Whether they’re techies or not, nonprofit staffers are using software to help fulfill their missions. A newly-released report aims to quantify that nonprofit tech market. And in doing so, the study asserts that some organizations aren’t satisfied with their tech options; in fact, some aren’t even sure what their options are.

Software Costs and Profit: Findings of a Nonprofit Sector Survey (download the .pdf document), a report from Idealware, a nonprofit dedicated to reviewing software for nonprofit use, reveals that nonprofits spend an average of $26,000 per year on purchasing and licensing software. The report conservatively estimates the nonprofit software market represents more than $960 million annually.

“Regardless of the amount of money being spent, It’s not being effective,” suggests Idealware founder Laura Quinn, who surveyed people who assess software purchases for tech-savvy nonprofit organizations for the study, the first published by her new enterprise. Based on her study's findings, Quinn infers that nonprofits are not getting all the information they need about software options, and have difficulty spending their money wisely when it comes making software purchases. "Some nonprofits spend too much money on software they don't need, while others don't invest the money for the software they need to do their job," she concludes.

Many survey participants seem less than assured about their organization’s software capabilities. Twenty-six percent said their organization does not have the right tools, while 58 percent said their organization does have the right software tools. And though 49 percent of respondents believe their technology teams are aware of the most helpful tools, 26 percent said their tech teams do not know about all the software that could help their organizations.

In their survey comments, nonprofit staffers implied that they’ve had a hard time tracking down the right tools for their needs. One participant complained, “We desperately need another way to learn about some of the available tools.” Another put it more bluntly, stating, “It’s a nightmare.” Study participants hailed from across the nonprofit spectrum: twenty percent from nonprofits providing adult services, about 13 percent from legal organizations, about six percent from groups dealing with international relief and justice, about six percent from community development groups, about six percent from environmental nonprofits, and almost five percent focusing on politics and policy.

According to the study, the higher the nonprofit’s annual budget, the smaller the portion of that budget spent on software. For instance, survey participants working for groups with annual budgets of between $1,001 and $100,000 spend almost two percent of their annual budgets on software, while those organizations with yearly budgets between $5 and $10 million allocate less than half of one percent of those coffers to software. “Technologists I speak to feel there’s not enough being spent on software,” comments Quinn.

Twenty percent of the nonprofits participating in the survey have average annual budgets of $500,000 or less; 18 percent have budgets of $501,000 to $1 million; about a third of those participating in the survey work with between $1 and $5 million; and 29 percent have budgets of $5 million and above.

Nonprofit staff who took part in the survey said their organizations devote a total of 12 person days to researching software on average each year. In other words, if four people spent three days analyzing software, this would total 12 person days. Quinn also points to the need for better understanding of the time it takes to put lower-cost software to use, asserting that “People tend to over-prioritize cost and under-prioritize time spent” on software implementation. “An organization's resources matter, certainly,” she adds, “but it's important to look at the whole picture….There's an opportunity to save nonprofits real money by helping them choose software wisely.”

Nonprofits surveyed were recruited for participation through email lists from tech-oriented groups including The Nonprofit Technology Enterprise Network, an organization that provides educational resources about technology to nonprofits; The Information Systems Forum, an email distribution list for nonprofit professionals interested in information technology; and Quinn’s own Technology on a Shoestring mailing list for nonprofits interested in tech. A total of 261 people were surveyed over a two week period in July.

Note: Kate Kaye is a member of the Idealware advisory board.