One of the greatest challenges to running a successful nonprofit organization has always been that donors look at nonprofits’ stewardship of funds as a primary way to assess impact. While there is no doubt that nonprofits must use donor funds responsibly, tracking to see if a nonprofit maintains the highest possible ratio of spending on programs-to spending on overhead is a poor proxy for understanding how effective a nonprofit truly is. In fact, the imperative to limit overhead has forced many organizations to underinvest in efforts to improve efficiency. Ironically, this has long prevented nonprofits from utilizing innovative digital technologies that could help them be more efficient and effective.
Now more than ever, cloud-based technology can have a transformative effect on how nonprofit organizations increase impact and reduce costs. The same technologies that give for-profit businesses insights about customers and markets, create operational efficiencies and speed up innovation can also help nonprofits target donors and raise funds more strategically, design and deliver programming more efficiently, and connect field teams with headquarters more effectively. This means smart investments in digital tools are essential to every nonprofit’s ability to make progress toward its mission.
The good news is that a major shift is underway. As part of our work at Microsoft Tech for Social Impact to understand how nonprofits can use technology to drive progress and demonstrate impact, we recently surveyed 2,200 donors, volunteers and funding decision-makers to learn how they decide which organizations to support, what their expectations are for efficiency and effectiveness, and how they feel about funding technology infrastructure at the nonprofits they support.
The results, which we published recently in the white paper “Beyond overhead: Donor expectations for driving impact with technology,” make clear that people donate to organizations they trust and that donors are increasingly looking at data beyond the ratio of program spending to overhead spending to measure impact. We also found that those who support nonprofits now overwhelmingly recognize the critical role technology plays in driving impact and delivering value. Nearly four out of five supporters (which includes both donors and volunteers) and more than nine out of 10 funding decision-makers told us they support directing donations to improve technology at a nonprofit. An overwhelming majority — 85 percent of supporters and 95 percent of funding decision-makers — are more likely to contribute to organizations that can show that they are using technology to improve how it runs programs.
At the same time, the survey found that most people expect organizations to use donations more efficiently and to advance the causes they work for more effectively than in the past. Among supporters, for example, 79 percent believe nonprofits should be better at maximizing funding than they were 10 years ago. Just over 80 percent of funding decision-makers believe nonprofits should be more effective at achieving their goals and advancing the causes they work for now than in the past.
To give you a better sense of what potential donors are looking for as they consider where to target their nonprofit contributions and how much they weigh technology into their thinking, we have developed a tool using Power BI so you can look at the data in greater detail. Within the tool, you can see how people responded to questions about overall effectiveness and efficiency, the importance of technology as a driver of success, how likely they are to support organizations that use technology to demonstrate impact, and their willingness to fund technology improvements at the nonprofits they support.
To make the tool as useful as possible for your organization, you can sort the data by supporters and funding decision-makers, and you can explore how responses varied by region. As you move through the data, you will see how these critical groups of supporters and funders think about these important questions in the region where your organization operates:
The ultimate goal of this survey was to get a clearer picture of what motivates people to contribute to an organization and how technology can help nonprofits meet supporters’ expectations. Overall, I believe our research provides some important insights that can help any organization be more successful. Fundamentally, we found that people donate to organizations that are perceived to be trustworthy, and that trust is achieved though operational transparency and effective communications. More than ever before, donors recognize that using data to measure and demonstrate impact is the foundation for trust.