How much should you pay for Association Nonprofit Software
How much does AMS membership software cost? And, how much should we budget?
In this article, we wanted to explore the money questions we get quite a bit from nonprofit and association executives.
From our experience, Nonprofit Associations are very good about benchmarking. In a sector where donors and members scrutinize where the money is going, benchmarking is used with success. If a nonprofit doesn’t benchmark outcomes, there is certainly a third-party agency which likely is!
The Study Cited for Membership Software Budget
Recently, we reviewed a study conducted by Clifton Larson Allen on behalf of the Texas Society of Association Executives (a wonderful resource!). The “Texas Associations Matter” study outlined the economic impact which nonprofit associations have on the Texas economy. Further, the comprehensive study outlined the specific demographic details of the roughly 1,900 organizations in the state. Here are some takeaways from an IT software perspective which may help all nonprofits in every state answer the questions above:
Small associations (less one million in revenue) represented 71% of the total association nonprofits in Texas
Across all association size classes (Small, Midsize, Large) each year associations in the state of Texas spend about 3% on technology and web expenses
Small Associations (less than 1 million in revenue) on average spend about 5% on technology and web expenses
Apart from the mere fact that everything is bigger in Texas (You know we are still a Republic, right?), if you believe in the value of benchmarking data, this study suggests that you should at a bare minimum be spending 3% of your operating budget a year on software technology for your nonprofit association.
I would like to stress this at a minimum. Because, in order to truly keep up it will be important for your organization to consider spending more. You must consider going beyond the averages to excel and grow. Nonprofits and Associations are competing with so many entities today for mind share and remaining viable. It’s not enough just to “keep up” with the “Joneses’ of the Nonprofit Community”. Rather, moving forward into the 21st Century executives are going to have to think of new ways to grow and attract new members/donors in ways that they have never imagined. And, technology will be a big part of helping in that effort.
What Should you Budget for Membership Software?
In the book, “Race for Relevance, 5 Radical Changes for Associations“, the author, Harrison Coerver, underscores the point that Associations will need to invest more in the future to remain relevant. In essence, he believes that conventional wisdom of the old guard must change in order to adapt to the “new frontier” of associations.
The conventional approaches and paradigms of yesteryear no longer fit in an environment that’s been fundamentally and irreversibly changed. Harrison also stresses that technology (web and software combined) will quickly become an integral component of an associations functioning and performance. And, to realize this will require a major shift in the mindset of association nonprofit executives across the board to truly embrace technology rather than begrudgingly invest in it. In short, he says that your “spend” should be in the range of 8% to 10% of total revenue to remain competitive.
Just to reiterate, this is double what is transpiring now in the great state of Texas. And, I would venture to assume that other states are similar if not less in spend than Texas. Wouldn’t you?
So, how much should you budget on your website, information technology and nonprofit association software?
How much is enough?
Well, in most expert opinions, your nonprofit needs to spend at least the minimum but even more should be considered to grow and remain relevant. But, the answer for your particular organization will vary. Hopefully, this information can be used as a discussion point to put some perspective on your next budget meeting for information technology. As we stress quite a bit here, it is important to set realistic expectations.
The good news for most forward thinking nonprofits is that most systems today are in the reach of even the smallest nonprofits. The key is finding the right one for you based on all factors involved including a realistic budget.
If you need help auditing your needs or gaining some consensus on software choices, please reach out to us. Until then, keep SmartThoughts in mind!