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Nine out of ten nonprofit leaders say technology is vital to their success. Yet most spend less than 3% of their budgets on it.
This jarring disconnect comes from an exclusive Chronicle of Philanthropy survey of over 350 nonprofit leaders, revealing a sector caught between recognizing technology's importance and actually investing in it. While the survey focused on the broader nonprofit market, the findings mirror a challenge we see across the association space—one with profound implications for member value and organizational sustainability.
For context, for-profit companies typically spend nearly 6% of their budgets on technology. That's double what most nonprofits invest. For associations working to deliver value alongside free online resources, AI tools, and social networks, this gap represents more than a line item. It's a fundamental challenge to delivering the modern experiences members expect.
The Investment Gap Is Creating Two Different Worlds
The Chronicle's survey paints a picture of organizations living in parallel realities. Some still exclusively accept paper checks because they don't want to pay credit card processing fees, while others are experimenting with artificial intelligence and automation. The gap between these organizations reveals fundamental differences in operational capacity.In the association world, this gap manifests in painful ways. While some associations deploy AI knowledge agents and personalized newsletters, others still process membership applications manually, entering data from PDFs into spreadsheets.
The survey revealed what many association professionals know viscerally: There's a vicious cycle at play. Limited technology investment means more manual processes. More manual processes mean staff spend their days on repetitive tasks instead of strategic initiatives. Less strategic work means fewer opportunities to develop new revenue streams or enhance member value. Which leads to even fewer resources for technology investment.
As Melissa Lukin from Rebuilding Together Peninsula told the Chronicle, it's "an endless cycle of being consistently inefficient, but then not being able to access the skills that would make us more efficient."
Sound familiar?
Why Associations Face Unique Challenges
The technology investment gap hits associations particularly hard for several reasons. Unlike charities seeking donor support, associations must deliver value in a world where information is increasingly free and accessible. Your members can find industry information on Google, network on LinkedIn, and get professional development from YouTube. They're comparing your digital experience not to other associations, but to every other digital service they use.
Think about it: Your members wake up and check emails sorted automatically by importance. They order coffee with two taps on their phone. They stream personalized content recommendations. Then they log into your member portal—if they remember their password—and feel like they've time-traveled back to 2005.
The Chronicle survey found that 64% of organizations cite lack of in-house technical expertise as a primary barrier. But here's the thing: In an age of AI tools and no-code platforms, deep technical expertise matters less than curiosity and willingness to experiment. You don't need a computer science degree to implement a chatbot or automate a workflow. You need someone willing to try, fail, learn, and try again.
Board dynamics compound the challenge. Association boards often bring decades of business experience and fiduciary responsibility to their roles. They've seen technology fads come and go, watched expensive implementations fail, and feel accountable for protecting the organization's resources. This prudent approach leads them to favor proven solutions over emerging technologies. They seek clear, immediate ROI because that's what responsible governance has traditionally required.
This conservative approach made sense in a slower-moving world. But when technology capabilities double every few years while your investment stays flat, standing still means falling behind.
The New Reality: Technology Is More Accessible Than Ever
Here's what many association leaders miss: The same AI revolution that's disrupting your value proposition is also democratizing technology capabilities. Tools that would have required a Fortune 500 IT department just five years ago are now accessible to any organization willing to experiment.
Consider custom software development. Traditionally, building a bespoke member portal or learning management system meant hiring developers, managing complex projects, and spending hundreds of thousands of dollars. Today, AI coding assistants can help a curious staff member build functional prototypes in days, not months. What once cost $250,000 might now be achievable for a small fraction of that investment.
The real paradigm shift isn't just about cost. It's about speed and iteration. Instead of spending a year planning the perfect system, you can build something basic, test it with a subset of members, gather feedback, and improve it—all within a few months. This approach, impossible in the old world of waterfall development, is now standard practice for organizations embracing modern tools.
But here's the catch: You have to invest something to capture these opportunities. Not necessarily millions, but enough to run meaningful experiments. Enough to free up staff time for learning and innovation. Enough to signal that technology is a strategic priority.
Your association doesn't need to match corporate technology spending dollar for dollar. But in a world where every company is becoming a technology company—including associations—you need to invest enough to stay relevant and deliver value to your members.
A Practical Path Forward
So how do you break out of the 3% trap without breaking the budget? The answer lies in strategic experimentation and gradual scaling.
Start with bullets before cannonballs. This concept, popularized by Jim Collins, means firing small, low-cost experiments before making major investments. Identify one specific member pain point where technology could help. Maybe it's the clunky event registration process. Maybe it's the inability to find relevant content on your website. Maybe it's the three-week turnaround time for membership applications.
>> Related: From Bullets to Cannonballs: Why Your Association's AI Experiments Aren't Scaling
Pick one problem. Set aside a small budget—even $5,000 can be enough to start. Give a curious staff member time to explore solutions. This might mean testing an off-the-shelf tool, building a simple automation, or creating a prototype with AI assistance. Set clear success metrics: reduced processing time, increased member satisfaction, or staff hours saved.
Create an innovation budget. Even if it's just 0.5% of your total budget explicitly earmarked for technology experiments. This sends two important signals: to your team, that it's safe to try new things, and to your board, that innovation is a planned activity, not a random expense.
Measure, learn, scale. When an experiment shows promise, document what worked and what didn't. Share these learnings across the organization. If something delivers real value, that's when you make the larger investment to scale it properly. If it doesn't work, you've learned something valuable for a fraction of what a full implementation would have cost.
Foster technological curiosity. The Chronicle survey's finding about technical expertise misses a crucial point. You don't need a team of developers. You need people willing to ask, "Could technology make this better?" Create space for staff to learn, whether through online resources (like Sidecar's AI Learning Hub), conference sessions, or simply time to experiment with new tools.
Remember: Every manual process is an opportunity. Every member complaint about your technology is market research. Every time a staff member says, "I wish we could..." is a potential experiment waiting to happen.
Beyond the 3% Barrier
The hidden cost of underinvesting in technology isn't just inefficiency—it's irrelevance. When members can get instant answers from ChatGPT, why would they navigate your clunky knowledge base? When they can network globally on LinkedIn, what makes your online community worth visiting? When they can learn anything on YouTube, what makes your professional development unique?
The answer isn't to match these platforms feature for feature. It's to invest enough in technology to deliver what only your association can provide: deep industry expertise, curated connections, and validated knowledge—all wrapped in a modern, accessible experience.
Breaking the 3% barrier doesn't require a massive budget increase overnight. It requires a shift in mindset from technology as a cost center to technology as a strategic enabler. It requires moving from annual planning cycles to quarterly experiments. It requires accepting that the biggest risk isn't trying something new—it's continuing to do things the way you've always done them.
Three steps can start your journey today:
First, audit your current technology spend. Not just the obvious items like your AMS or website, but everything: software subscriptions, consulting, staff time on manual processes. You might discover you're already spending more than 3%—just inefficiently.
Second, identify your highest-impact manual process. What task consumes the most staff time for the least member value? That's your first experiment target.
Third, run a 90-day pilot. Pick an AI tool, automation platform, or modern solution. Set clear goals. Measure results. Most importantly, learn from the experience.
The 3% problem isn't necessarily about spending more. It's about spending smarter, experimenting faster, and building the technological muscle your association needs to thrive. In the end, increasing your technology investment isn't a luxury—it's a necessity for remaining relevant and valuable to your members.
