What Will It Take to Reach Critical Mass on Nonprofit IT Funding?

Three and a half years ago, funders and nonprofits alike found themselves drowning in all of the details necessary to make the emergency pivot to a “new normal” in which much of their work moved almost immediately to individual employees’ homes.

That experience led to a wake-up call for funders: If they were struggling to get their own IT houses in order in the face of COVID, how much worse must the situation be for their grantee partners?

Today, enough funders are supporting their grantees’ IT needs that the Technology Association of Grantmakers (TAG) has issued a new report outlining best practices for such initiatives. Appropriately titled “Emerging Practices in Funding Nonprofit Tech,” the publication outlines six approaches to guide funders as they consider diving into the nonprofit tech funding arena. And while the movement to support nonprofit tech hasn’t yet reached “critical mass,” as TAG puts it, the association hopes its efforts will help significantly boost the number of funders willing to jump on board.

The report is the result of meetings that began in November 2022, when TAG convened a special meetup of tech funders during its annual conference. That one-time gathering turned into a quarterly tech funders’ exchange, and eventually, TAG partnered with the tech funders to nail down the practices that seemed to be working for them and their grantees. The new report was published at the end of July.

A focus on holistic approaches

The most striking aspect of the funders’ recommendations is that they go well beyond the typical (and somewhat clichéd) idea of how grantmakers can support organizations in the IT realm, i.e., writing a check to purchase a suite of new computers or upgrade nonprofits’ software.

The first recommendation, for example, is that funders adopt a called the “Strategy, Skills, Tools” framework: a thorough process of helping create an overall IT strategy for grantees and then evaluating and supporting them as they determine both the tools they’ll need to pursue that strategy and the skills necessary to work with those tools. Through this approach, according to the report, grantmakers can provide “advisory services, training programs and funding for tools selection and implementation,” allowing grantees to make informed decisions about the tech they need and to successfully use that tech once they have it.

Other recommendations include providing direct IT services, which funders can do either by loaning grantees their own IT employees or contracting with outside vendors, and facilitating learning opportunities for cohort-based learning groups of nonprofits faced with similar tech challenges. This “cohort-based learning” approach, as it’s called in the report, is particularly interesting because it involves building connections between nonprofits so they can continue supporting and learning from one another after the grant or program ends.

In addition to outlining specific approaches, the report includes brief case studies from funders that have employed one or more of them.

Of course, nonprofit tech funders can still just opt to write a check. According to the report, some of them are doing just that by inviting existing grantees to apply for IT-specific needs. And let’s not forget that unrestricted general operating support, which much of the sector remains hesitant to provide, can, of course, cover IT needs – although not in the hands-on way TAG’s report recommends.

However, the report does recommend one best practice that hasn’t yet been adopted: adding 10% to existing grants specifically to support nonprofits’ tech needs. That suggestion was included in the report, according to TAG Executive Director Chantal Forster, because most tech funders are at least exploring the idea.

That exploration can’t turn into action too soon. As NTEN CEO Amy Sample Ward said in the report, “Technology is required as an underpinning for all programs and missions." That fact has become amply clear to both the for-profit and nonprofit worlds since March 2020.

Nonprofit tech funding is “very close to critical mass”

Dedicated philanthropic support for nonprofits’ tech needs isn’t yet widespread enough to call it business as usual. As detailed in TAG’s own State of Philanthropy Tech Report from November of last year, only 23% of funder respondents provided tech and tools to nonprofit grantees, while a significantly larger number, 36%, provided training and technical assistance. On the other hand, when I interviewed Forster, she said that “Emerging Practices in Nonprofit Tech” was among the five most frequently accessed pages on TAG’s website. Perhaps even more encouraging is the fact that, according to Forster, several of the funders profiled in the new report weren’t supporting nonprofit IT as recently as three years ago.

“I think funders are receptive to the message that we need to fund nonprofit technology. But they need two things,” Forster said. One is the “why” – a through understanding of why funders need to support nonprofits’ IT needs. TAG, NTEN and other organizations have been boosting that message for the past three years, and I’m sure funders’ own COVID-era IT struggles have only amplified it. However, Forster said, funders also need to know how to create successful IT funding programs — and that’s exactly the question the new report attempts to address by illustrating what “early adopter” nonprofit tech funders have been doing.

“I think we're very close to critical mass” on funder support for nonprofit tech funding, Forster said. “I don't think that we're at critical mass yet — we’re still in that early adopter phase. But it's important to pause and hear from the early adopters so that it's easier to reach critical mass.”

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