Funders Lagging Nonprofits in Technology Adoption

This is a guest post by Tessie Guillermo, CEO of ZeroDivide, an organization that helps underserved communities realize the transformative power of technology to achieve social progress and economic opportunity.

By Tessie Guillermo

The demand for technology by nonprofits as a tool for social change has been rising. However, the supply of technology funding has lagged significantly in comparison. Unfortunately, funders don’t know what they don’t know and have so far been unable to keep up with the fast pace with which their grantees are adopting new technologies.

The dramatic demonstration of technology’s role in recent global events (Haiti, Egypt, Japan) provides impetus for this demand growth. Everyone wants technology and believes they need it, but acquiring and using it effectively is a function of knowledge, affordability and the supply of funding for technology. The supply of technology funding on the other hand, is highly variable and quite limited.

At ZeroDivide we have recently released, “Amplifying Social Impact in a Connected Age,” which looks at the gap between the demand for and supply of technology funding, particularly as it relates to the application of technology for program impact. We wanted to find out if there was opportunity for changing the supply curve for technology funding, and what might be required to do so.

While there is overwhelming interest in increasing funding for technology, 68% of participating funders cited “limited staff familiarity and expertise” as the #1 barrier to increasing investments in their grantees’ technology activities. Technology expertise is still the domain of IT, and increasingly the communications departments, but rarely is there fluency throughout most philanthropic organizational infrastructure.

Seventy two percent of respondents reported that their foundations invested 10% or less of their annual grantmaking in nonprofit technology capacity or tech-related activities and most of those grants were directed to traditional technology infrastructure or administrative operations. Skepticism about the impact of technology, particularly the use of social media, in achieving social change objectives is high due to the lack of standards for measurement and documentation of results.

Funders expressed anxiety about their relative lack of technology expertise compared to their grantee. One respondent captured this well saying, “grantees—they’re way out in front of us on this (technology-related) work." This knowledge and pressure from grantees is the greatest push factor for funders to invest more resources in technology funding. Technology service providers validated that the market for technology services is inefficient and resource intensive. They indicated that funders allocate technology funding for nonprofit capacity building by primarily funding discrete activities such as a training for grantees, or a single hardware purchase or software project.

The research surfaced three key recommendations for how to transform the status quo. Changing the “slope” of the technology funding supply curve, building the market for technology capacity and integration for social impact is possible in at least these key ways:

1) increasing funder education and engagement activities through “how-to” guides, case study reports and peer convenings and partnerships;

2) strengthening funder advising offerings that move them from idea to action, particularly for small to mid-size foundation with no or limited staff with technology expertise; and

3) expanding the pool of investment through mechanisms such as collaborative funds, matching grant programs, donor-advised funds, leveraging public sector and private industry investments, and exploring community benefit agreements that created funds such as the California Emerging Technology Fund, the California Consumer Protection Fund, and ZeroDivide.

Philanthropy must literally "get with the program" on technology funding, and get smart on the benefits of allocating sustained resources to this area of grantmaking. By doing so, the potential for technology to increase social impact can be fully realized.

ZeroDivide will be hosting two webinars to discuss their new report. A funders-only webinar is scheduled for April 5 at 2pm EDT (email jeff@zerodivide.org for details). A webinar open to everyone is scheduled for April 6 at 2pm EDT, click here to register.