Despite the benefits of moving operational software to the cloud — integrated systems, constantly updated software — nonprofit leaders remain wary of putting external-focused operations such as fundraising and grant management online. Those considering cloud-based software are more likely to use it for back-end systems such as payroll or human resources.

The reluctance comes at a time when nonprofits are increasingly using wider varieties of potentially incompatible systems. In 2022, half of nonprofit representatives surveyed said they use six or more technology tools, leading to up to two hours every day of lost time due to inefficient or incompatible systems. This year, that percentage, perhaps spurred by new pandemic-related demands, jumped to 61%, according to 2023 Trends and Insights into the State of Nonprofits, Schools, and Local Government, a research study from Austin, Texas-based MIP Fund Accounting, a cloud-based accounting firm that specializes in associations, government entities, K-12 schools and nonprofits.

Overall, 73% of people from responding organizations expect to increase their investment in technology during 2023, including 81% of government entities, 71% of nonprofits and 57% of schools, the three areas that represent most of MIP Fund Accounting’s primary markets.

The boost in spending mirrors optimism about revenue for 2023. Among the nonprofit respondents, 80% believe their organization’s revenue will increase during 2023, while only 10% believe it will stagnate and another 10% anticipate a decline. This optimism also included their outlooks on their ability to retain employees, interest rates, the labor market and inflation.

Cloud-based systems usually offer both integrated systems as well as constantly updated software. That said, nonprofit managers take a piecemeal approach to their use. By far, the most commonly used cloud software is accounting and financial systems, which are employed by 71% of nonprofits surveyed. Other types of cloud-based systems such as grant management (48%), payroll and HR (45%), fundraising (41%) and procurement (37%) trail its use.

But nonprofit managers are not in any rush to put their external-facing software, such as fundraising or grant management, in the clouds. Among nonprofit respondents not currently using cloud-based systems, 69% are considering using payroll systems and 52% are mulling accounting software.

The move to upgrade systems comes amid a time of bravado and wishful thinking. Among leaders from all sectors surveyed by MIP Fund Accounting — education, government and nonprofits — 75% anticipate improvements to the U.S. economy in 2023. Barely more than one-third (36%) believe the country is currently in a recession while 42% responded it is not. Even more heartening, 77% of all surveyed anticipate boosts to their revenue, including 82% of government organizations, 80% of nonprofits and 69% of schools.

MIP Fund Accounting conducted its research during the fourth quarter of 2022. Respondents were drawn from accounting, advancement and development, C-suite, HR and purchasing departments. MIP Fund Accounting undertook the research to create a snapshot of the education, government and nonprofit sectors as a whole, and gain insight into how organization leadership view the impact of the 2023 economic environment. A full copy of the report is available here: https://www.mip.com/resource/2022-nonprofit-research-study/

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