6 IT Budgeting Tips For Nonprofits

Webinar March 2024

Each year brings new possibilities for nonprofit organizations, especially when it comes to technology. However, investing in technology without a clear strategy can quickly deplete your budget and hinder your organization’s ability to achieve its mission. That’s why it’s crucial to have a well-planned IT budget in place, especially for nonprofit organizations that are often working with limited resources. Below are some tips to keep in mind this budget season. 

You can also register for our next live webinar, “IT Budget Planning For Nonprofits” happening on Wednesday, March 20th at 11:00AM (Pacific). Register here and you will also receive an “IT Budget Planning Checklist For Nonprofits” and more free resources.

1. Define your goals

The first step to creating an IT budget is to clearly define what you want to achieve with your technology investments. Are you looking to improve communication and collaboration among team members? Or do you want to enhance online fundraising efforts? Identifying your goals makes it easier to prioritize and allocate your budget accordingly
For instance, if your goal is to increase donations by 20% in the next year, your IT budget may include investments in online fundraising platforms and donation management software. Goals don’t have to be just big-picture projects, they can also be smaller, ongoing improvements such as implementing a new cybersecurity protocol or upgrading outdated hardware to maintain efficiency. By establishing these parameters, you can tailor your IT budget to directly support these goals, ensuring every dollar spent contributes to your organization’s overarching purpose.

2. Evaluate current and past spending

Tracking your organization’s past and current technology spending is crucial in creating a realistic budget for the future. Take the time to review your expenses in the past year and identify areas where you may have overspent or underspent, as well as which investments were beneficial to your organization. This will give you a better understanding of where to allocate funds for the upcoming year and where to make cuts. You may find technologies that didn’t provide the expected results and cut them from your budget in favor of new investments. Alternatively, certain software or systems may no longer be relevant to your organization’s current needs, and reallocating those funds toward more effective solutions can help maximize your budget.

Evaluating your spending patterns can also be helpful for predicting cash flow. If you typically experience an influx of donations during certain times of the year, plan your IT investments accordingly to avoid overspending when funds are low. Additionally, consider potential future expenses such as software renewals or hardware upgrades, and factor those into your budget planning.

3. Prioritize spending based on impact and needs

Not all technology investments will be equally crucial for your organization. Before finalizing your IT budget, prioritize your investments based on their impact and necessity. Consider the potential return on investment and how each technology will directly contribute to achieving your goals. Certain IT projects, such as migrating to the cloud and implementing new software for remote work capabilities, may have an immediate impact on your organization’s efficiency and productivity. On the other hand, allocating a large part of your budget on fads like virtual reality may not be as beneficial in the long run unless they’re properly evaluated and are truly aligned with your mission.
Another important budget priority are the necessities, such as cybersecurity measures and regular hardware maintenance. These may not seem as flashy or exciting as new technology investments, but they are essential for protecting your organization’s data and ensuring the efficiency of daily operations.

4. Don't budget by the penny

While it’s essential to be mindful of expenditures, attempting to budget by the penny may lead to overly restrictive financial plans. Allow for flexibility in your budget to accommodate unforeseen circumstances and emerging opportunities. Create a buffer for adjustments and unexpected expenses, such as those associated with troubleshooting hardware failures, software glitches, and security incidents. This will prevent your organization from being caught off guard and having to sacrifice other important initiatives to cover these costs.

5. Manage vendor relationships

When forecasting your cost for IT solutions and services, it pays to be conscious of vendor relationships. Take the time to thoroughly research and compare prices from different suppliers before making a purchase. This will help you negotiate better rates or find more cost-effective alternatives that still meet your organization’s needs.
What’s more, you need to build long-term partnerships with vendors to secure discounts or savings in the future. Regularly reviewing and reevaluating these relationships can help you identify additional cost-saving opportunities and stay within your budget.

6. Work with an IT consultant

IT budgeting can often be ineffective without an impartial, knowledgeable expert to guide you. Working with an IT consultant that has experience in the nonprofit sector can provide valuable insights and help you create a more strategic budget. They can look at what costs are essential,what areas can be minimized, and which technologies are most beneficial for your organization’s specific needs to improve your operations while staying within budget constraints. A reliable IT consultant’s experience can also help you avoid costly mistakes and provide valuable advice on managing your IT budget in the long term.
If you need an IT consultant and managed IT services provider that has a specialized focus on nonprofits, Varsity Tech is the perfect partner for your organization. With our extensive experience in the nonprofit sector, we understand the unique challenges and needs of these organizations and can provide tailored solutions to help you achieve your goals within budget.Contact us now to get started.