Information Technology and Financial Sustainability
This chapter emphasizes the role of information technology as support for financial sustainability in a nonprofit organization. The chapter introduces the reader to concepts related to technology and various aspects of management and financial management of a nonprofit organization. The reader will learn how to use computer and information technology to support a path toward financial sustainability.
Information technology refers to the means of access to information and related services that combine various support and devices, such as telephone, computer, software, and the Internet. In other words, information technology includes all computer-based information systems and related technology used by organizations in the operation of their programs, activities, or services.
When individuals make donations to a nonprofit organization during a fund-raising campaign, information about these donors is collected. Whether manually or online, information is processed in a form (e.g., name, address, telephone, e-mail, donation amount, and other information). Information is transferred to fund-raising or public relations staff who will either call, e-mail, or send a letter to thank donors. Information is also transferred to accounting staff who will record donations as a financial transaction and deposit them in either a restricted or unrestricted fund. Staff can go back to information collected to verify accuracy or make corrections of mistakes made when data was transferred. Information about donors can be classified and analyzed to make decisions about fund-raising planning and monitoring. Data can help monitor fund-raising practices and effectiveness, and assess which fund-raising strategies worked and which ones did not. The process that I just described is an information system. The term "information system" is used to designate the network, support, and devices that organizations develop and maintain to collect (or retrieve), process, store, and distribute data or information to support their decision-making and control processes. Information systems of organizations are usually managed by a chief information officer (CIO) or a chief technology officer (CTO) or a chief operating officer (COO) or someone with a dual role to carry the duties of a CIO (Box 21.1).
Box 21.1 Sample Job Description for Chief Information Officer
- As the chief technology expert of the organization, guides senior management in understanding IT initiatives and represents the company's technology needs and interests at all levels.
- Is responsible for developing and maintaining the IT budget, assuring quality assurance, business continuity solutions, and managing all centralized and distributed technology, including voice and data communication.
- Offers solutions to enhance the organization and know when to be decisive on IT matters after fully considering input from stakeholders.
- Develops and executes the direction and delivery for the technology systems to maintain performance, stability, reliability, recoverability, and application execution.
- Stays abreast of emerging technologies and makes appropriate recommendations regarding their applicability and implementation.
- Drives the creation and implementation of an IT strategy (planning, performance management, IT effectiveness, benchmarking, operating model, etc).
- Develops, implements, and monitors IT policies and controls to ensure compliance with laws and regulations, data integrity, availability, security, and confidentiality, including systems documentation.
- Establishes policies, procedures, and practices to operate at full capability, while supporting continuous expansion and multisite facilities.
- Provides guidance to the organization's program staff on the technological aspects of implementing policy goals.
- Leads and manages the architecture, design, and implementation of the systems and network infrastructure to provide low-latency, high-performance solutions.
- Ensures timely and accurate technology budget analysis and financial review.
- Gains immediate credibility with senior leadership and the IT staff by listening, creating relationships, and developing IT plans that align with business goals.
- Delivers continuous improvement in the identification and resolution of problems.
- Develops escalation procedures to ensure reliable operations and response to incidents.
- Meets regularly with executive teams to ensure all aspects of technology operations advanced are clearly defined and executed in a continuous and timely fashion.
- Develops and maintains an appropriate IT organizational structure that supports the needs of the business.
The development of an information system starts with an investigation to understand problems and needs; analysis of options; selection of the options and design of the system; execution of the design plan; and the monitoring, assessment, review, and maintenance of the information system. Information systems are multifaceted because of the different specialty interests and functions that exist within the structures of an organization. Information needs exist at the strategic (executives, leaders), management (managers), and operational (staff) levels. Some organizations develop and maintain:
- Executive information systems to satisfy the needs of executives and leaders to address strategic issues and make long-term decisions
- Management information systems (MIS) to help managers to make planning, implementation, control, and performance measurement decisions
- Transaction processing systems used by operational staff for data inputs, processing, and transfer
As I indicated in previous contexts, an effective information system must meet at least five criteria:
1. Accuracy: There is an internal control and check of information as well as a uniform procedures manual, which enables the production of accurate information.
2. Completeness: Summarized information from the system provides pertinent data that can be considered complete enough to inspire decision making.
3. Consistency: The system provides reliable, consistent, and uniform information.
4. Relevance: Information obtained from the system is relevant, appropriate, and trustworthy.
5. Timeliness: The system must be able to receive, process, edit, summarize, and adjust information in a timely manner, according to the needs of the users of your business.