Is your nonprofit organization digitally ready?
Efficiency is extremely important for all organizations, but it is even more critical for nonprofits that are charged with achieving their mission, often with diminishing resources. To that end, many nonprofits are implementing modern tools and technology to seize opportunities to fundamentally change the way they carry out their mission. Digital platforms help spur innovation and unlock the true potential of organizations, but you must understand available platforms and how they can help overcome potential risks.
For clarity in this article, digital platforms refer to emerging information technology associated with Web, cloud, social, mobile and the use of data collected through interactions and transactions on these platforms.
Digital platforms can help your organization become more effective in a number of ways, from collecting online donations and crowdfunding to managing membership, procurement, accounts payable, expenses and budgeting. However, to determine how various digital platforms can help enhance the success of your organization, you should assess how well your organization can answer the following five questions:
- Where is our money coming from?
- How much does it cost to raise a dollar?
- How are we spending our money?
- What are the outcomes we are achieving?
- What are the risks and rewards of potential media coverage?
Where is our money coming from?
As part of the strategic planning and annual budgeting process, every nonprofit should periodically assess its programs and determine which to invest in growing, which to maintain at a steady state, which to sunset and new programs to be launched. Strong insight into financial development and funding sources provides an understanding of the amount of revenue available to accomplish your mission. It also helps accounting and reporting become more efficient and accurate, while optimizing the effectiveness of fundraising and development campaigns.
To optimize visibility into funding, your organization can leverage several digital platforms, including fundraising, constituent relationship management (CRM) and association and membership management (AMS) systems. Many of these systems are now fully browser enabled, available as cloud-based solutions and provide social media integration. You can also benefit from integrating online and offline fundraising and friendraising platforms and implementing enhanced data analysis, data modeling and big data initiatives. In addition, a 360-degree CRM platform can provide a comprehensive view of constituent interactions to better tailor communications, activities and asks to donor interests and preferences.
How much does it cost to raise a dollar?
Every potential donor and funder wants to know that as much of their donation will go toward the mission as possible. A high level of transparency is required for nonprofit organizations through IRS Form 990 and additional reporting, and current and potential constituents can view operational efficiency information through portals available through GuideStar, Charity Navigator and the Better Business Bureau. As your organization decreases the cost to raise a dollar, your reputation for fundraising efficiency increases, as well as the prospect for raising additional funding.
Online giving, social media, crowdfunding and friendraising can all help lower your fundraising costs. In addition, by utilizing key revenue data from CRM, fundraising and AMS systems, and cost information from automated accounting systems, your organization can gain insights into campaign effectiveness and return on investment.
How are we spending our money?
With increased transparency and oversight demands, funders and grantors want to know how your organization is spending the money they have provided to support the organization. That information must be disclosed in compliance and financial audits, but having it readily accessible also provides opportunities for budget monitoring and midcourse corrections. If used correctly, the spending information helps enable successful program management to help you deliver on your mission cost-effectively.
The majority of a nonprofit organization’s costs flow through two streams: accounts payable and payroll. Several digital tools can provide enhanced insight into your spending, including accounting, timekeeping and payroll systems, as well as project and grant accounting platforms. Web-based procurement and accounts payable automation systems help to control spending, and online time and expense reporting systems help to efficiently and effectively capture and approve time and expenses and provide necessary effort reporting substantiation.
Digital platforms also increase the potential for increased workforce mobility and more accurate and timely data, as geographically dispersed employees and volunteers can input and manage data on the go, anywhere, anytime.
What are the outcomes we are achieving?
Your organization must be able to communicate how you are delivering on your mission and making a difference in the world. If you can measure results and return on investment more effectively, you can create a compelling presentation for potential donors and lay the foundation for future strategic planning growth initiatives.
Outcome information typically resides in program and operational systems; often, these are based on case management or CRM platforms. We also find that organizations have multiple nonintegrated operational systems, and making sense of the disconnected data is a challenge.
Business intelligence and corporate performance management (CPM) tools allow organizations to slice, dice and analyze data from multiple sources into useful information to make more informed business decisions, understand and document the success of efforts (and make more compelling presentations to prospective funders). In addition, business intelligence systems and CPM tools can strengthen planning and alignment of strategy with operations.
What are the risks and rewards of potential media coverage?
Positive publicity is always good, but negative publicity is not only bad, it is also sticky and travels fast. Your organization manages employee, volunteer, donor and other constituent data in an environment where all information has value to hackers. In addition to having an obligation and fiduciary responsibility to protect that data, your organization could be the subject of bad press if a breach should occur. Also, your mission may make you vulnerable to attacks simply based on who you are and what you do.
Your data can be located on-premise or in hosted or cloud deployments, and a strategy can be developed to meet your unique needs and implement necessary safeguards. Digital platforms can help you increase and communicate good information, as well as for avoiding and mitigating breach threats. For instance, social media, mobility and third platform technologies can encourage positive interaction with your organization, while security and privacy applications, penetration testing and proper Payment Card Industry Data Security Standard (credit card transactions) compliance discourage the potential for reputational damage and negative publicity.
Implementing digital platforms within your organization can lead to several benefits, including increasing insight into donors and members, detailing mission success and financial efficiency and protecting constituent data. Once you understand the potential solutions, you can utilize a scorecard approach to assess your organization’s digital readiness and implement the right technology and automation within each key area.
Enhanced digital technology and innovation can help you transform from a reactive, inefficient organization with high risk of data loss to a leading, proactive organization with high-quality programs, optimized costs and responsive and responsible constituent stewardship to better achieve your mission.