Learn how to think about and manage your IT budget as a nonprofit, what you can cut, and where you should not cut.
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Nonprofit IT Budgeting Strategy
Community IT CEO Johan Hammerstrom walks through how to think about your nonprofit IT budget at any time, but particularly if you anticipate facing steeper challenges and may have to scale back. What are the three “buckets” of your IT needs, and how can you best manage your costs while keeping efficiency and functionality? What is a nonprofit IT budgeting strategy that will work for you in 2026?
More extensive resource on nonprofit IT budgeting:
Discovering the Value of Your Nonprofit IT Budget webinar with Johan Hammerstrom.
Takeaways:
In decades of assisting hundreds of nonprofit clients with putting an IT budget together – often coaching how to create and talk about the budget with stakeholders, executives, and board members – Community IT CEO Johan Hammerstrom has come to think of your nonprofit IT budget in three “buckets.” Every nonprofit has a different budget process, so take that into account when connecting your IT needs and priorities to your own process.
Remember that your IT budget is not a technology task. It is a technology + business needs task. You need to incorporate the big picture. And don’t forget that IT is just another strategic asset that you manage like your lease, your programs, your payroll.
Don’t make assumptions about what is “too expensive.” If you want to recommend something in your IT budget, make the case for it.
Necessity/Non-Negotiable
Licenses and subscriptions are non-negotiable. Luckily, licenses are usually predictable, fixed costs per seat.
Infrastructure needs to be current.
Cybersecurity is non-negotiable. Make sure your protections are following best practices. Use your financial auditing process and insurance checklists to update and upgrade your cybersecurity.
Staff training on using the IT available and cybersecurity to protect your organization, staff, and funds.
Can Postpone (and Plan For)
Laptop replacements. We recommend a 3-4 year replacement cycle – that is, you replace 1/4-1/3 of your laptops every year, so that no staff member is working on a laptop that can’t implement security patches and updates, or is holding back productivity because that laptop is so old and slow. This is specific to your organization, but we recommend not stretching this replacement cycle beyond a 5 year cycle.
Redesigning your website. Again, this depends on your business needs, which nonprofit staff and executives know better than anyone. Use that knowledge to weigh your options against your budget.
Older server replacement/moving to the cloud for all functions. Are your older servers doing anything crucial for your organization? Are they doing something that doesn’t have any alternative in the cloud? How much will the server cost to replace? What are the costs to the nonprofit if the old server goes down?
Everything that can be postponed should come down to a business decision.
Discretionary (Can Postpone Indefinitely)
Updating systems like a CRM or other software. Where there is no critical immediate impact of not updating, the organization can make a long term plan to do the updates relative to other, more critical and immediate needs, knowing that times and needs may change, costs may come down, and/or AI may change the software/system landscape entirely.
When facing difficulty with funding, you will need to prioritize immediate needs and long-term needs.
Having a relationship with your funder where you can talk about your planning and decision making can help. Having a nonprofit IT Roadmap is a big help.
Talking with Stakeholders About Your Nonprofit IT Budget
Start with connecting your IT budget and systems to your business needs. If you can’t justify certain systems or software because they are crucial to your business, consider upgrading or eliminating those expenses.
Having a strong inventory of your hardware and software, and a good on-boarding and off-boarding system, so that you can present all of your expenses as essential to your staff and business will help.
The intangibles need to be part of the conversation too. Nonprofits bring resourcefulness and empathy to these decisions, so don’t discount those assets. Nonprofits have a deep knowledge of their business and their community. Use that to your advantage to learn from staff where they could find value in the nonprofit budget, where they could see an improvement that helped their workload and maybe frees up budget for other needs.
Community IT knows 2025 was very challenging to our nonprofit sector. With all of the budget challenges our friends and colleagues are negotiating, we hope we can help nonprofit IT be the least difficult to manage.
Presenters
Johan Hammerstrom’s focus and expertise are in nonprofit IT leadership, governance practices, and nonprofit IT strategy. In addition to deep experience supporting hundreds of nonprofit clients for over 20 years, Johan has a technical background as a computer engineer and a strong servant-leadership style as the head of an employee-owned small service business. After advising and strategizing with nonprofit clients over the years, he has gained a wealth of insight into the budget and decision-making culture at nonprofits – a culture that enables creative IT management but can place constraints on strategies and implementation.
As CEO, Johan provides high-level direction and leadership in client partnerships. He also guides Community IT’s relationship to its Board and ESOP employee-owners. Johan is also instrumental in building a Community IT value of giving back to the sector by sharing resources and knowledge through free website materials, monthly webinars, and external speaking engagements. He has assisted hundreds of nonprofits over his decades of experience at Community IT and has been instrumental in assuring that all clients have access to strategic planning – a service that is uncommon at outsourced IT providers but that Community IT feels is an essence of what we can provide to nonprofit clients to help them be successful at their missions. Johan was happy to talk about nonprofit IT budgeting strategy with Carolyn.
Carolyn Woodard is currently head of Marketing and Outreach at Community IT Innovators. She has served many roles at Community IT, from client to project manager to marketing. With over twenty years of experience in the nonprofit world, including as a nonprofit technology project manager and Director of IT at both large and small organizations, Carolyn knows the frustrations and delights of working with technology professionals, accidental techies, executives, and staff to deliver your organization’s mission and keep your IT infrastructure operating. She has a master’s degree in Nonprofit Management from Johns Hopkins University and received her undergraduate degree in English Literature from Williams College.
She was happy to have this podcast conversation with Johan about a Nonprofit IT Budgeting strategy for challenging times, and hopes it is helpful to our nonprofit audience.
Ready to get strategic about your IT?
Community IT has been serving nonprofits exclusively for twenty years. We offer Managed IT support services for nonprofits that want to outsource all or part of their IT support and hosted services. For a fixed monthly fee, we provide unlimited remote and on-site help desk support, proactive network management, and ongoing IT planning from a dedicated team of experts in nonprofit-focused IT. And our clients benefit from our IT Business Managers team who will work with you to plan your IT investments and technology roadmap if you don’t have an in-house IT Director.
Being 100% employee-owned is important to us and our clients. It is an important aspect of our culture as a business serving nonprofits exclusively for almost 25 years. Your Nonprofit IT Budgeting strategy is important to Community IT. Unlike most MSPs, Community IT considers budgeting and strategic management a major part of our services to our clients.
We constantly research and evaluate new technology to ensure that you get cutting-edge solutions that are tailored to your organization, using standard industry tech tools that don’t lock you into a single vendor or consultant. And we don’t treat any aspect of nonprofit IT as if it is too complicated for you to understand.
We think your IT vendor should be able to explain everything without jargon or lingo. If you can’t understand your IT management strategy to your own satisfaction, keep asking your questions until you find an outsourced IT provider who will partner with you for well-managed IT.
More on our Managed Services here. More resources on Cybersecurity here.
If you’re ready to gain peace of mind about your IT support, let’s talk.
Transcript
Carolyn Woodard: Welcome, everyone, to the Community IT Innovators Technology Topics Podcast. I am Carolyn Woodard, your host, and today I am happy to have our CEO, Johan Hammerstrom, with me.
Johan, would you like to introduce yourself and tell us why we should listen to you about nonprofit IT budgeting?
Johan Hammerstrom: Thank you, Carolyn. Yeah, happy to be here. My name is Johan Hammerstrom. I’m the CEO at Community IT. And IT budgeting is something that we’ve helped hundreds of nonprofit organizations with. It’s an integral part of our service and something that we have a lot of experience with.
Carolyn Woodard: And you, personally, this is something that you often are assisting our clients with.
Johan Hammerstrom: Yes, I’ve been helping nonprofits put together IT budgets for decades now. I’ve worked with a lot of organizations directly, and then also assisted our team with working on budgets for their clients.
Carolyn Woodard: And I imagine this is not something that all MSPs do?
Johan Hammerstrom: I think that’s probably right. I mean, there’s a range of MSPs, managed services providers and IT support providers. And many of them are mostly focused on the technology.
If they are helping out with a budget, they’re basically just providing a list of technology solutions to purchase and what those solutions cost.
From our perspective, budgeting is a more complicated and involved process that really involves and requires effective partnership with the organization. And that’s a central part of the service that we provide. I think there are some managed services providers that do provide assistance around budgeting in the same way that we do, but it’s not universal among managed service providers.
Carolyn Woodard: And is that something that we have learned that we need to do because we only serve nonprofit clients?
Johan Hammerstrom: Well, I think it comes out of our mission-driven approach. Our goal is to really help our customers succeed at their missions. That’s why we do this work. We only work with nonprofit organizations, and we really believe strongly in the work that they’re doing.
In order for them to be effective, we need to understand what their priorities are, how their mission is accomplished, and how IT fits into them accomplishing their mission. We don’t consider ourselves to be successful with our customers if we’re not engaged at that level.
We found early on that in order for technology to be effective at a nonprofit organization, it needs to be planned. It needs to be prioritized. Good decision-making needs to happen around technology solutions. And the budget is an element of that process, but it’s a pretty critical one.
Carolyn Woodard: And that seems like a good segue into how does one, how do we recommend that nonprofits should budget for IT? And I’ll just say we have a couple of webinars about this, so we could spend an hour just talking about ways to incorporate IT budgeting into a budget process.
But can you kind of condense that down and give us some tips that you would advise?
Johan Hammerstrom: Yeah, absolutely. And I think it’s helpful to preface it. As I mentioned earlier, I’ve worked with literally hundreds of nonprofits, helping them with their budget. And one of the first things I learned is that every organization has a different budgeting process.
Some are very rigorous, some are pretty flexible, some happen well ahead of the start of the fiscal year, some happen at the last minute. One of our clients that I worked with early on, I put a lot of effort into the spreadsheet. I put an Excel spreadsheet together with all these different categories of where their IT spending needed to go, organized and prioritized, and spent a lot of time getting the spreadsheet looking really nice and submitted it to them.
And then when the budget was approved, they showed me their version and they had taken my entire spreadsheet, copied it and pasted it into a single cell of their Excel spreadsheet. And at first, I was like, what? No! all my hard work.
And then I realized, IT is just a small part of their overall budget. And that was their process and their approach. So it was a good lesson that the first step of working on an IT budget is to understand how the organization does its budgeting process, how it thinks about budgeting, how it thinks about prioritizing initiatives, so that you can frame the technology priorities in, you know, business terms that make sense to the organization.
And it’s helpful to, as you’re working on an IT budget, just keep in mind that it’s not a technical task, it’s a technology plus business exercise. Keeping the business side of it in mind is really important in prioritizing and framing the technology initiatives and solutions that need to be budgeted for in the coming fiscal year.
Carolyn Woodard: I think we often talk about people who manage programs, projects, your lease, your other infrastructure, your operations, are very capable of managing IT, but sometimes there’s just that insecurity, I guess, or just a feeling that you don’t know enough.
So, I like that idea of approaching it as you would manage any other asset or strategic plan, or budget that you had to think about. Especially if you have a trusted partner who can help you with, what is the IT and what is it going to do for you?
But then after you have figured out what’s your style and how do you do it – do you budget early? Do you do it last minute? Are there some things that you have to include or how do you think about what you include in an IT budget?
Johan Hammerstrom: One way to think about what to include and what, honestly, I think the best approach is to prioritize. Include everything. That’s something I tell our team all the time, is don’t make the decision for the customer. Don’t assume that they can’t afford this particular solution.
If we think it’s important, let’s make the recommendation and it can always be cut out of the budget, but at least it’s there and it’s been identified as something that the organization needs.
It’s always important to include everything in the first version of the IT budget with the understanding that the organization may not be able to afford everything that’s been included in the budget.
I think of it in three different categories.
There’s the non-negotiable category; you have to pay for these things to function as an organization.
Some of the items that show up in the non-negotiable category are subscriptions. If you’re a Microsoft 365 customer, you’re going to have to pay that license, or your email is not going to work, and that’s unacceptable. Those items are pretty self-explanatory. If you have an office, you know, you have to pay for the internet connection. The networking infrastructure, for the most part, needs to be current.
And then cybersecurity is an area that I would consider non-negotiable. I think maybe five years ago, it was more thought of as more discretionary, but now given the prevalence of cybersecurity threats and the requirements that financial auditors and insurance companies are including in the financial audit process and in insurance applications, things like next-generation antivirus, security awareness training, and fully functioning backups, those are really now in the non-negotiable category. So that’s the first group.
The second, I would say, are those items that can be delayed, potentially, if there’s major financial constraints on the organization, if there are other priorities, if there’s funding issues. Things like laptop replacements. We strongly recommend a three- or four-year laptop replacement cycle, depending on how much wear and tear an organization’s laptops get. And it really does vary from organization to organization. Some of the groups that we work with, their staff are working from home, they never go anywhere, their laptop’s sitting on the desk. That laptop could last for four or five years. Other organizations, their staff are organizers, they’re out in the field, they’re meeting with people on an ongoing basis, they’re taking their laptops with them everywhere they go. Those laptops probably need to get replaced every three, maybe four years. So that’s a good example of there’s no one size fits all decision-making process.
It gets to the business requirement. How are the laptops being used? What is the organization? What do their staff need them for? And that can help inform that decision-making process. Do we need to have a three-year laptop replacement cycle? Can we extend it for another year or two? I would caution heavily against going beyond five years because of just the wear and tear. Just from operating, computer hardware starts to break down, people start to have funny issues, and it creates a lot more problems. But anyways, that’s one area.
Redesigning your website could be another one where, and again, it depends on the business need. What role does the website play for the organization? If you have an out-of-date website that looks a little long in the tooth, is that going to create problems? Is that going to undermine your standing with donors, or funders, or your constituents? Or is your website just an online brochure? We’re working with an organization right now that doesn’t have a website, which is inconceivable in 2025. But they’ve been around for many years, and it’s on the list to get a website, but they’ve survived without one. And that’s another great example of everything comes down to a business decision.
Carolyn Woodard: And the culture and the organization itself.
Johan Hammerstrom: Yeah. Another one, this is maybe a little bit more of a niche example, but I think it serves to illustrate the larger point, and that would be older servers. You know, there are still organizations that maybe have a server or two in their office. Generally, those servers in this day and age are not really doing anything critical for the organization. Maybe they’re hosting a lot of media files, you know, photos and videos. It’s very expensive to replace a server.
That’s a good example of where you don’t want to just put a line item in your budget for $10,000, $15,000 to replace a server.
You want to have a conversation. Do we need to replace the server? What’s the business impact if the server goes down? What’s the long-term plan for what that’s the function that that server is playing? Do we have on our five-year roadmap a plan to replace the server, move it to the cloud? Maybe it’s hosting files for a program that’s no longer being, you know, pursued by the organization and it could all just be retired.
It’s a niche example, but it serves to illustrate the point that there are very few items on an IT budget that shouldn’t be examined from a business perspective.
Carolyn Woodard: And then you said there’s a third kind of category?
Johan Hammerstrom: The third category are discretionary. Those are things where you could postpone them indefinitely. And one example might be upgrading a business system.
If you have a database, like a case management system or a program management system, that’s serving the organization well, but maybe is an older system that needs to be upgraded. Those sorts of projects can be very expensive. And if the system is still meeting the needs of the organization, that’s one where there’s no business impact. There’s no critical business impact from not upgrading the system.
Now, there are long-term business impacts related to using antiquated systems that the organization really should have a long-term plan for addressing. But in situations where there’s difficulty with funding, those are the kinds of IT investments that can be delayed if necessary.
Relative to the other ones, at the end of the day, if you don’t pay your Microsoft subscription and don’t have email, it doesn’t matter how good your business system is, your line of business system is, you’re not functioning as an organization.
If your staff have six or seven-year-old laptops, they’re probably not getting much work done during the day because their laptops are unusable. So even in that case, having the latest and greatest business system isn’t making a big difference.
It’s not so much that it’s not important and doesn’t have the long-term strategic value for the organization in accomplishing its mission. It’s more that you’ve got to address the fundamentals first before you can address the higher-level strategic initiatives.
Carolyn Woodard: I think you’ve already covered my next question, which was, in this challenging environment, well, I’ll say nonprofits are always concerned about their budget. I don’t think there’s ever a time when any nonprofit is thinking, we’ve got plenty of funding and woohoo.
It’s always a challenge, but it seems like this year has presented some new and intriguing challenges that nonprofits may not have faced before.
We’ve had lots of stories and clients where their work was never political before. And then all of a sudden, they’re getting a lot more scrutiny for things that they hadn’t had scrutiny before. Maybe they have donors who are getting shy, or they had federal money or state money that they’re no longer going to be able to get.
If your budget is contracting, I think you talked a little bit about where can you cut, or put off until later, but can you just go over that again? It sounded like you were saying there’s some immediate things that you have to pay for every year, like email.
Johan Hammerstrom: Yeah. I mean, subscriptions, software subscriptions, you absolutely have to pay for. And even there, you should look at what are the essential systems that you have to have. I think there is an opportunity around software solutions to do an inventory of what the organization is using and identify whether or not it’s necessary.
There’s a separate issue related to that around data security and data privacy that there may not be a cost associated with, that also should be addressed.
But from a cost standpoint, I think one of the common examples is Adobe software, which is very expensive. And in good times, a lot of organizations will just buy a bunch of Adobe subscriptions for all their staff. And in leaner times, I think it’s worth asking the question. Everybody needs email. That’s obvious on the face of it. But does everybody need Adobe Creative Cloud? How many people in the organization really need that software?
Are there subscriptions for staff who are no longer with the organization?
There is an opportunity to go through and inventory what the organization has and identify, do we need all that we’re paying for right now, or can we reduce our spend in that area?
In a similar way with laptops, for organizations that are reducing staff size, they may have a lot of laptops that were returned by their staff that they’re no longer using.
Those could end up, instead of renewing a warranty or purchasing new laptops, you could potentially reshuffle the laptops that you have in such a way that newer laptops that are on the bench could be distributed to staff whose laptops are past their usable life.
There are opportunities for consolidating and doing cost saving when the organization is reducing its staff size or cutting back on its budget in other ways.
Carolyn Woodard: I think that is something that when we have new clients and we do our initial assessment for them; it’s kind of shocking how many nonprofits may not have a current inventory of either their laptops or their licenses. And so that is often something that we can find savings for them if they don’t have a good offboarding process even before these times, they may be paying for licenses for people who left, a year or a couple of years ago.
You should only be paying for the license that people are using.
Johan Hammerstrom: Yeah, that’s a great point, Carolyn. And I think that’s a good example – inventory management is a subset of IT management, and budgeting is an activity or a subset of IT management. All of these things fall under the larger function of IT management that can be hard to keep up with, particularly the proactive parts of it.
And that gets back to the first question that you asked – do all MSPs help their customers with budgeting? I mean, a lot of MSPs probably help their customers with learning the cost of solutions, providing them cost estimates. But in our view, budgeting is a much larger process that needs to be integrated into overall IT management, and not nearly as many MSPs provide IT management as part of their service.
Carolyn Woodard: Right, right. That makes sense. So, I think you talked a little bit, too, about one place you can find savings, is in that inventory and licenses. And you talked before about looking at projects, maybe, and seeing if there are projects that you can put off, or maybe talk to your funders about – we want to move this server to the cloud, and we’ve gotten an estimate that it’s going to take this much time of our staff to go through and figure out what the server is doing, and how we’re going to change that. Talk to your funders about when and how you could do something like that.
Johan Hammerstrom: Yeah. I mean, I think, and this is going to sound fairly self-serving, but in my experience, most nonprofit organizations are already running a very tight ship and are investing just enough in IT. And in our experience, there’s not a lot of wiggle room to cut more without starting to have a negative impact on the ability of the organization to do its work.
Carolyn Woodard: Yeah. No. Sorry, everyone. It’s hard. It means making some really critical decisions.
And that’s another reason why it rises to this level of budgeting. You know, your executive, your leadership team needs to be really looking at how do you make these decisions because all of them are going to be painful. And maybe even you have a board member who is helping you with that strategic planning.
Johan Hammerstrom: Yeah. And good management and good leadership is really the best investment you can make at any time, but particularly in times like these.
Carolyn Woodard: Yeah. Do you have any advice for talking with those supporters about IT budgets, everyone from the staff who are going to be impacted to leadership, to board members?
Johan Hammerstrom: I think I’m going to sound like a broken record, but talking about IT in business terms is really important. I can’t overemphasize that enough.
It doesn’t really help to talk about IT in technology terms. You always need to connect a technology solution to the business need that it’s meeting. And if you can’t, then it really calls into question whether that solution is necessary. If it doesn’t tie to some business need you can speak to, then why do you have that solution in place?
Carolyn Woodard: Is it even a solution?
Johan Hammerstrom: Yeah, right. It’s not solving any problems or addressing any needs that the organization has. I think that it’s always helpful to have that conversation. At whatever point IT is connecting to the organization, that’s a good place to have that conversation.
So, if you’re an IT manager at an organization, and you report to the Director of Operations or the Vice President of Operations, then that’s the most important conversation because that’s the interface, if you will, between technology and the business needs of the organization. That’s the place to start having the conversation and identify what business needs are being met by all of these technology solutions.
And then you can expand that conversation out from there in a way that will make sense to key stakeholders throughout the organization.
Carolyn Woodard: That’s great. And I really like the way you put it that, well, I guess it’s sobering to think about the fact that so many nonprofits are already running such a lean organization and really don’t have a lot of places they can cut without there being pain, more pain points.
But if you think about it, that’s also an asset in this process. We have nonprofits who are used to keeping an old car running for a long time. And that is something that you bring to the table, is that ability to make those decisions.
And I guess we would say, when I’m hearing you say, is, you know, make sure you’re getting those security updates, that you’re still operating a car that has brakes. And when it gets to a point where it doesn’t have brakes anymore, you’re going to need to upgrade.
Johan Hammerstrom: Yeah, and I think empathy needs to be a part of the process as well.
Having worked with nonprofit organizations for over 25 years, I think the number one lesson I’ve learned is that almost every nonprofit is resource constrained. And to your point, they’re limited by the resources that they have. And I think that’s just the reality of doing work in the nonprofit sector.
It’s very challenging and difficult work at times and it’s made even more challenging and difficult because of the limitation, limited resources that nonprofits have to do this work. Flexibility, empathy, resourcefulness, you know, those are the qualities that I think the most successful nonprofits have in abundance and it’s valuable. Those things need to be a part of the budgeting process as well. You know, the intangibles are also critical in order for nonprofits to survive and succeed, particularly in challenging times like now.
Carolyn Woodard: Well, I think that’s a great place to leave it. We know that our nonprofit sector can do hard things. So, a budget is a hard thing, but it’s probably not even the hardest thing that you’re looking at.
Thank you, Johan, for your time today. I think this was really helpful, hopefully, to people who are thinking about their budgets. I know a lot of nonprofits don’t do budgets at year-end anymore. It might be a process that you’re going to start, you know, in the first quarter or second quarter, but keep these things in mind as you are thinking about where you can pare.
Johan Hammerstrom: Great. Thank you, Carolyn.
Carolyn Woodard: Thank you.
Photo by Donnie Rosie on Unsplash