is not intuitive to many nonprofit organizations. They need support in the form of subsidies to try the services before deciding how and if they will prioritize and incorporate them into their organizational mix.


To really create an effective nonprofit IT deployment alternative, all the efforts need to be more interconnected. The various NGO IT support organizations need to be better linked and extended into a national and then international network. The online tools and ASPs that currently exist could then be better marketed and distributed through them to local constituencies with the necessary training and support services provided.

Funder support has a significant influence on nonprofit organizational behavior. If it is understood that funding support for capacity building in the IT sector is focused on nonprofit technology providers of low cost services and free shared resources, nonprofits will more than likely gravitate towards them. This in turn will reinforce the providers and their offerings and create even richer services to the constituents through this shared approach. The difficulty for funders is deciding who the best providers are in this nascent industry and what organizations still really deserve individual IT investment. There will also certainly be (as there are now) for-profit players with appropriate sensitivity to nonprofit needs that participate in this evolution.

- Jonathan Peizer -