Overcoming the Technology Cost Crisis in the Nonprofit sector through adoption of Cloud Technology

We all know that financial management for nonprofits continues to be a challenge that is often underestimated.  I have typically found that financial management is viewed in the simplest format, primarily with outdated reports and other information that provide very little real visibility as to the reality of an organization’s operations.  This was certainly true of FEGS, one of the largest NYC social service organizations, whose collapse will probably be pointed to many times in the years to come.  Unfortunately, I suspect the discussions will probably have little impact and prompt even less real change.

The discussions continue to be good ones, including an op-ed by Crains based on a recent study, “Shaky finances plague most city nonprofits”, which details many of the challenges nonprofits face, not just in NYC, but across the country.  While there are many excellent (and accurate) points made in the study, being in the industry of technology for Nonprofits, I was especially interested in the point about the technology cost crisis.

The technology cost crisis is nothing new to Nonprofits.  Numerous studies have been done over the past 20 years indicating that Nonprofits have on average been 5 to 7 years behind for-profit firms when it comes to technology.  I have personally seen this and have often thought the disparity is actually larger than 5 to 7 years.  My experience has historically been that Nonprofits just have not invested in current technology, whether this decision was made as a result of budget constraints or a lack of recognition on the importance of current technology and the value it provides.

Throughout history, automation has been proven to streamline processes and reduce direct related costs.  These cost reductions can then be reinvested in other areas of an organization.  While there were many contributors to the collapse of FEGS, I suspect the right technology, including cloud-based financial management tools like Intacct, streamlining operations, locking down internal controls and providing clear visibility to operations for board and outside funders could have potentially saved this organization.

By Jacqueline Tiso, CEO & Founder of JMT Consulting, a national consulting firm serving the needs of Non-profits organizations in the US.


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ERP professionals providing insight and advice for not for profit organizations.