Nonprofits Still Struggle to Fund Technology, Despite Rising Digital Demands

3 Mins Read

Nonprofits rely on technology for fundraising, service delivery, communication, and reporting. Yet funding for technology remains one of the most persistent challenges across the sector.

According to analysis from NTEN (Nonprofit Technology Network), many organizations continue to face structural barriers when it comes to securing consistent, long-term investment in digital infrastructure.

The gap is increasingly visible as expectations around data transparency, cybersecurity, and AI adoption continue to rise.

The Core Problem: Tech Is Seen as Overhead

One of the central issues highlighted is perception.

Technology expenses are often categorized as “administrative overhead” rather than mission-critical investment. As a result:

  • Grant funding rarely covers full IT costs
  • Donors may prioritize program spending over infrastructure
  • Technology upgrades are delayed or under-scoped

This creates a cycle where nonprofits adopt tools reactively rather than strategically.

The Real Cost of Underinvestment

When technology funding is inconsistent, nonprofits may face:

  • Outdated CRM systems
  • Cybersecurity vulnerabilities
  • Manual workflows
  • Data silos
  • Staff burnout

Digital inefficiencies can directly impact fundraising performance and program effectiveness.

In many cases, the lack of sustainable tech funding becomes a growth constraint.

Funders Are Slowly Shifting

There are signs of change.

Some philanthropic organizations are beginning to:

  • Offer unrestricted funding
  • Provide multi-year grants
  • Support digital capacity building
  • Recognize technology as mission-aligned

However, NTEN’s analysis suggests this shift is not yet universal.

Technology funding still varies widely by organization size and sector focus.

AI and Digital Transformation Raise the Stakes

The conversation around nonprofit technology funding now includes artificial intelligence.

AI adoption requires:

  • Modern data infrastructure
  • Clean and organized datasets
  • Staff training
  • Governance policies

Organizations without foundational IT investment may struggle to adopt AI responsibly or effectively.

This creates a widening digital maturity gap between well-resourced and under-resourced nonprofits.

Moving From One-Time Grants to Long-Term Strategy

NTEN emphasizes the importance of treating technology as ongoing infrastructure rather than a project-based expense.

Sustainable tech funding strategies include:

  • Including IT costs in every program proposal
  • Advocating for full-cost funding models
  • Educating boards about digital risk
  • Building dedicated technology budgets

Technology is not a single purchase — it is a continuous investment.

The Governance Factor

Leadership plays a critical role.

Organizations with stronger digital outcomes tend to have:

  • Executive-level tech champions
  • Board awareness of cybersecurity risks
  • Clear digital roadmaps
  • Cross-functional collaboration

Without leadership alignment, even funded initiatives may fail to deliver impact.

What’s Next for Nonprofit Tech Funding?

The future of nonprofit technology funding may depend on:

  • Funders adopting full-cost grant models
  • Sector-wide digital literacy improvements
  • Increased transparency around infrastructure needs
  • Recognition that cybersecurity and data management are mission-critical

As expectations rise for digital engagement and accountability, technology funding may shift from optional to essential.

Conclusion: Infrastructure Is Mission-Critical

Nonprofits are expected to operate with growing digital sophistication. Yet funding models have not always kept pace.

NTEN’s analysis underscores a simple truth: technology is no longer back-office support — it is central to mission delivery.

Without sustained investment, organizations risk falling behind in an increasingly digital ecosystem.

Key Takeaways

  • Many nonprofits continue to struggle with consistent technology funding.
  • Technology is often categorized as overhead rather than mission-critical infrastructure.
  • Underinvestment can lead to inefficiency and security risk.
  • Some funders are shifting toward more flexible support, but gaps remain.
  • Sustainable digital transformation requires long-term funding strategy.