We often speak with organizations that are considering upgrading their technology with NationBuilder, but have some concern over the cost. For the Executive Director, CFO, or COO of the organization, there is a more holistic way to view the costs of technology—including opportunity cost and staff efficiency.
To illustrate, I put together an example of a mid-size nonprofit with an annual budget of $2 million, 8-10 staffers, and an email list of 100,000 people they want to grow to 200,000. Let's see what happens financially when they bring on the NationBuilder platform.
We'll call the sample organization the Committee for Better Committees. They've got an Executive Director, a $90K/year COO/Chief of Staff, a $70K/year Communications Director, a $70K/year Development Director, a Development Associate at $40K/year, three program staff, and often two paid interns doing largely data entry at a cost of $10K/year each.
To start, the Committee for Better Committees has a Drupal website, and they pay a consultant to update it at a cost of $5K annually. They also use Constant Contact at $295/month for emails. They have no blast texting capability, phone banking, or canvassing system. The Committee for Better Committees raises $200K each year through events using EventBrite, which charges them 5.5%, or $11K/year. They do minimal online fundraising and zero online advertising.
Total year one cost of technology for the Committee for Better Committees = $19,540.
Now, let's compare those numbers against NationBuilder. First, let's assume the high-cost scenario in which the organization decided to rebuild their site and makes full use of NationBuilder tools at a cost of $6K. The cost for an account with 100,000 email addresses is $1K/month. But, a new website built using NationBuilder automatically pulls in Facebook and Twitter interactions, so they'll grow to their 200,000 email address target which is priced at $2K/month. Therefore, the average monthly cost is $1.5K/month. Good news: the staff can update the site now, which eliminates consulting fees, and emails are unlimited—so, no more Constant Contact fees. And with the new donation processor, they'll be charged 3.0% on donations, or $6k.
Total year one cost for the new and improved Committee for Better Committees using NationBuilder = $30,000.
"Ouch, we can't afford to spend $10K+ more," says the COO. Right. But that's not all.
Let's take a closer look at the fully loaded cost of using the old-school technology.
Instead of using the existing formula—current dollars spent vs. dollars spent with NationBuilder—we need to factor in the broader impact. A more accurate formula looks more like this:
Current dollars spent on technology + Dollars lost due to inefficiency
Dollars spent with NationBuilder - Additional money raised with better engagement
1. The Communications Director spends 10% of her time managing inefficient communications processes because Constant Contact doesn't connect to their website or social media. This equals $7K in salary time.
2. Information doesn’t feed into the database seamlessly, so the Development team spends 50% of intern time on data entry, and the Development Director and Associate each spend 5% of their time managing these interns and handling data inefficiencies. There's another $10K + $3500 + $2000 in staff time = $15.5K.
3. The Chief of Staff spends 1% of her time managing the Online Consultant who updates the website. That’s another $1000.
So, the total cost of the old system is actually $19,540 + $7,000 + $15,500 + $1000 = $43,040.
On top of that, we're also missing the opportunity cost.
With NationBuilder, we just doubled our list and built a much more effective online engagement tool which increases online fundraising from $200K to $250K in year one. (To be fair, let's also say it requires $5K of staff time to learn NationBuilder and make the switch.)
Now, we're looking at the fully loaded cost of the old system as $-43K vs. $-35K with an additional $+50K more raised.
All said and done, switching to NationBuilder represents a financial gain of $58,000 for the Committee for Better Committees—in year one alone. That gain could be reinvested as another fundraiser, another program staffer, or simply one less week of fundraising work for the Executive Director, who just booked her first real vacation in years. And we haven't even quantified the value of social recognition as an organization on the cutting edge of technology.
Of course, not every case will be exactly like the Committee for Better Committees. Some cases are far more disparate, and some are more of wash for the tech upgrade. If you'd like help thinking through the true math of an organizing technology upgrade, let us know—we're happy to help.