A better way to develop a nonprofit’s technology budget
“I always get my IT budget approved.”
“There hasn’t been any pushback about my technology budget requests, and I wonder sometimes if I’m asking for too little.”
I’ve heard statements like this from several nonprofit IT directors. Here’s how the budgeting process goes down.
They look at last year’s total spending
They add X% for inflation
The budget gets approved
Or perhaps…
They look over last year’s expenses
They do some analysis on which computers might need to be replaced, which service prices are going up, and whether their data storage or CRM is going to get bumped to the next price tier
They factor this in
The budget gets approved
If we truly believe that technology is a strategic asset to the organization, why aren’t we more strategic about budgeting for it? What if the process looked more like this:
They look over the next 2-3 years’ strategic objectives and the theory of change
They identify ways technology could help the organization achieve those objectives and impacts
They evaluate investment options and develop recommendations
They present a compelling case to leadership
After a vigorous discussion about strategy, priorities, and risk factors, the budget gets approved
How do these approaches to nonprofit technology budgeting compare?
In a nutshell, the first approach is passive, the second approach is tactical, and the third approach is strategic. It couches budgeting in planning, which is exactly where it should be.
There are a few advantages to this last approach. Not only does it result in better alignment of technology investments with the organization's goals, it also engages the leadership team in a deeper conversation about technology strategy. It moves technology from the cost zone to the investment zone.
But let’s be honest, it does require more time and effort. As the IT director, you need to gain an understanding of the big picture–and this is a good thing, but it might not be easy, especially if leaders don’t yet think of you as someone who needs to be included or informed about strategic issues. Repositioning yourself from the person who troubleshoots the printer connection to the person who provides an IT vision is not something that is going to happen overnight. You will need to develop your skills in problem analysis, consensus building, and making presentations.
To be successful with this approach in consecutive years, you will also need to manage projects well, provide visibility for the rest of the organization, and share evidence of success.
Wouldn’t it be better for our organizations, and for our careers, if we could say…
“I got most of my IT budget approved following a discussion where I had the opportunity to demonstrate my understanding of the organization’s strategic direction.”
“We’re spending twice as much as last year on technology, and getting a huge mission return on that investment, thanks to the forward looking recommendations that I developed together with the leadership team.”
In your next budgeting cycle, I challenge you to take a more strategic approach–and let me know how it goes.
