The short answer
There's no single right percentage of your operating budget to spend on technology. Organizations differ too much in size, program mix, and how much of their work already runs through software for one number to fit all of them.
What matters more than the number is the structure behind it. A nonprofit is in reasonable shape on technology spending when three things are true: there's an actual line item for it, that line item covers the ongoing cost of running systems and not just the purchase price, and one person is accountable for the decisions that shape it. Organizations that get these three right tend to land on a defensible number naturally. Organizations that skip them struggle no matter what percentage they land on.
What the sector survey found
Verified benchmarks for "the right percentage" are hard to come by, and figures circulating online often turn out to be estimates rather than measured results. The most useful published data point instead comes from the 2024 Nonprofit Digital Investments Report, produced by NTEN and Heller Consulting from a survey of more than 300 nonprofits. It found that 45 percent of respondents believe their organization is spending too little on technology, against 49 percent who feel their spending is about right. The same report found that a nonprofit's general operating budget is, by a wide margin, the only significant source of technology funding: 69 percent of respondents said it was a significant contributor, while foundation grants specific to technology projects were rated a significant contributor by only 14 percent. Technology spending, in other words, mostly comes from money the organization was already going to spend rather than money raised specifically for it.
What the budget line should cover
A technology budget that only shows up when something needs to be purchased is missing most of what actually costs money over a year. A complete line should include:
- Subscriptions and licences for the software the organization already runs
- Hosting and infrastructure for anything built or configured specifically for the organization
- Support and maintenance, whether from a vendor contract or an internal or contracted role
- Security and backups, including the recurring cost of keeping both current
- Training, so staff can use what's already been bought
- A replacement reserve, so aging hardware and software don't become emergencies
- Advisory time for the decisions themselves, since someone has to evaluate options before money gets spent
Most of these are recurring costs rather than one-time purchases. A budget built only around the purchases will always look smaller than the technology actually costs to run.
The grant funding trap
Grant funding shapes nonprofit budgets in a way that works against technology spending specifically. Grants are typically approved annually and tied to a specific program or project, which rewards proposals for something new and tangible, like a platform purchase, and gives no obvious home to the ongoing costs of running it. A funder will more readily approve a case management system than the maintenance, support, and staff time that system needs every year after it's live.
The result is organizations that can point to a technology purchase but not to a technology budget. The purchase gets funded once, and then it competes every year afterward with everything else in the general operating budget, with no dedicated funding stream behind it. Budgeting for technology as a genuine annual line, independent of any single grant cycle, is how an organization protects the running costs that grants rarely fund on their own.
Making the case to a board
None of this changes without buy-in above the technology function. A board that treats technology as a cost center to minimize will keep approving purchases and denying the maintenance budget that keeps them working. A board that understands technology as an investment with ongoing costs asks a more useful question: what does this actually take to run properly, and what does the organization get for it.
That shift starts with the same three things covered above: a visible budget line, a definition of what it needs to cover, and a named owner who reports on it. A board that can see the number, understand what it includes, and know who's accountable for it tends to fund technology more predictably than one that only sees a line of unexplained expenses.
The takeaway
Skip the search for a magic percentage. Build the budget line so it covers what technology actually costs to run, not just what it costs to buy, and put someone in charge of it. Datarex works with nonprofits and social service organizations on exactly this kind of planning, and engagements are scoped to be approvable by an executive director or a board. See how pricing works for how that's structured.