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What I Learned From Grantmakers About Funding Technology

 Funding technology

Over the years, I’ve talked to a lot of foundations about funding grantee technology. But our recent three-part course How to Get Your Technology Project Funded: Tips from Grantmakers revealed more than a few interesting takeaways. Here are some of the insights from our panel of seven foundation program officers that really hit home for me.

Your First Conversation With A Funder Shouldn’t Be About Technology

Every one of the funders who participated—many of them among the most enthusiastic technology funders in the country—said that technology is only one part of what they’re looking for in a grantee. Even if technology is a top need, most grantmakers want to get to know the organization and invest in its mission first. Once that relationship has been established, they’ll be more receptive to technology funding requests.

Your Proposal Shouldn’t Be About Technology 

Most funders don’t fund technology, per se. They invest in projects that can dramatically improve your ability to fulfill your mission. A successful proposal doesn’t lead with technology. It talks about how the technology helps deliver impact. In fact, it could sometimes work well to be to include your technology request in a larger project because it directly demonstrates the benefits and practical uses of your technology. For example, a project to craft a performance management strategy might logically include money for related data systems.

Technology Corporations Aren’t a Likely Source of Technology Funding 

It seems obvious, right? Technology companies with a lot of money would support and fund nonprofit adoption of technology. As it turns out, the world doesn’t work that way. In general, big companies such as Microsoft, Cisco, and Facebook don’t fund nonprofits directly. Many of them have philanthropy arms, but they’re much more likely to either support nonprofits en masse or in their local community. For instance, Microsoft donates hundreds of thousands of dollars of software licenses through TechSoup, and Google has funded a large digital inclusion initiative in eight specific communities through its Google Fiber initiatives in eight specific metro areas. Other technology companies support their headquarter communities with donations or staff volunteer time. But unless you have a specific connection to the company, there’s no real reason to think that a technology corporation is a better bet for funding than any Corporate Social Responsibly arm.

Funders Really, Really Want to Know that You’re Ready to Succeed 

Nearly allof the funders on our panel talked about wanting to make sure that the technology is right for your organization, that you understand the complexities of implementing a tech project, and that your organization is culturally ready. Lindsay Buss, a grantmaker with the World Bank, summed it up: “Funders have enhanced concern about readiness when it comes to technology proposals.”I heard a strong lesson in there: It’s important not just to think the project through, but to show your thinking by including a few sentences in your proposal about why it’s the right technology at the right time, the process by which you’ll successfully implement it, and some provision for training and developing cultural buy-in.

My biggest takeaway is that funders—even the relatively tech savvy funders who participated in our panels—are looking at technology proposals with a skeptical eye. But the course provided a lot of insight into who might fund technology, what they’re looking for, and how to craft a proposal to give yourself your best chance at success. 

 

 

Best of the Web: August 2015

The Idealware “Best of the Web” is a monthly roundup of the top nonprofit resources from the Idealware blog, our Facebook page, and our Twitter feed to help you make the right technology decisions. Please forward it along to anyone you think might benefit from it.

7 Reasons Why Mobile Is Critical To Your Nonprofit (Care2)
Did you know that the average person looks at his or her phone 150 times a day? This may be one reason why nine out of ten mobile web searches lead to action. TextMarketer’s infographic is chocked full of interesting stats like these and makes a strong case for putting mobile at the center of your outreach strategy.
 
2 Infographics on Storytelling (TechImpact and Care2)
Marketing gurus are often good at explaining why storytelling works, but not how to do it effectively. Care2 helps you tap into classic storylines that draw people in. And Classy’s new infographic walks you through the elements of a compelling story, from developing a character to realizing impact. 
 
Trying To Keep Your Data Safe? You're Probably Doing It Wrong (NPR)
Today, we all have to be our own security experts. But a new study from Google shows just how bad we are at it and what we can do to keep ourselves and our organizations more secure.
 
How to Prepare for Windows 10 (CNET and Slate)
The recent release of Windows 10 holds a lot of promise, but jumping in and downloading it right away might also carry risk. CNET helps you get your system ready. Slate outlines some of the ways your privacy might be at risk by downloading Windows 10 and how to protect yourself. 
 
How Facebook Is Bringing Back The Silent Newsreel (Medium)
You may have noticed that Facebook now autoplays video on mute when you scroll over the player. What you might not have realized is the opportunity this has created for moving images and text that don’t need sound to get a message across. Check out these examples of videos that make the most of the Facebook video player.
 
Creating a Tech-Savvy Nonprofit Culture (NTEN)
Peter Campbell, friend of Idealware, offers insights into what it takes to make sure your organization is up to all the tech challenges the world might throw its way.
 
On Using What You Have to Resist Buying What You Do Not Need (Nonprofit Quarterly)
Trish Tchume of the Young Nonprofit Professionals Network explains the groundwork she needed to do to help her organization build capacity while staying on budget.  
 
The Social Network Illusion That Tricks Your Mind (MIT Technology Review)
Why do some ideas on social media seem to spread like wildfire while others continue to languish in obscurity? And more importantly, are those fast-spreading ideas really as common as they seem? USC researchers say that viral content often enjoys the benefit of the “majority illusion.” The majority illusion occurs when people with large personal networks take up an idea and share it. The content then reaches a lot of people and creates the appearance that the idea is common.
 
Defining Knowledge Management for Your Organization (Idealware)
How does a nonprofit transition from being driven by a few personalities to becoming a sustainable organization that lives on beyond the founders? Our own Laura Quinn talks about how Idealware is managing its institutional knowledge to set up current and future staffers for success.
 
Creating an Effective Peer-to-Peer Fundraising Campaign (Cathexis Partners)
Peer-to-peer (P2P) fundraising can seem overwhelming because there are so many people involved and so many facets to consider. This detailed, interactive infographic helps you wrap your head around what you need to do to lead a P2P campaign. It walks you through the entire process from planning and laying a foundation to wrapping up and setting the stage for future successes.
 
Leveraging Social Media and SEO for Online Disaster Outreach: Lessons from Sandy (LawHelpNY)
When disaster strikes, is your organization positioned to provide its services to the relief effort? This report proposes best practices, new tips, and tools for cost-effective online disaster outreach.
 
A/V Tips for Nonprofits (Video Caddy and Lifehacker)
Do you record video at events or put together short videos for donors or social media? If so, you need to make sure you’re following these five best practices. Lighting is especially important. If you want to become a lighting expert, visit Lifehacker.
 
12 Nonprofit Call-to-Action Twitter Images to Study and Learn From (Nonprofit Tech for Good)
Learn from the best. Check out these examples of Twitter images that stood out even on the fastest moving feeds.
 
Web Design is Dead (Mashable)
This headline may be overstating the case a bit, but the commoditization of websites by template makers and AI programs that can choose a design for you means that you don’t have to spend a lot of money on a designer to create your website. In fact, the maturing of web design may be opening up more time and budget for thinking about the user experience.
 
Do you enjoy this monthly roundup? Donate to Idealware to help us continue providing the best nonprofit technology content on the web.
 
Would you like to suggest a link for Best of the Web? Email it to info@idealware.org.
 

Defining Knowledge Management for Your Organization

Your nonprofit’s beginning may well be a lot like Idealware’s. For the first year or so, I wrote every article, researched every report, and conducted every conversation. There was no need to ensure that anyone else could use Idealware’s growing base of knowledge because I was the entire organization. Ten years and six more staff members later, it’s become a whole different situation. Together, we’ve built a huge body of information that we need to be able to use quickly and easily to create even more great resources. Knowledge management has become an important part of Idealware’s evolution. 

The term “knowledge management” doesn’t mean a lot by itself, but it describes a powerful concept. Idealware has generated hundreds of articles and reports; created tens of thousands of PowerPoint training slides; and built relationships with myriad nonprofit technology experts, staff members, consultants, vendors, and funders. Most of that information is in some system, but is it the right one? Is the knowledge and content itself actually findable for staff members who don’t know exactly the right word or acronym to search for?

As Idealware’s Director of Partnerships and Knowledge, it’s my job to develop a system that can get institutional knowledge out of people’s heads, document that knowledge, and centralize the information in a way that makes sense to anyone who needs it.

That said, there’s no single “knowledge management system” or technology that is going to solve our problems. (Speaking of knowledge, we have an article on that: http://www.idealware.org/articles/software_for_km.php.) Instead, we’re looking at a combination of systems, processes, and good old fashioned documentation to make sure we capture the highest priority information. We’re still working to define our strategy, and to get everyone’s input, but for us, our system’s likely to include:

  • Better ways to know what articles, trainings, and working materials we have for any given topic. The discovery process will probably include looking at how widely our knowledge covers nonprofit needs, the depth of the content, gaps in our information, and how up to date each resource is. We’ll also need to think through whether Salesforce is the best way to track this information or spreadsheets will do the job.
  • A more systematized process for how staff should track contacts, experts, consultants, vendors, and more through our Salesforce system.
  • A new centralized slide management system that will let us tag, track, and version each of our tens of thousands of PowerPoint slides. This will likely be the biggest effort in our 2015 knowledge management plan—but it will save untold hours finding and customizing training curriculum. 
  • Documenting—probably through Word documents—the substantial knowledge we’ve gained about what’s important to particular audiences. For instance, what technology challenges do legal organizations face? What about food pantries or libraries? How does the funding infrastructure in those areas support Idealware training and reports? 
  • Thinking through naming and tagging conventions for our file share.

Like I said, there’s not a ton of fancy technology needed to accomplish this. For the most part, it’s about making sure that the information is captured, tagged, and named effectively so everyone can find it.

As with any technology or process, we also need to make sure that it’s right-sized for our organization and that we have buy-in from all our staff. We need to make sure the processes to capture information are quick and easy, and everyone knows why it’s important and will ultimately help them. 

Idealware might have started with me, but I don’t want it to end with me. We’re at the right point in our development to start thinking about what it takes to build a sustainable organization. For us, knowledge management is one big and important step.

 

You Down With NTC?

At Idealware, we’re already counting down the days until 16NTC in San Jose (239). One of the reasons we’re so excited is because we have a lot of interesting sessions proposed and we want to know whether anyone else out there in nonprofit tech land is also interested in attending or collaborating on any of them. 

I’ll review them below, but drop us a comment or an email at info@idealware.org if you have feedback or want to collaborate on any of these sessions. And vote for any or all of our sessions here
 
We’ve all been through those excruciating brainstorming sessions where everyone is struggling to find a good idea (emphasis on good).Maybe it takes a different approach to get at new and interesting ideas. Laura Quinn, our Director of Partnerships and Knowledge, will lead a few fast-paced games that can open up creative thinking when it comes to getting the most out of your technology or finding new ways to serve your population using the technology you already have.
 
As our friend Robert Weiner likes to say, Salesforce is free like a puppy. It might not cost anything to take it home, but it requires a lot of care and feeding to make it work. In this session, we want to break down misconceptions about Salesforce, highlight the strengths and weaknesses of the different packages available for the platform (including the Nonprofit Starter Pack, NGO Connect, and more), and provide a high-level overview of the most recommended and popular third-party apps. 
 
It’s always a little mystifying when you get rejected for a grant. You want to know why the funder said “no” or what you could have done differently. This session proposes to give you that opportunity before you submit your application. Our panel of experts will take you behind the scenes to show you what it takes to get the green light for your project.
 
As it becomes easier to communicate and collaborate from across the world, Idealware is experimenting with developing a remote office. We’ll share what we have learned so far and bring in other experts who can talk about how their remote office works. 
 
There’s only one week left to vote for what sessions you’d like to see at 16NTC. Go here to vote for one of our sessions. And let us know what you think about these ideas or whether you’d like to collaborate on one of these or your own session by emailing info@idealware.org. 

Practical (Not Perfect) Security

Bramah Lock
 
For most of human history, locks were like speed bumps to would-be thieves. A good lock might take a few extra minutes to pick, but anyone who wanted in could get in. That all changed in the 1770s, when a man named Joseph Bramah invented a new lock that was more complex and more secure than any the world had ever seen.
 
Bramah’s lock was so good and he was so confident that he created a contest. He put his lock in the window of his locksmith shop and offered 200 Guineas to anyone who could pick it—that's the equivalent of more than $30,000 today.
 
Jeremiah Chubb improved on the lock, adding a detection system that alerted the owner when someone tried to break in, and for nearly three quarters of a century the world was held fast by the locks made by Bramah and Chubb. Security experts call this the era of “perfect security.”
 
Of course, anyone who works in security knows it’s just a matter of time before someone finds a way to break through. Many career thieves tried and failed to collect the 200 Guinea prize. Challengers made bold pronouncements. Observers placed bets. The house always won.
 
Then, in 1851, an American locksmith named A.C. Hobbs arrived at The Great Exhibition in London. Hobbs was in London to promote the Day & Newell Parautoptic Lock, but his sales method was not like the typical exhibitioner. Hobbs had built his career by traveling around the country to banks and opening vaults. It was a dramatic and effective technique. London offered the biggest stage and the most dramatic sales pitch imaginable—the chance to crack the uncrackable.
 
In one of the exhibit hall rooms where a real Chubb Detector lock was installed in a real door, Hobbs found the vulnerability in 25 minutes and opened the door. The handful of people who witnessed the event couldn’t quite believe what had happened. They locked the door and asked Hobbs to open it again. This time it took him seven minutes. 
 
He then went to Bramah’s store to beat the famous lock. It took him 52 hours over nearly a month, but he did it, and with that great accomplishment, put an end to perfect security.
 
A recent 99 Percent Invisible podcast episode tells the whole story. There’s also an excellent article in Slate about Hobbs.
 
Since Hobbs beat the Bramah lock, no security system has proven itself invulnerable. We may never again see perfect security. But what about practical security? What steps should your organization be taking to stay as secure as possible?
 
Here are a few tips to keep the casual online thief or prankster at bay:
 
Strong passwords
Most cloud services now let you set a more difficult password strength requirement for all users. At a minimum, you want passwords to be at least 8 characters long, with a combination of upper-case and lower-case letters, numbers, and symbols. Of course, the most important element of password strength is secrecy. Even the strongest password is useless if you use it for multiple accounts, share it with coworkers, or worse, write it down on a post-it note on your desk. Loose lips sink ships! Password managers, such as LastPass, DashLane, or 1Password, securely store your passwords for all your accounts, letting you log in with a master password and two-factor authentication. However, you should be aware that these services are not immune to hackers themselves.
 
Multi-Factor Authentication
Many online services now let you enable multi-factor authentication—a login where, in addition to a password, you also need a randomly-generated security code, a PIN, or even a fingerprint scan. This ensures that, even if someone knows or can successfully guess your password, they still need your phone or fingerprint to access your data.
 
Firewalls
A firewall is an easy way to add a powerful layer of security. It can block unwanted downloads or potential threats.
 
Virus Protection
Malware (viruses, adware, or spyware) can cause a computer to lose access to the internet, corrupt important files, or compromise sensitive information. Make sure all of your organization’s computers have some sort of anti-virus software, which can detect and remove potentially harmful files. And, since this software can only protect your computer if you actually use it, make sure to schedule it to scan the computer automatically on a weekly basis and allow it to check for and install updated security definitions for newly-discovered vulnerabilities.
 
Physical locks or alarms
While most people worry about their online security when using cloud services, it’s equally important to consider the security of your physical hardware or onsite files. To start, do you lock up your office at night—with a deadbolt, not just the knob? Have you set a password for each computer? If you have a physical file server, is it locked in its own room, or does it just sit under someone’s desk (or worse, under the sink)? Is there an alarm if someone does break into your office?
 
Rules for how staff use technology at work
Many technology issues come down to human error and are therefore completely avoidable. While your staff members should only use their work computers for work purposes, we know that’s not always the case. Develop a set of guidelines for what employees can and can’t do with office equipment and make sure everyone understands these rules. While browsing Facebook is (mostly) harmless, and in some cases a part of someone’s job, if a staff member is using their work computer to torrent pirated Game of Thrones episodes, or visiting NSFW sites, they are potentially at risk of exposing their computer to malware. It is possible to block access to specific sites for all employees, but it’s best to start with an open conversation on what is and isn’t appropriate at your organization.
 
Unfortunately, most people will only follow these guidelines as long as they are convenient for them. Stronger passwords or two-factor authentication can be an easy sell, but when security policies make work less efficient, or your staff is confused or frustrated, then security usually gets left behind. The key to policies that people will actually adopt and follow is to find the right balance between good security and convenience.
 

 Image Credit: Wellcome Images, via Wikimedia Commons 

Best of the Web: July 2015

The Idealware “Best of the Web” is a monthly roundup of the top nonprofit resources from the Idealware blog, our Facebook page, and our Twitter feed to help you make the right technology decisions. Please forward it along to anyone you think might benefit from it.
 
2015 Digital Adoption Report (NTEN)
More than 60 million Americans do not have internet access in their homes, but 60% of organizations report that constituents need to use the internet to participate in their services. In collaboration with Mobile Citizen, NTEN surveyed nonprofit organizations to learn more about digital adoption within nonprofits and how the digital divide might be affecting the delivery of services to their communities.
 
What’s Data Got to Do with It? (JustGiving)
This beginner’s guide to data and fundraising shows how SolarAid, Parkinson's UK, Friends of the Earth, and Marie Curie are using data in exciting and insightful ways.
 
How to Have a Data-Led Approach to Fundraising (The Guardian)
You know data is important to your fundraising efforts. And you probably have a lot of it. This article breaks down four area of focus for getting more fundraising mileage from your data.
 
Tech Heavyweights Take on Human Trafficking with Big Data (Upstart)
Data analysis, image recognition, and mapping programs—powered by Palantir, Google, and Microsoft—are helping anti-trafficking nonprofits not only locate victims in real time, but predict their victimizers’ next moves. 
 
Advocacy & Fundraising Emails (Epoltics.com and Epolitics.com)
Mass email can be an effective way to reach constituents—as long as you stay out of your own way. Epolitics warns that your emails might be getting intercepted by spam filters and shows you how to increase the chances of landing in the inbox. It also looks at email design and finds that less is more when it comes to readers opening messages and taking action.
 
3 Keys To Selecting The Right Nonprofit Cloud Vendor (Tech Impact)
Cloud-based technologies can seem a little scary for a first-time buyer. This short blog post walks you through the three most important steps when considering which Cloud technology to choose and how to make sure you get what you really need.
 
Creating A Data-Informed Culture: Alvin Ailey American Dance Theater And Leading For The Future (Arts Management & Technology Laboratory)
We talk a lot about using data to market your organization and develop fundraising campaigns, but the lessons can sometimes seem a little abstract. This case study shows how one organization put theory into practice by centralizing patron management and learning how to deepen engagement across its entire network.
 
Seeing Beyond Facebook & Twitter for Social Media Advocacy (Epolitics.com)
There’s no better way to reach a mass audience on social media than through Facebook or Twitter, but that doesn’t mean other social media platforms don’t also offer opportunities. Check out these innovative approaches to social apps from Tumblr to Tinder.
 
Measuring Return on Investment for Technology (NTEN)
Our own Karen Graham explains how you can calculate your return on investment when weighing which technology project to pursue first.
 
5 Questions to Help You Integrate Mobile in Your Fundraising (The Nonprofit Quarterly)
The number of people who donate through a mobile device doubles when the page is designed to be responsive to mobile formats. Debbie Laskey runs you through the questions you need to ask yourself to better prepare your organization for mobile fundraising opportunities.
 
Database Management Tips (NTEN and Sunlight Foundation)
Choosing and implementing a database can be daunting, but it doesn’t have to be. NTEN and Idealware teamed up to offer five steps to get you on the path to being a data-driven organization. One important part of that process is cleaning and maintaining your data. The Sunlight Foundation examines why clean data is such a big challenge and what you can do to keep the mess to a minimum.
 
Google's Guide To Designing With Empathy (Fast Company)
Have you ever thought about how blind people might use your website? What about other disabilities? Google designers explain some of the ways you can make your site accessible to more people.
 
4 Ways to Use Your Smartphone for a Good Cause (Gizmodo)
Looking for new, innovative ways to harness the power of your constituents’ mobile phones? Check out these examples of apps that make a difference.
 
Businesses Are Hanging Up On Voice Mail To Dial In Productivity (NPR)
Voicemail seems to be going the way of the telegraph. Will anyone miss it?
 
Outputs, Outcomes, and the Meaning of “Impact” (Idealware)
The terms we use to talk about the good we do can get confusing. We break down what outputs and outcomes mean to us and talk about our recent report outlining outcomes management systems at larger nonprofits.
 
The Remote Worker’s Guide to Office Etiquette (Lifehacker)
If you work thousands of miles away from the rest of your team, how do you remain a good teammate? It’s not always easy, but these tips should help.
 

Would you like to suggest a link for Best of the Web? Email it to info@idealware.org. 

3 Mistakes to Avoid in Your Tech Grant Proposal

Want to write better grants? Try walking a mile in your funder's shoes. This spring, I had the privilege of helping a small, tech-savvy family foundation in Minnesota review technology grants. Here are a few “don’ts” I learned from stepping behind the scenes of the grantmaking process.
 
1. Don't Write to Fill Empty Space
Just because you are allowed 750 words, doesn't mean you have to use every last one of them. Instead, get to the point and make it easy to scan. Proposals stood out when they stated the problem and solution clearly using economical language and bullets.
 
2. Don’t Put Off Doing Your Homework
Show you’re already done a lot of thoughtful planning. For example, an organization that wanted funding for a software investment explained what alternative products it had considered and why this one was the best fit. It also provided a return on investment analysis, which included measurable improvements that linked to the organization's mission. Weaker proposals pointed to vague problems such as "inefficiency" or suggested new tools without any explanation of the selection process.
 
3. Don't Expect the Funder to Trust You Blindly
Most funders think of their grants as investments in the ongoing success of an organization, so it’s your job in your application to prove that your project is a strong investment. One of the biggest red flags for me was when applicants asked for money to purchase or implement technology, but gave no explanation of how they would pay for its support and maintenance in the long term. How do I know the technology won’t become completely unusable in two or three years? Stronger proposals also included a qualified consultant or staff member to lead the project, an assessment of risks, and evidence of the organization's past success with implementing and leveraging technology improvements. These details were crucial in winning my trust (and the grant).
 
Looking for more tips on how to gain funding for technology? Hear them straight from the funders. Sign up for How to Get Your Technology Project Funded: Tips from Grantmakers, a three-week course we’re offering in partnership with the Nonprofit Quarterly. Starting July 16, you will learn what it takes to get your project funded and get a chance to ask your questions directly to professional grantmakers at major institutions including the World Bank, JP Morgan Chase, and the Hartford Foundation for Public Giving.
 

 

Outputs, Outcomes, and the Meaning of “Impact”

 
How do you know whether your organization is making a difference? We talked to leaders at nine different large nonprofits to learn about the technology and strategies they use to help themselves answer that question. From this research we created a report that tells their unique stories and outlines their practices. You can read the report at: http://idealware.org/reports/technologies-and-practices-managing-outcomes-lessons-large-nonprofits
 
However, in the course of that research, it became clear that not all organizations use the same terms when talking about this topic. 
 
Performance management is commonly used to refer to a wide range of activities—from program outcomes to individual employee performance. To some, program performance management clarifies the issue, but that term often gets confused with program evaluation, which is sometimes used to define the practice of looking at the success of a program after it’s completed rather than while it’s still in progress. And we often hear that nebulous-but-important word “impact” get thrown around, which is just as often used to refer to small interventions as it is to sweeping change. 
 
Idealware views the terms this way. Performance management is the all-encompassing term that includes outcomes management, employee management, program evaluation, and most other practices relating to data about programs. Our report focused on outcomes management systems, which is our term for how organizations measure their impact, or success in the wider world, when it can’t be easily rolled up from the constituent level. 
 
The terms outcomes and outputs are not without confusion themselves. These are distinct ideas and opportunities for measurement. Outputs are the result of the activities an organization has carried out. For example, the number of people who turned out to a rally or the number of acres preserved by a land trust are outputs. Outcomes go further. They look at how outputs had a broader effect on the world. For example, that rally that thousands of people attended could have contributed to the passage of legislation. The legislation creating a new freedom or banning a harmful practice is an outcome. Similarly, the acres protected may have produced the outcome of hundreds of new migratory birds or cleaner drinking water. Counting those birds or measuring the pollution levels in drinking water are the outcomes because those are the results that the original activities were trying to produce. 
 
An outcomes management system looks at both—outputs and outcomes—in whatever way is meaningful to the organization to help it draw lines of progress and provide tangible measurements for processes that are at times abstract, complex, and messy. 
 
Even if we all agree on the terms, you probably have never heard of an outcomes management system. In fact, there is no such software. In our research, we did not uncover any software in use that could be described as a comprehensive outcomes management system. 
 
But that doesn’t mean that many organizations are not trying to put together their own systems. Read our report to find out how organizations such as GuideStar, the United Nations Foundation, DonorsChoose.org, Habitat for Humanity, and more have developed their own systems for measuring outcomes. You may discover approaches that could work at your organization.
 
 

Photo credit: NASA HiRISE camera, Mars Reconnaissance Orbiter. [Public domain], via Wikimedia Commons

Measuring Return on Investment for Technology

 
Editor's note: This article was originally published in NTEN: Change (http://www.nten.org/change-quarterly/), June 2015, CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0/)
 
Don’t let technology gobble up staff time and money, without giving enough back. Effective organizations have a positive Return on Investment, or ROI, for individual technology choices as well as their overall investment in technology. In this article, we answer your basic questions about why ROI is useful and how it works. We’ll share simple ways to measure and compare return on investment and go over a few tips for establishing your ROI measurement process. No accounting background is required!
 
What if you were spending three times longer on troubleshooting your broadcast email tool than on developing the content of your newsletter? An exasperated executive director recently lamented to me that this is happening in her organization. Technology is gobbling up staff time and money, without giving enough back.
 
On the other hand, when an organization is using technology effectively, the results are greater than or equal to the resources invested. That’s what it means to have a positive Return on Investment (ROI).
 
Let’s take a closer look at some simple ways to measure and compare ROI and go over a few tips for establishing your ROI measurement process.
 
When is ROI Useful?
When you’re making a purchase decision, thinking about ROI can help you considered whether the product or service is worth your money. But that’s not the only time when ROI is useful. When you are looking at past investment choices, ROI analysis can help you evaluate those decisions and make more accurate projections of costs and benefits next time. When you are writing grants, articulating the funder’s ROI in terms of dollars and mission impact makes your case stronger for technology funding.
 
Challenge yourself to look beyond specific purchases and projects, and considered your organization’s overall return on its investment in technology. Your executive director and IT director or advisor should be looking at how resources are allocated toward hardware, software, and services; as well as across programs, fundraising, marketing, and administration. Are expenditures made in proportion to the way technology benefits each of those functional areas? Are you wasting resources on technology that isn’t doing much for you? Is your technology budget simply keeping the lights on, or is it fueling your mission?
 
Basic ROI Mechanics
To do return on investment analysis on a practical level, you don’t have to be an accountant and you don’t have to be perfect. For now, let’s not worry about net present value, internal rate of return, cash flow, or payback period. Let’s keep it simple.
 
The basic formula is: ROI = net gain/cost
Example: I spend $50 and make $75. My net gain is $25.
ROI = 25/50 = .5 or 50%
 
In order to do this, you need to assign numbers to the costs and benefits. Many of your numbers will be guesses and approximations. Just make note of your assumptions as you go along, and consider running some alternate scenarios. For example, if your estimate of staff time saved is over or under by 20%, how does that affect the equation? Also, choose a timeline. For items with an ongoing cost, such as a software subscription or equipment maintenance, I typically use a 3-5 year timeline.
 
Costs
Some examples of costs are money, staff time, disruption and frustration, and opportunity cost. Opportunity cost means the missed chance to do something else that might have saved or made money. In addition to the investment before you, think about the cost of other alternatives, including the option to do nothing. In the price tag for technology, don’t forget the costs of training and support, and disposal or recycling of your old technology.
 
Some costs are tricky to measure. I worked with one nonprofit employee who suspected she was spending an unreasonable amount of time on a tedious report creation task. She was comparing data management products that purported to streamline this work. So, she timed herself with a stopwatch on the current process, then timed herself doing the same task in each of the products under consideration, and multiplied it out by how many times per year she needed to create the report. By doing this, she formed a reasonable projection of how much time the old system was costing her.
 
Benefits
What are the benefits of a technology investment? You might think immediately of ways that it saves you money or increases staff productivity. Note that efficiency by itself isn’t worth much—it is the increased output or decreased personnel cost that matters. One organization made the case that by freeing up two hours per week for the development director, she could personally contact enough donors to more than cover the cost of the investment in her efficiency.
 
Technology can also lead to new or increased revenue streams, a broader reach of your services, and other benefits. For example, in my technology capacity building work, video conferencing and document collaboration tools enabled us to provide remote consulting to clients in an underserved rural area and helped to build our image as a tech-savvy organization. At another organization, a CRM investment improved morale by making employees’ data entry and reporting work more enjoyable, while at the same time improving the quality of services by providing visibility into the client’s full history and relationship with the agency.
 
Some return on investment analysis falls short because it does not fully capture the benefit side of the equation. Think about what your organization is trying to accomplish in the world. Is it possible to quantify mission impact in terms of social ROI? For example, if a technology investment can be tied to increased wages, helping people off public assistance, or reducing carbon footprint, consider how you might factor that into your ROI equation too.
 
Example: Should I Buy A New Server Or Move To Cloud Services?
Weighing return on investment for replacing a server versus implementing Cloud file storage and management is a great example because it’s a real decision that many nonprofit organizations face today. It’s interesting because multiple alternatives add complexity: you could replace or upgrade existing servers, move to a platform such as Office 365 or Google Apps, move completely or partially to a file management service like Box.com, use more lightweight hardware such as a NAS device, or many, many other options—including doing nothing.
 
It might be tempting to boil this decision down to a simple choice between costs that are more front-loaded and costs that are spread out over time. But the cost-benefit equation is more complex than that and will be different for each organization, depending on how you weigh various factors. For example, it’s generally agreed that Cloud-based file management offers greater mobility than a conventional server network. Does that matter to your organization? Does it matter enough to ask all of your coworkers to say goodbye to that remote desktop connection, which was such a pain to set up but now works almost all of the time, and go through the pain of learning a brand new system?
 
In this analysis, I didn’t attempt to assign a dollar value to morale or some of the other more fuzzy aspects of return on investment. However, I did try to unearth some of the hidden costs. Considering only the cost of the technology itself, a conventional server network looks pretty inexpensive, while Cloud services appear slightly higher. Adding in projected costs for implementation and support gives you a better feel for the total cost. Adding downtime, training time, and lost productivity changes it again—and this makes the Cloud look less expensive. In the end, it’s unclear which one is the winner, due to the margin of error.
 
Notes:
  • This is loosely based on a real nonprofit organization and the numbers came from an assortment of price quotes and best guesses.
  • It’s perhaps misleading to have such a precise total. It might be better to say the expected costs are “$20,000-25,000ish” for both options.
  • Actual downtime can make a huge difference in the totals.
  • For convenience, we’re saying there are 30 employees and cost of staff time is equal to the average pay rate of $30/hour.
  • I chose to use a five-year cost of ownership since that is a reasonable life span for a server.
  • This doesn’t count added productivity from increased mobile access.
  • This also doesn’t count any of the costs of a remote access solution with a server. 
More on the Process
Now you know a bit about how ROI analysis works and you’ve seen an example. Maybe you’re ready to try it in your organization. Who should be involved? How much effort should it take?
 
Like any aspect of a technology investment decision, if you want buy-in from leadership and end users, you had better involve them. End users will help you check your assumptions about the real costs and benefits. The executive director and board should be making sure ROI is considered in important decisions and provide guidance on the relative weight of each factor. Initiating and leading an ROI analysis is an opportunity for an IT director or other technology responsible staff person to position themself as a valuable resource and as someone who is capable of thinking strategically about technology.
 
Of course, you shouldn’t perform an ROI analysis for every little decision. If you need a mouse, buy a mouse. But make it part of your organizational culture by using it consistently for large investments—before and after deployment. Circle back to check whether your assumptions were right, and you will learn to get better at this.
 
When presenting the results of your analysis, don’t assume that everyone else is going to geek out on the details. Share a handful of data points to make your case, and tell a story that provides context and interest. Let’s say I was presenting the same analysis about server vs. Cloud. I might point out that the five year cost is approximately the same, but the chance to reduce down time by even a small amount is tremendously valuable because…etc.
 
And finally, remember that ROI is not the law. Sometimes you won’t be able to show positive ROI with numbers, yet there is still a strong business case for your investment. Do your homework and you will be able to make a deliberate, well-informed decision.

 

The Known Unknowns

A couple months ago, I saw this list of essential tech skills and ever since I’ve been thinking a lot about how little technology expertise I had before joining Idealware and how much has changed for me in the past year. 
Last spring I was in college, where I typically spent 70% of my working time reading books (made of paper, not the e-kind), and the other 30% writing. I wasn’t all that picky about the tools I used—Microsoft Word was good, but Google Docs did just as well, and sometimes a pen and paper was preferable if I just needed to concentrate. In a few art classes, I developed a deeper relationship with software such as Adobe Audition and Max 6. My use of calendar and reminder apps was minimal at best.

The technological ecosystem I inhabit now is far more diverse. My daily tasks include broadcast email, file sharing, CRMs, CMSs, spreadsheets, and social media. I spend so much time working in these tools that it can seem as though my professional potential is determined by what I can make technology do, rather than how hardworking I am or how intelligently I look at broader world issues. 
But looking down the list, I still can’t immediately do half of what’s here. And that’s fine, because my success isn’t actually dependent on what technology I can use. My ability to learn and adapt has been far more important than what I knew last year. I can Google articles and videos that will show me how to make a chart like Edward Tufte or export a list in CSV format. These are things I can learn in a few minutes, or an afternoon.
A lot of Xers and boomers expect college graduates to be technology experts in a box, but that’s not actually what an organization needs. Technology changes too fast for that. And the reality of life outside of a cubicle is most people have little reason to use many of those tools before taking the job. Besides, it’s too much pressure to be expected to know everything about so many complex functions and software programs.

To recent grads, I say don’t sweat what you don’t know. Convince your future employer that working with technology is not a skill set—it’s a mindset. The flexibility and intelligence to figure it out the system is what will make you stand out.
 
Photo Credit: Chris Hondros/Getty Images

 

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