Shifting Funder Focus to Nonprofit
Tech Capacity

Last week a comment about nonprofit overhead being a deterrent to giving prompted me to lecture my dinner companion on the nonprofit starvation cycle. Nonprofit friends might find this to be a relatable experience.
Formally published for the first time by the Stanford Social Innovation Review in 2009, the nonprofit starvation cycle describes a truth that has challenged nonprofits for decades: nonprofits are so hungry for decent infrastructure that they can barely function as organizations – let along serve their beneficiaries. The publication called on funders to break the cycle by shifting their focus from costs to outcomes, clearly communicating their program goals, and funding infrastructure needs when necessary to be effective; knowing that nonprofits respond to the will of funders.
Although some progress has been made in shifting hearts and minds, the prevailing inclination remains to invest in new projects and innovation over infrastructure and capacity building – the lack of which can compromise the impact of a nonprofit and ingrain inefficient and ineffective daily operations.
We can see the effects of this in the Sioux Falls nonprofit community through research we conducted on the state of Sioux Falls philanthropy. While mission and measurable impact are priorities of Sioux Falls funders, the infrastructure required to achieve those aims might not always be prioritized in gift agreements. An investment in infrastructure is an investment in achieving impact in the most efficient and effective way possible.
Nonprofits are especially under-resourced when it comes to building their technology capacity – both having the software and tools as well as trained team members that know how to use it. Technology infrastructure is critical because it equips nonprofits to understand and evolve their work in real time and make data-informed, strategic decisions. It also allows nonprofits to demonstrate with greater accuracy the impact of a donor’s contribution. For many nonprofits, an infusion of tech capacity would truly innovate how their work is carried out.
To build sustainable programs and help stop the starvation cycle, we recommend funders consider initiating conversation with the nonprofits they support regarding their tech capacity and what gaps exist. Here are a few important tech check-ins to help gauge capacity:

  • Mobile giving readiness.
  • Email and social media marketing training.
  • Integrated systems with software that can scale.
  • Social impact measurement software.
  • Customer relationship management software.
  • Donation software.
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