yA A elie ahs Technology Trends Report SSE CC ECC’Table of contents LT Cele 0148 (6) nn Ki Demographics..................08 oT Ric) DO dee 9 Tet aTe) Cole) ann aK} LAV =o 1) ace Cefe) Tol UTS (6) avdIntroduction Inatime of rapialy changing technology advancements and The survey conducted for this report captures the perspectives of growing reliance on digital solutions, the nonprofit sector those leaders, exploring the challenges faced, the opportunities {sleveraging technology solutions to maximize impact and seized, and the technologies that are shaping the nonprofit efficiency ata faster pace. sector in 2024 (ur2024 Nonprofit Technology report offers a deep dive into ‘technology use in the nonprofit sector With valuable insights ‘rom nonprofit finance leaders from across North America, this report not only sheds tight on current technology trends but also provides strategic foresight into the changing landscape of nonprofit operations. ‘As stewards of financial integrity within their organizations, nonprofit finance leaders play a critical rote in guiding the adoption of technologies that align with mission-driven goals. Sage seuone nineDemographics Sage ‘This year, nearly 300 nonprofit leaders responded to our survey. The majority (90%) of these leaders represent small to mid-size nonprofit organizations inthe United States with revenue of less than $24M annually. The demographics are inline with our survey respondents from previous years, allowing us te compare year-over-year results. What's the approximate annual revenue for your organization? Less than $3M m$3M-$10M mS10M-$24M m$25M-$49M, 1m $50M-$99M, ™$100M or more ‘The respondents representa variety of nonprofit cause areas, including human services (2199, education 17%), community improvement (16%), arts and culture (14%), and healthcare (13%, ‘The most frequent titles of respondents wore executive director, chief financial officer, and chief executive officer More than half (56%) of respondents represented the C-suite at their organization, up from 49% of respondents last year Other survey participants ‘identified themselves as controller, director of finance, accounting manager, and VP of finance and administration.Results Ss Lc) Cee atrte ong ee ee eet Pretirirss Sage Revenue ‘44% of respondents reported an increase in revenue in 2023, with an additional 29% reporting flat revenue. We saw a larger percentage report an increase last year, but in totality, a higher number of organizations are reporting either increased or flat revenue meaning the post-pandemic bounce back was higher in 2022, but fewer organizations reported a decrease in 2023. Human services, ats and culture, and education organizations more frequently reported an increase in revenue over other nonprofit categories. Arts and culture ‘organizations are new to that lst this year, indicating a recovery in an area that was hard-hit during the pandemic. What changes have you experienced in your revenue inthe past 2 months? wos © rerease in revenue @ decrease in revenue sox @ Nocange wx we ox on 220 «2021=~—=«2022=~S*«DS:CSCS:*« When we examine the last five years in greater detail, we see a clear positive trend in revenue versus the decrease we saw during the hetght of the pandemic in 2021. Our 2024 survey results reflect the lowest percentage of survey responclents reporting a decrease {n revenue since pre-pandemic times. Of those who reported a decrease in funding, 65% ‘say their funding decreased by a small margin of less than 25%, Of those that reported an increase in funding, more than a quarter experienced an increase of greater than 25%. Good news for 2024: 86% of organizations are predicting increased or flat revenue, with 63% forecasting an increase. Of those forecasting an increase, 41% of those organizations expect an increase of greater than 25%. That number is up from 26% last year, meaning many more organizations are forecasting larger increases.Sage Funders 29% of nonprofit finance leaders reported that the biggest increase in funding this year ceame from government funding, followed by foundation grants. Our survey respondents, reported that the most significant decrease in funding came from individual donors, Inwhat funding areas have you seen a change in the last ‘2months? 50% 40% @ oreasea 30% @ decreased 20% @ stayed the same 10% 0% Foundations Individuals Corporate Government When we look t year-over-year trends, funding from foundations has remained the steadiest, while individual, corporate, and government funding has had more variability, trending up or down given the economic climate. This year, we saw every area drop slightly in the percentage who have seen an increase, ‘except corporate giving, For the first time in our survey, we've seen corporate giving back to pre-pandemic levels. Overall, we've seen government funding remain fairly high when compared to 2020, numbers, butit did dip slightly this year as the availability and accessibility of government funding has changed post-pandemic. Inwhat funding areas have you seen an increase ‘in the Last 12 months? @ Foundation grants @ inivisuar giving @ comporate giving 0% @ severeneraing 60x 2020 201 2022 2028 2024Sneed services, coupled with inflation Perper Benet enter Peete Mtoe SR ened Pence Pcs Sage Programs and services ‘The major theme when it comes to programs and services over the last two years has been one of increased demand coupled with higher costs. 26% of survey respondents say that participation in programs has increased this year, with 70% saying the cost of programs has increased. hile inflation isa hurdle in most sectors right now, the National Philanthropic Trust says that nonprofits are “particularly vulnerable to inflation because they cannot react to rising prices the way for-profit businesses can” They go on to note the correlation between rising costs and an increased demand for services, and the difficult position ‘that puts nonprofits in ‘The increased demand for services, coupled with inflation and rising costs of programs, puts more pressure on nonprofits to accurately budget and plan for the future, stretch ‘every dollar, and be good stewards of funding. In what areas have your programs increased in the last 12 months? @ Pericisationinprograms @ number ofprograms @ costor programsClear and transparent Perea iin! peor erent ence inter) See ena’ RU ees Sage ‘The rote of the nonprofit finance Leader ‘This survey is for nonprofit finance leaders, and each year, we ask about their role {n teling the story of mission impact to constituents, Finance plays a huge role in ‘translating an organization's mission into fiscal strategies, providing the guidance needed to move the mission forward. What is the rote of your finance team in helping to build a ‘compelling story of mission impact? DTC Peete See Cony Peres CT aa Biel eu Greeters ay ese a) Ree eerie (ic., Guidestar by Candid) Nearly 60% of respondents indicated that thelr finance team documents transparency and accountability at their organization. It’s no surprise this was the most common response, as itis acructal component for nonprofit success. Transparency and accountability establish a foundation of trust with stakeholders and clear and ‘transparent documentation of financial practices assures donors thetr contributions are being used responstbly and in alignment with the nonprofit's misston, Nearly half of respondents indicated thetr finance teams track program results. This enables nonprofits to demonstrate impact, make stratagic decisions, and effectively ‘communicate their impact story with stakeholders. By actively engaging the finance team in pursuit of mission achievement, nonprofits can optimize resource allocation, enhance operational efficiency, and build a foundation for sustainable growth. Through this involvement, the finance team becomes a partner in transforming mission statements into tangible, positive change within the causes the nonprofit serves.Market trends Sage External challenges Nonprofits face several challenges thatare out oftheir control In this survey, we asked about the largest external challenge a respondent's organization is currently facing. What are the biggest external challenges your organization is facing today? zonomic uncertain inrton Compeston for funsing| sattng shorages Increased demand fr services om 20% -<40%~—~—~GOX~—~«CO~C*«OOK ‘There wore also other challenges in the comments worth noting: “Delays in federal grant payments, due to normal processing delays and especially government shutdowns.” avian avitenment nares “Government funding via COVID retief funds is coming to an end.” Huran secs nenpratit “Worldwide events, conflicts, and wars draw attention away from our issue.” -tneratens nonprtiyica ‘The responses echo much of what has been discussed around programs and funding, However, given that economic uncertainty, inflation, and competition for funding are tied for the top response, we wanted to dive deeper into the challenges nonprofits are experiencing related to the ecanomy.Sage ‘The economy has had a significant impact on nonprofits, shaping operations, funding ‘sources, and overall viability. With the economy experiencing volatility, nonprofits have ‘to make fast changes to be successful in the current climate. We asked our respondents how they anticipate this uncertainty will affect their organizations. How do you anticipate economic uncertainty will affect your organization? (select al that apply) Rete Sree cur ee) Pe CUCU RC aa 43) ete eeu its) 38%) Pee R ON al) Investment in automation Reese c Ron at] er ‘Some respondents expanded on the challenges in the comments: ‘We are seeing changes in program and operations spending but not reduced. ‘There are fewer individual donations but government contracts are 3-5 years, so, economic uncertainty is a factor around renewal.” “Economic uncertainty may cause foundations (the chief source of our revenue) to reduce the level of their funding commitment. Qur government funder is faced with increasing deficits and cut its grants to us in an effort to reduce the deficit” ~Commurity improvement nonprofit ‘We are seeing increased demand for our services; therefore we need to expand our staff and also generate increased support through grants from foundations and government sources. 1d to prospect for additional donors to compensate for attri ~Eveaton orpSage But the economic uncertainty has also turned challenges into positive innovation, which was also reflected in the comments “We have already invested in technology to automate repetitive administrative tasks. This has freed up staff time to focus on volunteer training and support.” ~Eaveaton nonprofit fe see an increase in team participation in resource mobilization and a shift to innovative revenue models.” ntarnationat nonpotiyGo Internal challenges ‘We also wanted to understand what challenges nonprofits were facing internally What are the biggest internal chatlenges your organization is facing today? Lack ot process automation and Manual tn-consuning reporting rultpla. dsparte syst Lack ofreabtine vsti nto ‘eymavresanapertormance Budgeting ad panning om 2% 40% ~—~—«GO~«CBORC«TOOK,SELL PCr hhas consistently appeared in the Cer eu survey's inception five years coe Sage ‘When you compare the internal challenges over the last few years, the top five have remained fairly consistent. ‘Top 5 internal challenges from the mesigorm can 2022 2023, 2024 cettpene ae EES 4) stonatonsns MAL oe aed efficiency aie efficiency cesctpne 2k etre ase rn reporting efficiency ees —— ee ES Ee a eae pares aed ae ESE (SE (SE Bee) Ee ESS eee eee eee eee eae ee vce | ee | ee Soyo (Se™ ess a This year, “lack of process automation and organization efficiency” was the number one {internat challenge. This challenge has consistently appeared in the top two challenges singe this survey's inception five years ago. ‘We consistently hear from nonprofits that a lack of process automation and organization efficiency impacts thetr ability to effectively fulfill their missions and ‘serve their communities. Resource constraints, time-consuming manual tasks, and human errors are all consequences of manual, paper-based inefficient processes, Lack of automation is a major theme when discussing internal challenges. All five of the ‘top challenges could be alleviated with the use of modern technology.Technology Sage We asked respondents about the technology solutions they use to support operations and growth, The most used pieces of technology were financial management and accounting software (85%), a donor management or ORM solution (64%), and a ‘budgeting and planning tool (28%). Over the course of our annual survey, we've seen a large increase in the use of a budgeting and planning software~it has increased steadily from 18% use in 2022 to 28% this year. ‘Accounting and financial management software When asked specifically about financial management and accounting systems, 48% of respondents indicated they use QuickBooks. This was the most prevalent answer followed by Sage Intact and MIP Fund Accounting (formerly Abita), We also asked respondents what functionality of financial management and accounting software is most important to thetr organization. ‘When it comes to your financial management and accounting software, which of ‘the following functionality isa priority to your organization? fnanialroporing voter systems vigyt9 manage mutile eit automate 0% 20% ~—« 40% ~=—«GOX ~—«BOK —*100%, These responses are in the same priority order asin the 2021 and 2022 surveys, indicating these are key factors when considering financial management and accounting software. One difference to hightight is that 46% noted the importance of automating outcome metrics. This has increased steadily over the years, up from 35% in 2022. Outcome metrics are key to telling the story of mission achievement and the ability to track and ‘measure those automatically has become increasingly important to nonprofits.Key takeaways 4. Entry-level accounting software cannot rise to the needs of nonprofit, chatlenges—especially during economic instability. When discussing internal challenges in the survey one respondent from a public benefit organization noted their biggest challenge was the “increasing concern of whether QuickBooks can keep up with our needs." When you consider the top pains of lack of organization efficiency and manual, time-consuming reporting—coupled with the fact that most respondents use QuickBooks, it's safe to assume that entry level accounting software like QuickBooks can not rise to meet the needs of current nonprofit challenges, While entry-level accounting software like QuickBooks can be a good fit for small organizations with a simplistic structure, it wasn’t built for the needs of a complex nonprofit, especially ina challenging economic climate. Some of the impacts of economic instability on nonprofits including increased competition far funding, volatility in funding streams, and operational challenges can be exacerbated by the Use ofa solution like QuickBooks. However, these pains can be exacerbated or removed by leveraging a modern, cloud accounting and financial management solution lke Sage Intacet + Competition for funding: Sage Intacct can help nonprofits differenti themselves when funding competition is fierce. By utilizing compliance reporting in Sage Intacet, nonprofits can demonstrate that they are a responsible steward of donor dollars. Couple that with the abitity to track and measure outcome metrics ccan make a nonprofit very attractive when under consideration for funding. + Volatitity in funding streams: Nonprofits often experience fluctuations in ‘funding streams due to economic uncertainties, Government grants, corporate «giving, and individual donations may become more unpredictable, impacting long-term planning and program sustainability. Sage Intacctis, atts core, a fund accounting salution, with the ability to easily track multiple funding sources ‘and establish a clear and complete audit trail from transaction to report to reconciliation. This not only frees up valuable time for finance staff but makes audits fast and efficient, + Operational chattenges: Nonprofits using QuickBooks as their financial foundation are often forced to butld cumbersome workarounds to complete ‘complex processes like revenue recognition and multi-entity consolidation, ‘eaving users overly retiant on spreadsheets and manual data entry. Sage Intacct has built-in automation and workflows to increase your efficiency and productivity by eliminating redundant data entry, routing and tracking digital approval signoffs on transactions, and automating fund, revenue, and billing processes, Sage enoneSage 2. Tracking outcome metrics is a critical component of telting your story and attracting donors Ina warld where both the demand for services and competition for funding are high, nonprofits have to employee various strategies to stand out and secure financial support. Outcome metrics are a powerful too! for demonstrating accountability, and transparency. They can measure financial and statistical data that reflect an organization's, program’s, or initiative’s efficacy. Many nonprofits obtain their best results by measuring across multiple dimensions for blended scorecards that encompass activities, capacities, financial results, and other metrics. [At Sage Intacct, we automatically tag and track data by key dimensions which gives nonprofits the instant visibility and insights they need to be proactive. Sage Intacct also provides access to statistical data to enable nonprofits to automatically calculate key metrics such as financial (revenue), statistical (membership), ora combination (donations per attendee). The Sage Intacct open APL allows organizations to integrate their financial data with the data from any or al of their other business systems. For instance, by viewing combined CRM and financial data, nonprofits gain greater visibility into metrics tke average number of gifts per active donor, fundraising to expense ratio, cost per dollar contributed, and more The ability to track outcome metrics is atthe core of alot of strategies to stand out and attract donors. Here is how leveraging outcome metrics can help attract funds: Strengthen relationships with existing donors: Cultivating relationships with current donors is essential f you can leverage outcome metres in your ‘communication by demonstrating the impact of their contributions, you can ‘enhance donor loyalty and drive consistent support. + Focus on impactful storytetting: Compelling storytelling is key to ‘communicating @ nonprofit’ impact. By showcasing the tangible outcomes of programs, highlighting success stories, and emphasizing the mission with data, nonprofits can draw an emotional connection with potential funders, + Develop a strong ontine presence: Outcome metrics can help bolster your online presence and are a key component to a well-designed website, active social media ‘channel, and compelling digital content that can increase a nanprofit’s visibility.Sage + Risk management: Planning for the future involves identifying potenti ‘3. The need to budget and plan for the future has never been greater ur respondents cited “budgeting and planning” as atop five internal challenge this year. In addition, we've seen a steady increase over the years in the number of, respondents whose organizations leverage budgeting and planning software, Inuncertain economic times, nonprofits may experience fluctuations in funding streams. Government grants, corporate giving, and individual donations can be more Unpredictable, impacting long-term planning and program sustainability. For smatl nonprofits, it's easy to use spreadsheets to manage budgets, but when an organization grows in complexity—or needs to quickly shift direction due to world events~Excel becomes problem that only a true budgeting and planning solution can solve. These are some of the ways a modern budgeting and planning sotution like Sage Intact Planning can help nonprofits: Financial stabitity: Budgeting enables nonprofits to allocate resources strategically, ensuring there isa clear plan for income and expenses. Sage Intacct Planning can streamline collecting data, create models, build plans and budgets, {and define KPis continuously to make the process seamless, risks. and developing strategies to mitigate them, Automating planning using Sage Intacct Planning allows nonprofits to be more agile in response to change. Change ‘can create risk, but also opportunity. Whether positive or negative, those who can react quickly to change are more likely to succeed. + Real-time eottaboration: Effective planning cannot be done ina silo, For maximum efficacy, everyone at the nonprofit from development to programs to the board, needs to work tagether and be on the same page. Sage Intaect Planning allows centralized input from all budget owners, making financial plans more realistic and achievable,Conclusion Sage ‘The 2024 Nonprofit Technology Trends Report aims te pravide a comprehensive view of ‘the current landscape of technology use within the nonprofit sector, based on insights ‘from nonprofit finance leaders across North America. ‘The responses from nonprofit finance leaders hightight positive trends in revenue recovery since the peak of the pandemic. Our findings emphasize the crticat role of nonprofit finance Leaders in leading their organizations through change with ‘transparency, accountability, and strategy. ‘As nonprofits face a complex landscape, the ability to track outcome metrics, strengthen financial planning, and enhance operational efficiency are crucial for ong: ‘orm sustainability and impact. With oritical challenges such as economic uncertainty, inflation, and competition for funding atthe forefront of the nonprofit sector, the need ‘to leverage modern technology solutions is greater than ever. ‘To earn more about Sage Intact, visit www sageintacct.comynonprofit.Peseta g Sage Intacct is the AIOPA’s preferred provider of cloud financial ea eee eter ae eee! eM eee eee eee Rem eE LT membership associations, cultural institutions, and faith-based Cer eee eer ee ee donor accounting, while delivering real-time visibility into the esc s ur madern, true cloud solution, with open APIs, gives nonprofits ‘the connectivity visibility, and efficiency they need to do Doe ee eee ‘stewardship, build influence, grow funding, and achieve mission ere ce eee ey De Cee eae Cc Cee eee ee cree ace) Pee eae cena ee00 Seer ee ees peerpoeineenr rier rennnaiensennuveTonnrani’ ar ed