Postponing transformation in a crisis: a critical error for the nonprofit sector

Whatever the future holds for the nonprofit industry, your organization can't adapt to meet it while still relying on brittle, high-maintenance, and functionally obsolete legacy systems. Let's look at why even in times of crisis, being truly prepared for the future means being prepared to embrace change.

The nonprofit sector has been facing down the twin threats of limited funding and increasing donor expectations for some time. With resources scare, it’s tempting to see freezing investments in new technology and infrastructure as the sensible choice. Especially as we face the crises precipitated by COVID.

But curbing spending across the board at such a crucial moment could have disastrous consequences in a world more and more dominated by digital. The nonprofit sector faces another crisis – many organizations’ operational viability is threatened by brittle business processes and obsolete legacy systems. And far from saving money - aside from the short term – postponing digital transformation may shackle you with many years’ worth of higher maintenance costs – not to mention lost productivity and reduced impact delivered to the communities you serve.

The cost of not upgrading

The reluctance to make large investments in what are inevitably seen as back-office IT systems is understandable.  But the systems your organization relies on without these investments are often fragmented across many important administrative tasks, ranging from project planning and cost management to funding applications and allocation to the way that your staff are recruited, managed, and deployed across initiatives.

In this kind of environment, you have to consider the impact of not upgrading your systems on multiple different parts of your organization.

• Sub-optimal funding allocation. Without a single source of truth, it’s impossible to accurately determine where your finite resources are best deployed. This ultimately also makes it impossible to track where each dollar is being spent, making accurate donor reporting impossible, and potentially causing regulatory and compliance issues.
• The cost of data entry. Entering data multiple times across multiple systems creates cost in terms of potential security concerns, storage, and time wasted by the people doing it. In fact, when all these factors are considered, we’ve seen excess cost of over $12,000 a month for data entry at a typical US nonprofit organization.
• The impact of overspend. Inaccurate reporting, budgeting, and financial planning is endemic in organizations still relying on outdated IT infrastructure. This means that projects are often poorly scoped and frequently exceed their budgets.
• Your ability to attract and retain talent – and how much it costs you to do so. Hiring and keeping the right people is more important to the nonprofit sector than perhaps any other. Your people are so key to the services you deliver and the impact you have that you can’t afford for them to become disengaged. And one of the fastest ways for this to happen is to force them to spend large amounts of time in a legacy system-induced purgatory, rather than contributing creatively and meaningfully to your mission.

The savings of upgrading could amount to $1M annually

Taking into account these factors, the savings inherent in upgrading your legacy systems can be significant. In fact, we recently found savings of around $1M per year for a typical US-based nonprofit organization. All on the basis of around 2 years payback time, with an over 100% internal rate of return.

And this only represents initial savings, without factoring in any income generated due to improved grant submissions, funding sources (thanks to an improved ability to report to donors and meet their expectations), or  improved regulatory compliance.

Experience how Unit4’s technology transforms nonprofit operations at X4U

Experience 4U is our first global virtual event, designed to help you understand exactly what we can bring to your organization, and how to make the most of your investment.

Our two-day program boasts over 40 sessions - all with live Q&A so you can ask questions and share your thoughts with the speakers. Our nonprofit track sessions include:

Managing uncertainty and fluctuating income: Hear how automating your operational admin, proactive planning, and optimizing your use of funding can help boost your resilience even in the face of extreme uncertainty.

How to pursue nonprofit digital transformation​: Leaders from Nuclear Waste Management Organization and Oxfam share why and how their organizations are pursuing digital transformation during these challenging times to help them adapt to whatever the future holds.

Nonprofit industry model​:  Learn how our nonprofit industry model creates a digestible, iterative approach to implementing our solutions. And helps lower implementation effort by up to 50%.

Nonprofit points of view: Open roundtable​: Join your peers from leading nonprofit organizations, including The Nature Conservancy and Missouri Botanical Gardens, for an informal roundtable discussion to explore the challenges faced by nonprofits in 2020 and beyond.