Literature Review

Nonprofit organizations seek to achieve increased efficiency and productivity gains to support their mission. Although many surveys have been conducted to uncover nonprofits attitudes about IT, how it is adopted and what types of nonprofit adopt (Blau, 2001; Gifts in Kind International, 2001; Peizer, 2006; Popjoy, 1992; Public Sector Consultants, Inc., 1999; Quinn, Verclas & Hoehling, 2006; Forester, Jeffery J, 2006; Finn, Maher Forester, 2006) the research on organizational readiness and the impact of IT implementation on organizations and is sparse (Blau, 2001; Saidel & Cour, 2003). Thus, this researcher has chosen to focus on the rich literature on the impact of IT on for-profit organizations (Aral & Weill, 2006; Brynjolfsson & Hitt, 2000; McKinsey Global Institute, 2002; Stiroh, 2002). This research shows that a triangle of investments in infrastructure, human capital and planning are critical to successful implementation of IT in an organization. The challenge with these three investments for successful implementation is that often nonprofits see these as in direct conflict with the organizations mission. The next sections look deeper at each of the investments and explain the main issues with each related to nonprofits.

Infrastructure Investment

Investment in infrastructure is often seen as taking the organization’s focus away from its mission. Nonprofits whose mission is around feeding the hungry, for example, would rather spend money to feed more individuals than purchase a new computer even if its implementation could ultimately provide additional food. The Bayer Center’s biannual study of Pennsylvania nonprofits illustrates 44% of nonprofit organizations have an IT budget (Forester, Jeffery J., 2006 and a study in Michigan reveals less than half of nonprofit organizations have a defined IT budget (Public Sector Consultants, Inc., 1999). This exemplifies the fact that nonprofits lack interest in allocating dollars for IT infrastructure investment. Saidel & Cour’s study demonstrates that there is a tricky tradeoff between spending on IT and direct service to clients, making IT spending a difficult proposition (2003).

Other funding sources, such as foundations and governmental agencies, illustrate indifference in building the organizational IT infrastructure by capping the amount of money a nonprofit can allocate on their grant application to support internal capacity or by refusing to allow any capacity support whatsoever. Whereas funding continues to support the program, there is little to sustain the internal support mechanisms of the organization upon which the program is built.

Human Capital Investment

Investment in human capital remains a challenge. Nonprofits face two predicaments: an embedded staff untrained in technology and the challenge of finding IT professionals interested in working in the nonprofit sector. A nonprofit survey in Michigan (Public Sector Consultants, Inc., 1999) reveals that less than 50% of computer managers have been formally trained. Often employees and volunteers of nonprofit organizations are passionate about the mission, but have little technical knowledge or training (Public Sector Consultants, Inc., 1999; Quinn, Verclas & Hoehling, 2006). Organizations may try to hire individuals with IT skills, but these individuals are challenging to find because IT professionals desire to stay on the cutting edge of technology to remain a commodity in their profession (Saidel & Cour, 2003).

Planning Investments

Even if dollars have been dedicated to development of IT infrastructure, organizations often lack a strategic plan on how to spend those dollars. Only 32% of nonprofits have a long-term technology plan and this number did not increase from 2000 to 2001 (Gifts in Kind, Inc., 2001). Competition between nonprofits may lead to IT purchases that do not fit the strategic needs of the organization. When some nonprofits extend their scope and enhance their services through the use of IT, other nonprofits may feel pressured to follow their lead, often without the organization’s leaders understanding the ramification of implementation (Blau, 2001).

This illustrates the importance of strategic planning - ensuring the right technology is being used for the right purpose. This is made evident by a story about an African village and a bell. A delegation of western experts on technology was invited to build communication technology for the village. The delegation spoke to the village leader about the plan for a sophisticated IT station. The village leader listened respectfully and, after hearing all the wonders of modern IT, requested a simple bell. Ring once, it’s time to gather in the village; ring twice, the well has run dry; and so on. The delegation was shocked. They had not asked first but assumed what was needed. They thought modern technology held all the answers but they failed to ask the right questions.

Planning provides the organization an opportunity to reflect and ask the right questions which allows for the alignment of the IT strategic plan with the overall strategic plan.

Measuring the Bottom Line

The nonprofit bottom lines are very difficult to measure; often the focus is around outcomes and not entirely related to the bottom line savings which may result from IT implementations. Therefore, successful IT projects are more multifaceted in nonprofits than with for-profits, who are mainly focused on the fiscal bottom line.

Secondly, it is more challenging to define a bottom line in a nonprofit organization. Nonprofits are not necessarily focused on a fiscal bottom line, which is easy to measure. These organizations are more focused on their mission, which is challenging to quantify.