According to the Comparative Nonprofit Sector Project at Johns Hopkins University, the nonprofit sector is the world’s seventh largest economy. Referred to by some as the Third Sector, the nonprofit sector is as large as the global construction industry. In the United States, 22% of the population volunteers its time, and 10% of Americans are employed in the nonprofit sector. And in Norway, which has the highest rate of volunteers, 52% of the adult population donates time.
We are all affected by the nonprofit industry—whether as employees, volunteers, members, donors, or simply part of the general public. As IMA® members, all of us want to help the organizations we work with achieve best practices in accounting, finance, and governance. Technology and its users play an integral role in this effort, and management accountants can help ensure that nonprofit organizations are utilizing these tools properly and following established best practices. Having a better understanding of how nonprofits use available technologies—and the various factors that influence that usage—will help that effort.
The annual “Blackbaud State of the Nonprofit Industry Survey” asks nonprofits around the world about their technology and Internet usage. More than 2,000 nonprofit organizations from 10 countries responded to the survey. Respondents are asked the extent to which their nonprofit organizations use, provide, or conduct any of the following via the Internet: advocacy, campaigning, electronic newsletters, e-mail, event registration, fundraising, member acquisition and management, online payments, polls/surveys, retail (sell goods online), search engine optimization, social networking, “sponsor me” or group fundraising, supporter profile updates, volunteer management, weblogs, and website analytics.
The results from the survey show that most organizations find traditional methods of fundraising, such as events and direct mailings, more effective than online methods such as social networking and search engine optimization. Respondents from all countries surveyed reported a significant gap between the importance of a single database of supporter information and their own organization’s performance in achieving that goal.
SMALL VS. LARGE
While valuable, the results from the Blackbaud survey focus primarily on larger nonprofit organizations. For example, U.S. nonprofits that responded to the survey most often reported revenues in the $1 million-$24.9 million range. So how do smaller nonprofit organizations fare?
As part of a graduate research service learning project with my Master of Accountancy (MAcc) students, we received Blackbaud’s permission to pose the technology-related survey question to all of the nonprofit organizations in the state of South Carolina. With the support of The Chapin Foundation, The Waccamaw Community Foundation, and the South Carolina Association of Nonprofit Organizations—the state branch of the National Council of Nonprofits—we disseminated the online survey to all nonprofits in South Carolina.
Two hundred thirty-four organizations responded. Most often they reported revenues between $250,000 and $2.4 million. Since the high point of this range is only 10% of the high point for the broadest size range in the Blackbaud survey, this sample provides a reasonable proxy for smaller U.S. nonprofits.
Students compared the results of the S.C. survey to the U.S. results of the Blackbaud survey to identify differences between small and large nonprofits in the U.S. By looking at the data from Blackbaud’s global survey, we can also compare the results of the smaller nonprofits to the nonprofits in all respondent countries.
In terms of U.S. organizations, the results of the S.C. survey show that small nonprofits more closely resemble Canadian nonprofits with respect to size and distribution than they resemble larger U.S. nonprofits. This is true when employing either revenues or contributions as the demographic variable of interest. For example, 33% of nonprofits in the S.C. survey reported revenues of less than $250,000. In Canada, 15% reported revenues in this range, while only 7% of U.S. nonprofits reported revenues less than $250,000.
Small nonprofits use online tools for advocacy, e-mail, and social networking at a higher rate than nonprofits in any of the countries studied. In the S.C. survey, 56% of nonprofits utilized online tools for advocacy, while the reported usage in various countries in the Blackbaud survey ranged between 0%-45%. And almost all (99%) of S.C. nonprofits report using e-mail, compared to usage range of 61%-91% in the larger survey. As for social networking, 81% of S.C. respondents use it vs. 26%-71% in the larger survey.
Small nonprofits mirror the larger U.S. sample with respect to their use of online tools for event registration (63%), fundraising (79%), polls/surveys (43%), “sponsor me” or group fundraising (28%), and weblogs (34%).
HISTORICAL INFLUENCE
One interesting note from the Blackbaud survey is that the use of technology and the Internet seemed to vary depending on the country’s historical cultural influence. Organizations from countries that were historically part of the British Empire, namely Australia, Canada, India, New Zealand, the United Kingdom, and the U.S., had different usage rates compared to countries in the survey that historically follow a Continental European model, namely France, Germany, Italy, and the Netherlands, as well as many organizations in Africa, likely because of their countries’ historic relationship with France and other continental European countries. The lowest usage rates for 14 of the 17 tools were reported by countries in the survey that historically followed the Continental European model, while the highest usage rates for 14 of the 17 tools were reported by organizations in historically British Empire countries.
Two areas that highlight the difference are the use of online tools for member acquisition and management and for supporter profile updates. The Continental range of usage for member acquisition and management tools is 17%-26%, compared with a range of 29%-46% for nonprofits in historically British Empire countries. And for supporter profile update tools, 7%-20% of nonprofits in the Continental model countries use them, while 22%-42% of nonprofits in historically British Empire countries’ nonprofits use the tool.
TAKING ACTION
The results of these surveys suggest that the technology and Internet usage of nonprofits differs with respect to nonprofit size, country of origin, and accounting model used historically in the country. Knowing this information, management accountants working with organizations can adjust their recommendations and strategies accordingly to mirror those that work best in whichever country the organization is working. Additionally, tools not commonly used in that country may prove to be effective in reaching new segments of donors and volunteers.
For IMA members working and/or volunteering with nonprofits, these differences provide opportunities for improvement, integration, and increased connectivity with donors and those in need.
February 2016
