December 16, 2024
Developing a Holistic Data Strategy for Nonprofits
Nonprofit organizations manage an enormous amount of sensitive donor data, often with limited budgets and IT staff. To overcome these challenges, many turn to trusted third-party IT partners.
Technology plays an ever-increasing role in the nonprofit sector, and as a result, organizations are generating, storing, managing and protecting more data than ever before. This presents new fundraising and mission-oriented opportunities for nonprofits, but it also creates several new challenges — some of which mirror those of the for-profit sector, and some that are unique to nonprofits. Nonprofit leaders must carefully shepherd limited resources in making their investments, while also seeking to satisfy a wide array of stakeholders, including boards, donors, employees, volunteers and constituents. Emerging technologies such as artificial intelligence are creating opportunities for nonprofits to engage with their data in new and creative ways, but organizations must ensure that these solutions sit on top of a secure and reliable IT foundation. A trusted third-party partner is often key to helping nonprofits manage, safeguard and maximize the value of their internal data.
Learn how CDW can enable your organization to manage donor data.
Technology plays an ever-increasing role in the nonprofit sector, and as a result, organizations are generating, storing, managing and protecting more data than ever before. This presents new fundraising and mission-oriented opportunities for nonprofits, but it also creates several new challenges — some of which mirror those of the for-profit sector, and some that are unique to nonprofits. Nonprofit leaders must carefully shepherd limited resources in making their investments, while also seeking to satisfy a wide array of stakeholders, including boards, donors, employees, volunteers and constituents. Emerging technologies such as artificial intelligence are creating opportunities for nonprofits to engage with their data in new and creative ways, but organizations must ensure that these solutions sit on top of a secure and reliable IT foundation. A trusted third-party partner is often key to helping nonprofits manage, safeguard and maximize the value of their internal data.
Learn how CDW can enable
your organization to manage donor data.
In some ways, the challenges facing nonprofits are no different from those facing enterprise organizations operating in fields such as finance or retail. There’s work to be done. Workers need access to state-of-the-art technology to do their jobs, and organizations must thoughtfully implement tools and practices that will safeguard sensitive data. The infrastructure required to support, say, a video collaboration environment or a customer relationship management system is the same, whether an organization’s work is motivated by mission or money.
But in other ways, nonprofits face a unique set of challenges. Many have small IT staffs, limited IT funding and outdated technology infrastructure. Nonprofit leaders are responsible for identifying potential donors and maximizing donations, improving operations and service delivery, attracting and retaining top talent and more — all on tight budgets. Every dollar spent by a nonprofit must be accounted for and justified; nonprofit board members and donors may not understand how new IT expenditures will advance the mission of the organization.
Already, nonprofits rely on a wide range of technology solutions. Cloud-based donor management systems, for instance, have become essential for tracking contributions, managing relationships and coordinating fundraising campaigns. Many nonprofits also utilize data analytics platforms to better understand donor behavior, identify giving patterns and optimize outreach strategies. Artificial intelligence and machine learning are emerging as important areas for nonprofits to watch. AI and ML tools can automate routine tasks, identify opportunities for personalizing donor communications and possibly even predict future giving trends. As with enterprise companies, these automation tools can help nonprofits improve their overall operational efficiency, allowing them to focus more of their time and resources on mission-related work.
Cybersecurity solutions are critically important for nonprofits, whose data privacy needs might be considered even more pressing than those of enterprise organizations. Nonprofits must vigorously safeguard the financial information of their donors — just as businesses must protect customer data — or else risk potentially catastrophic damage to their reputations. Additionally, many nonprofit organizations operate in highly regulated sectors such as healthcare or education and may store sensitive information about the often vulnerable populations they serve, which could include children.
77%
At organizations where leaders say too little is being spent on IT, 77% say that available budgets present a hurdle to investment, while 47% identify a lack of grant or funder support as a barrier, 44% cite organizational culture and 12% say a lack of board support presents a challenge.
Source: NTEN, 2024 Nonprofit Digital Investments Report, April 2024
For many nonprofits, it simply isn’t feasible or cost-effective to internally implement, manage, monitor and refresh an ever-evolving IT environment. Working with an established, trusted third-party partner such as CDW can provide crucial advantages. CDW’s solution architects offer comprehensive IT support, vendor-agnostic expertise and decades of experience working to solve technology and cybersecurity problems for countless organizations across all sectors. These experts can help nonprofits navigate difficult technology decisions, ensure compliance with relevant regulations and implement solutions that align with their budgets and their mission objectives.
As technology continues to evolve — and as cyberthreats grow in both volume and sophistication — having a reliable technology partner can mean the difference between a smooth-running IT shop that serves the mission and a scenario in which an organization’s staff members are constantly forced to divert attention from their daily tasks to put out IT-related fires. In an effective IT partnership, nonprofits will be able to bridge the gap between their available resources and their technology needs, ensuring they can leverage modern solutions to maximize their impact.
In some ways, the challenges facing nonprofits are no different from those facing enterprise organizations operating in fields such as finance or retail. There’s work to be done. Workers need access to state-of-the-art technology to do their jobs, and organizations must thoughtfully implement tools and practices that will safeguard sensitive data. The infrastructure required to support, say, a video collaboration environment or a customer relationship management system is the same, whether an organization’s work is motivated by mission or money.
But in other ways, nonprofits face a unique set of challenges. Many have small IT staffs, limited IT funding and outdated technology infrastructure. Nonprofit leaders are responsible for identifying potential donors and maximizing donations, improving operations and service delivery, attracting and retaining top talent and more — all on tight budgets. Every dollar spent by a nonprofit must be accounted for and justified; nonprofit board members and donors may not understand how new IT expenditures will advance the mission of the organization.
Already, nonprofits rely on a wide range of technology solutions. Cloud-based donor management systems, for instance, have become essential for tracking contributions, managing relationships and coordinating fundraising campaigns. Many nonprofits also utilize data analytics platforms to better understand donor behavior, identify giving patterns and optimize outreach strategies. Artificial intelligence and machine learning are emerging as important areas for nonprofits to watch. AI and ML tools can automate routine tasks, identify opportunities for personalizing donor communications and possibly even predict future giving trends. As with enterprise companies, these automation tools can help nonprofits improve their overall operational efficiency, allowing them to focus more of their time and resources on mission-related work.
Cybersecurity solutions are critically important for nonprofits, whose data privacy needs might be considered even more pressing than those of enterprise organizations. Nonprofits must vigorously safeguard the financial information of their donors — just as businesses must protect customer data — or else risk potentially catastrophic damage to their reputations. Additionally, many nonprofit organizations operate in highly regulated sectors such as healthcare or education and may store sensitive information about the often vulnerable populations they serve, which could include children.
For many nonprofits, it simply isn’t feasible or cost-effective to internally implement, manage, monitor and refresh an ever-evolving IT environment. Working with an established, trusted third-party partner such as CDW can provide crucial advantages. CDW’s solution architects offer comprehensive IT support, vendor-agnostic expertise and decades of experience working to solve technology and cybersecurity problems for countless organizations across all sectors. These experts can help nonprofits navigate difficult technology decisions, ensure compliance with relevant regulations and implement solutions that align with their budgets and their mission objectives.
As technology continues to evolve — and as cyberthreats grow in both volume and sophistication — having a reliable technology partner can mean the difference between a smooth-running IT shop that serves the mission and a scenario in which an organization’s staff members are constantly forced to divert attention from their daily tasks to put out IT-related fires. In an effective IT partnership, nonprofits will be able to bridge the gap between their available resources and their technology needs, ensuring they can leverage modern solutions to maximize their impact.
77%
At organizations where leaders say too little is being spent on IT, 77% say that available budgets present a hurdle to investment, while 47% identify a lack of grant or funder support as a barrier, 44% cite organizational culture and 12% say lack of board support presents a challenge.
Source: NTEN, 2024 Nonprofit Digital Investments Report, April 2024
Money Matters
95%
The percentage of nonprofits that draw from their general budgets for IT spending. A large number of nonprofits also pay for technology investments with the help of foundation grants (47%), major donations (47%) and government grants (42%).
Source: NTEN, 2024 Nonprofit Digital Investments Report, April 2024
54%
The share of nonprofit IT spending that goes toward hardware. Additionally, 14% goes toward software and licenses, and 12% goes toward consulting and services. Only 1% of nonprofit IT spending goes toward training.
Source: NTEN, 2024 Nonprofit Digital Investments Report, April 2024
45%
The portion of nonprofit leaders who say their organizations are spending too little on technology. Only 6% say their organizations are spending too much.
Source: NTEN, 2024 Nonprofit Digital Investments Report, April 2024
Money Matters
95%
The percentage of nonprofits that draw from their general budgets for IT spending. A large number of nonprofits also pay for technology investments with the help of foundation grants (47%), major donations (47%) and government grants (42%).
Source: NTEN, 2024 Nonprofit Digital Investments Report, April 2024
54%
The share of nonprofit IT spending that goes toward hardware. Additionally, 14% goes toward software and licenses, and 12% goes toward consulting and services. Only 1% of nonprofit IT spending goes toward training.
Source: NTEN, 2024 Nonprofit Digital Investments Report, April 2024
45%
The portion of nonprofit leaders who say their organizations are spending too little on technology. Only 6% say their organizations are spending too much.
Source: NTEN, 2024 Nonprofit Digital Investments Report, April 2024
- OPTIMIZING PERFORMANCE
- EMBRACING EMERGING TECHNOLOGIES
- PRIORITIZING DATA AND DONOR SECURITY
Value is an important consideration for all organizations, but nonprofits must be especially judicious with their IT spending. While a large enterprise might be able to absorb a failed experiment with new technology (writing it off as the cost of doing business), such a misstep would be a significant setback for most nonprofit organizations, leaving them in a poor position to effectively pursue their mission. Strategic planning around core IT infrastructure can help keep technology initiatives under budget while also ensuring that these efforts provide nonprofits with a significant boost to their most important work. In addition to making strategic investments in the following technologies, nonprofit leaders might consider cost-conscious moves such as recruiting technology experts to serve on their boards and partnering with technology providers who understand the unique needs of mission-driven organizations.
CUSTOMER RELATIONSHIP MANAGEMENT: The imperative of effective donor management makes customer relationship management systems such as Salesforce an absolute must for nonprofit organizations. Leaders should carefully evaluate the needs of their organization before making a decision in this area, as CRM solutions are significant investments that will shape a nonprofit’s workflows and processes for years to come. By working with an experienced partner for system design and implementation, nonprofits can avoid common missteps such as underutilization and poor technology integration. When implemented effectively, a CRM tool can both reduce costs (by automating previously manual processes) and increase revenue (by streamlining fundraising activities and providing actionable insights from donor data).
DATA GOVERNANCE: According to a 2024 NTEN report, data and data systems have seen more investment from nonprofit organizations than any other technology recently, with 43% of survey respondents describing these areas as the “most important” for their organizations in 2023 and 2024. As nonprofits collect increasing amounts of constituent and donor information, proper data governance becomes essential, not only for operational efficiency but also for risk management. It can be time-consuming and costly to establish robust data governance frameworks, but it is typically far more expensive to ignore this need until problems arise due to poor data management. Such problems may include a large number of duplicate records, inconsistent reporting and regulatory compliance infractions, among others.
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CYBERSECURITY: Security came in second on NTEN’s list of 2023 and 2024 investments, and 90% of nonprofit leaders say that cybersecurity concerns have a “significant” influence on their organizations’ decisions regarding new tech investments. Like data governance, cybersecurity is an area in which the initial ROI may be difficult to see, but where the eventual consequences of underinvestment can be catastrophic. In the past, nonprofits may not have been seen as rich targets for cyberattacks, but hackers are increasingly taking aim at any organization that stores valuable data (such as donors’ financial information). Nonprofits must prioritize essential security measures such as multifactor authentication, endpoint protection and ongoing staff training.
CLOUD SOLUTIONS: Cloud computing has become a staple of IT operations for organizations in nearly all sectors, and the model has evolved significantly over the past decade. According to the 2024 State of the Cloud Report from Flexera, 89% of organizations now have a multicloud strategy that relies on resources from several public and private clouds. For nonprofits in particular, cloud-based solutions can offer significant advantages of both flexibility and cost management. Rather than requiring organizations to make large investments in on-premises infrastructure, cloud solutions offer them the ability to scale their technology resources in response to actual use. Additionally, cloud resources require significantly less day-to-day management — a boon for nonprofits with limited IT staff.
Considering the rate at which IT evolves today, the decision to delay modernization efforts by just a couple of years can put nonprofits in a position where they are failing to meet the baseline expectations of employees, donors and the people they serve. Additionally, emerging technologies often offer powerful new ways for organizations to optimize their impact with limited resources by enhancing operations, improving employee productivity, increasing engagement with constituents and maximizing revenue from donations.
AUTOMATION: There has been no escaping the hype around AI — generative AI tools in particular. According to BizTech magazine, many nonprofits are already leveraging AI solutions to analyze donor data and predict giving patterns, resulting in more targeted and effective fundraising campaigns. These tools include AI-powered chatbots, which can provide 24/7 support to donors, volunteers and constituents, helping to reduce the burden on staff. Chatbots can answer basic questions about programs and donation processes, provide updates on ongoing initiatives and even help schedule volunteer shifts. For organizations operating across international borders, automated translation features can dramatically expand their ability to serve populations in other countries while minimizing language barriers. Additionally, many nonprofits have begun to leverage Microsoft’s Copilot AI tool to streamline communications and content creation. AI-enabled PCs with neural processing units help power these use cases; they also support improved battery life and cybersecurity features for employee laptops.
ANALYTICS: So much of nonprofits’ ability to carry out their work depends on successful fundraising. As with any other type of marketing, organizations are constantly trying to apply lessons from previous campaigns about what has worked and what hasn’t. An effective data analytics program can supercharge this work, allowing nonprofits to scrutinize the ROI of past campaigns, uncover hidden trends and apply those insights to future fundraising initiatives. In addition to its predictive power, data analytics can help development leaders tailor their campaigns to specific donors — a capability that can have outsized returns for organizations where a small number of gifts account for a sizable portion of the overall budget. Just as important, analytics tools can help flag donors who are at risk of reducing their support, allowing organizations to proactively strengthen these crucial relationships and avert financial crises.
IT SERVICE MANAGEMENT: The addition of emerging technologies such as AI, analytics, virtual reality, augmented reality and the Internet of Things requires robust monitoring and management. An IT service management platform such as ServiceNow can keep a technology environment operating at full capacity — even for organizations with smaller IT staffs — helping to monitor and maintain growing IT stacks while ensuring consistent service levels across all systems. Nonprofits face unique ITSM challenges, such as the need to support both paid staff and volunteers, seasonal fluctuations in system demands and the demand for superior availability for donor-facing systems. Additionally, nonprofits must carefully track their technology costs and usage to maintain transparency with donors and board members and show that IT investments are achieving their intended outcomes. Effective ITSM platforms provide essential capabilities, including clear visibility into systems performance, automated detection of any issues, and self-service portals for routine requests.
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Fundraising in the Digital Age
70%
The portion of nonprofits that use automation technology in their online fundraising efforts, including automated tools that send donation receipts, year-end tax statements and reminders when on-file credit cards are set to expire
15%
The percentage of organizations that use AI software for donor prospecting activities, such as predicting what time of year specific donors are most likely to give.
87%
The percentage of nonprofits that regularly use social media in their digital marketing and fundraising strategies. Among these, 53% spend money on social media advertising.
91%
The share of organizations that accept credit card payments for donations on their website. Additionally, 53% accept PayPal, 45% accept ACH payments, 6% accept Apple Pay, and 4% accept cryptocurrency.
Source: Nonprofit Tech for Good, 2023 Nonprofit Tech for Good Report February 2023
Cybersecurity has become a top-of-mind IT concern for organizations in practically every industry, with cyberattacks such as ransomware growing exponentially over the past decade. According to IBM, the average global cost of a data breach reached $4.9 million in 2024, a 10% increase over the previous year and the highest total ever. This sort of hit can be debilitating even for Fortune 500 companies with multibillion-dollar budgets. But for small and medium-sized organizations — including many nonprofits — a particularly destructive cyberattack represents an existential threat. While no cybersecurity strategy is bulletproof, proactive investments in security technology and training give nonprofit organizations the best chance of protecting their data and systems from attack.
REGULATIONS, COMPLIANCE AND TRUST: Nonprofits need to safeguard their data, not only to prevent a costly breach but also to avoid running afoul of government regulations, failing to meet grant-specific compliance guidelines and spoiling the trust of their donors. The National Council of Nonprofits advises organizations to adopt and honor privacy policies that are clearly articulated and communicated to all stakeholders. “Be sure that your policies comply with all applicable laws — and review the policies annually to ensure continued compliance,” the organization writes. NCN also advises against buying and selling donor lists, as donors frequently complain when they are inundated with appeals from multiple nonprofits after giving to one. “Buying or selling contact information is one of the fastest ways to have someone declare that they’ll never donate another dollar to your organization again,” NCN notes.
DATA PROTECTION AND ACCESS MANAGEMENT: Modern cybersecurity has moved beyond the “castle and moat” model that dominated for decades, in which the network perimeter was hardened to keep away outsiders. Today, variables such as remote work, guest Wi-Fi, file sharing and cloud use require that internal IT resources be made available to those sitting outside the organization. As a result, a growing number have adopted a zero-trust architecture, which verifies every user and device before granting access to a given resource. It can be tricky to balance the competing priorities of security and access, and an effective zero-trust architecture is typically made up of many moving parts, such as identity and access management tools, secure access service edge solutions and endpoint management platforms.
BUILDING A SECURITY-FIRST CULTURE: Protecting nonprofit data requires more than state-of-the-art cybersecurity solutions. Staff and volunteers must also be trained to spot and report potential attacks. This is especially true for social engineering attacks such as phishing, in which hackers send phony emails to trick people into handing over their login credentials, paying fake invoices or clicking on malicious links. Gone are the days when most phishing emails could easily be spotted due to glaring grammatical mistakes and formatting errors. Today, attackers use sophisticated spear phishing techniques, impersonating employees’ bosses and close contacts. Along with training, nonprofits must invest resources into policy development, incident response plans and disaster recovery testing. These are all areas where a trusted third-party technology partner can be instrumental in lightening the load for nonprofit IT staff while providing additional peace of mind.