A nonprofit typically spends about 1 percent of operating budget on information technology. The median nonprofit that reports the technology line on its Form 990 books 1.1% of total functional expenses there, and that figure holds between 1.0% and 1.2% at every size from $100k in revenue to more than $250M. That is the answer to the question as asked, and on its own it is close to useless as a target. Within a single size band the middle half of organizations runs from 0.5% to 2.1% of expenses, a spread 10 times as wide as the difference between the size bands themselves, so no peer ratio at this level can tell a leader what their own nonprofit IT budget should be.
In the $3M to $50M revenue range, the median organization reporting the technology line books $81,858 a year on it. The middle half of those organizations runs from $30,808 to $207,469. Measured against headcount, the median works out to $1,281 for each W-2 employee.
This benchmark cannot answer that on its own, because the median sits near 1.1% of expenses at every organizational size. What it can do is locate an organization in the distribution: below 0.5% of expenses falls in the bottom quarter of reporting organizations, and above 2.1% falls in the top quarter. Whether that position is the right one depends on the organization’s own systems, staffing and contracts rather than on the ratio.
From $100k in revenue to more than $250M, a span of 2,500x, the median reporting filer books between 1.0% and 1.2% of total functional expenses on information technology. The entire range of nonprofit scale moves the benchmark by 0.2 points. Mission area moves it further than size does: within the $3M to $50M range the median runs from 0.77% in philanthropy, voluntarism and grantmaking to 1.46% in mental health and crisis intervention.
In the $3M to $50M range the middle half of reporting organizations runs from 0.5% to 2.1% of expenses, a width of 1.6 points against the 0.2 points separating the extremes of the revenue bands. Two organizations of identical size routinely sit at opposite ends of that range. Whatever decides a nonprofit IT budget sits inside the organization rather than in its size, and the only place to find it is that organization’s own systems, staffing and contracts.
Only 34.2% of filers report anything above zero on it, and checking extract zeros against the raw Form 990 XML shows most of those are absent data rather than reported zero spending: 77.4% of the zeros examined carried no technology element in the source filing. The reporting rate climbs with size, from 14.1% of organizations under $100k in revenue to 77.1% of those above $250M. That makes this a finding about how the sector keeps its books before it is a finding about spending. Most nonprofits cannot say what they spent on technology last year without rebuilding the figure from invoices.
Boards and executive teams set the nonprofit IT budget with almost no external reference point. The question that comes up in every budget cycle, whether the organization is spending too little or too much on technology, has until now been answered with anecdote, vendor marketing, or benchmarks borrowed from industries that do not resemble the sector at all. This report answers it from the sector’s own filings.
The four parts that follow take the benchmark apart. Part one sets out the flat line and the dispersion hiding inside it. Part two puts dollars on the midsize nonprofit. Part three measures the reporting floor. Part four tests the flat line against nine tax years and against the 50 largest metropolitan markets, and neither one bends it.
The median nonprofit reporting information technology on its Form 990 books 1.1% of total functional expenses on that line, and that figure barely moves with organizational size. Every revenue band from $100k to more than $250M lands between 1.0% and 1.2%, a spread of 0.2 points across a revenue span of 2,500x. The one break in the pattern sits at the bottom, where filers under $100k in revenue post a median of 2.1%, an arithmetic consequence of a small expense denominator rather than a sign that the smallest organizations invest more in technology. Pooled across the whole universe, the 111,363 filers reporting the line show a median of 1.1% with a quartile range of 0.5% to 2.3%.
| REVENUE BAND | MEDIAN IT SHARE OF EXPENSES |
|---|---|
| Under $100k | 2.1% |
| $100k to $500k | 1.2% |
| $500k to $1M | 1.0% |
| $1M to $3M | 1.0% |
| $3M to $6M | 1.1% |
| $6M to $10M | 1.1% |
| $10M to $25M | 1.1% |
| $25M to $50M | 1.1% |
| $50M to $75M | 1.0% |
| $75M to $250M | 1.2% |
| $250M or more | 1.1% |
The variation that matters is inside the bands, not between them. In the $3M to $50M range the quartile range alone runs from 0.5% to 2.1%, a width of 1.6 points, which is 10 times the spread of 0.2 points between band medians. Two organizations of identical size routinely sit at opposite ends of that quartile range. The band structure also shows how loose the distribution is at the top: among bands above $100k in revenue, the $250M+ band carries the widest quartile range, from 0.2% to 2.5%, meaning the largest organizations are the least consistent with each other rather than the most.
An organization that lands at 1.1% of expenses has learned almost nothing about itself, because that is where the median sits at every size. What locates a figure in these data is its position within the distribution: below 0.5% falls in the bottom quarter of reporters, above 2.1% falls in the top quarter, and those thresholds hold across the whole $3M to $50M range. One limitation belongs alongside that reading. These quartiles describe the spread of reported line 14 amounts, and line 14 excludes technology payroll, telecommunications and depreciation by instruction, so an organization that runs technology through salaried staff will place low on this scale for reasons that have nothing to do with underinvestment. A quartile position is a question about an organization, not an answer on its own.
Counting dollars instead of counting organizations gives a different and higher figure. Pooled across the universe the aggregate ratio is 1.4% against a median of 1.1%, because the largest filers dominate any dollar-weighted total. For a board asking whether its own technology budget is typical, the median is the right comparison. The appendix sets out how the two diverge band by band.
In the $3M to $50M revenue range, the median organization reporting information technology on its Form 990 books $81,858 a year on that line. That range holds 53,621 filings, of which 27,548, or 51.4%, report the technology line above zero. The quartiles run from $30,808 to $207,469, and the ninetieth percentile sits at $461,037. Expressed as a share of expenses the same group lands at the sector median of 1.1%, with quartiles of 0.5% and 2.1%. Of the organizations in this range that report the line, 44.4% already book more than $100k a year, which is 22.8% of all filers in the range including those that report nothing.
Per employee, the picture that stays flat as a share of budget turns into a rising one. The median reporting organization in the $3M to $50M range books $1,281 for each W-2 employee. Across all bands the per-employee median climbs steadily, from $868 in the $100k to $500k band to $2,956 above $250M. Technology holds flat as a share of budget while rising per head, which is consistent with larger organizations running more systems for each person rather than devoting a larger share of their money to technology. The appendix carries the construction and the full ladder.
The dollar quartiles and the per-employee figure can place the same organization in two different positions, and the disagreement carries more information than either figure alone. An organization sitting below the first quartile of $30,808 in dollars while sitting near the median of $1,281 for each employee is usually showing a staff base that is small relative to its budget, not a technology line that is underfunded. The per-employee figure is the more stable of the two because it does not depend on the size of the expense base, but it carries its own limitation: it uses the reported W-2 employee count, so organizations that deliver programs largely through volunteers or contractors will look expensive for each head without spending more.
Mission area moves the benchmark further than organizational size does. Within the $3M to $50M range, the median technology ratio reported on the Form 990 runs from 0.77% in philanthropy, voluntarism and grantmaking to 1.46% in mental health and crisis intervention, a spread of 0.69 points against the 0.2 points that separates the extremes of the revenue bands. Housing and shelter sits at 0.82%, recreation and sports at 0.88% and employment at 0.99%, while arts, culture and humanities reports 1.27% and community improvement and capacity building 1.19%. The three largest groups by filer count cluster tightly: education at 1.14%, human services at 1.02% and health care at 1.10%.
The dollar figures separate further than the ratios do, because sectors of similar budget size carry different expense structures. Median reported technology dollars run from $46,798 in recreation and sports and $53,437 in philanthropy, voluntarism and grantmaking up to $118,027 in health care and $127,904 in mental health and crisis intervention. Reporting propensity varies too, from 42.8% in housing and shelter to 57.0% in arts, culture and humanities, which means the sector medians rest on visibly different fractions of their populations. Sector is assigned by joining the filer identification number to the IRS Exempt Organizations Business Master File and taking the first letter of the NTEE code, a join that reaches 73.0% of filers in the range, or 39,155 of 53,621.
The median across all mission areas misreads any organization whose field sits away from it. A mental health provider reading the median across all mission areas, 1.09%, will conclude it is overspending when it lands at 1.46%, which is exactly the median for its own field; a grantmaker of the same size reading the same all-sector figure will conclude it is fine at 1.0%, when its field’s median is 0.77%. The limitation here is real and constrains how hard this cut can be pushed. The join to the Business Master File reaches 73.0% of filers in the range, and the filers it misses, those whose Business Master File record carries no NTEE code, are not missing at random and skew toward smaller and newer organizations, so the sector rows are directional. The ten groups shown are the largest by filer count, and sector medians are not additive with the band medians, so the two cuts do not combine in one sentence.
The share of filers putting any number on the information technology line climbs from 14.1% of organizations under $100k in revenue to 77.1% of those above $250M. The climb does not reverse at any band: 27.3% at $100k to $500k, 41.4% at $1M to $3M, 51.9% at $6M to $10M, 59.5% at $25M to $50M and 67.6% at $75M to $250M. Across the full universe only 34.2% of filers carry a positive technology figure, which means the sector’s Form 990 filings mostly say nothing at all on the subject.
This gradient is a measure of accounting practice at least as much as of spending, and the raw filings settle the question. The Statistics of Income extract collapses a blank line and a reported zero into the same value, so a zero in the extract cannot be read as evidence of no spending. Checking 9,295 extract zeros against their source Form 990 XML found that 7,191 had no information technology element in the filing at all, against 2,104 that carried a reported zero. That is 77.4% of zeros being absent data rather than reported zero spending. The likeliest explanation for the gradient is that larger organizations run more granular general ledgers with a technology account already in the chart of accounts, while smaller ones fold the same costs into office expenses, professional fees or program costs. This is why every median in this report is computed over filers reporting above zero.
A blank technology line is a fact about an organization’s chart of accounts before it is a fact about its spending. An organization that cannot answer what it spent on technology last year without reconstructing it from invoices is in the same position as the majority of its sector. The limitation is that this report cannot tell those two situations apart at scale: the 77.4% figure comes from a local sample of raw filings that was not drawn as a probability sample, so it establishes that most extract zeros are blanks without fixing the exact rate for the universe. What it does establish is the direction, which is enough to bar any reading of these data that describes non-reporting nonprofits as spending nothing on technology.
Outsourced technology work is inside this benchmark by design, because the Form 990 instructions direct filers to report payments to contractors for information technology services on line 14 rather than in the fees-for-services block. The exposure sitting outside the measure is bounded and small: 7.4% of filers in the $3M to $50M range report management fees while leaving the technology line empty, and the appendix sets out the line 11a and line 11g mechanics behind that figure.
The instructions are explicit that payments to contractors for information technology services belong on line 14, so an organization booking its managed services agreement into management fees is filing against the instruction and is also invisible in this benchmark. The exposure is bounded and small: 3,968 filers in the $3M to $50M range, or 7.4% of the range, report management fees while leaving the technology line empty. That is the population where a bundled contract could be sitting outside the measure. It does not move any median in this report, because every median here is computed over filers who did report line 14.
Nonprofit technology intensity was climbing on a straight line before the pandemic, and it has come back to that line. In the $3M to $50M range the median reported share rose from 0.79% in tax year 2015 to 0.95% in tax year 2019 on a fitted pre-COVID slope of 0.0375 percentage points per year, overshot to 1.13% in tax year 2021, which is 11.5 percent above trend, and stood at 1.09% in tax year 2023, which is 0.3 percent above trend. Real median technology dollars in that range rose 12 to 21 percent from tax year 2019 to tax year 2023, so the ratio came back to trend while the spending behind it kept climbing.
The flattening in tax year 2022 and tax year 2023 is not a retreat from technology, and holding the same 15,506 organizations fixed from tax year 2017 to tax year 2023 shows why. From tax year 2019 to tax year 2021 they raised reported real technology spending 14.9 percent while their real total expenses fell 4.3 percent, so the ratio moved 20.5 percent, further than the spending did. From tax year 2021 to tax year 2023 real technology spending kept rising, by 5.4 percent, while total budgets grew faster, by 9.7 percent. Across the full window those organizations raised real technology spending 21.2 percent while the ratio went flat.
An organization whose budget grew while its technology ratio fell in 2022 and 2023 is looking at the expected pattern in these data, not at a technology retreat, and a board that manages to a target ratio will cut in exactly the years its budget expands. The dollar figure is the one that tracks actual commitment. Two limits belong with that reading. The fitted line beyond tax year 2019 shows where the pre-COVID trajectory pointed rather than where the sector is going, and nothing here runs past tax year 2023. The balanced panel holds only organizations that survived the window and reported the line every year, so it sits about 0.11 to 0.20 percentage points above the cross section and measures change rather than level.
Where a nonprofit is headquartered barely moves the share of its budget it reports as technology, and it moves the dollars a great deal. Across the 50 largest metropolitan markets the median technology share runs from 0.94% to 1.42%, a spread of 0.48 percentage points, and the largest deviation in either direction is 0.31 percentage points from the national median of 1.12%. The metro is the mailing address on the IRS Business Master File, not necessarily where programs are delivered.
Pooling all 50 markets gives a median of 1.15%, within 0.03 points of the national figure, so the metro cut does not drift from the benchmark published above.
What does vary is the size of the organization behind the percentage and whether the line gets filled in at all. Inside the $3M to $50M band median reported technology dollars run from $48,025 to $125,777, Albany-Schenectady-Troy, NY at the bottom and Washington-Arlington-Alexandria, DC-VA-MD-WV at the top. Counted across all filers in a market rather than inside that band, that share swings by a factor of two, from 26.1% to 54.0% against 34.2% nationally. Washington leads on share, dollars and propensity at once, and sector mix explains it. Against the pooled distribution of all 50 markets it over indexes on international and foreign affairs work (7.5% against 3.1%), community improvement (9.4% against 6.5%), public and societal benefit (4.0% against 1.6%) and civil rights and advocacy (3.6% against 1.3%), the signature of national associations and policy organizations. Concentration does not explain it: its largest filer holds 12.9% of the metro’s technology dollars, below the 24.1% median across the 50 markets.
A city median carries almost no information about an organization, because every market lands within half a point of the national figure. Mission area moves the benchmark much further: within the $3M to $50M range the median runs from 0.77% in grantmaking to 1.46% in mental health and crisis intervention. The metro dollar figures are a check on the scale of the organizations a market holds, and the propensity spread is local bookkeeping convention rather than local spending. Two limits bind this cut. The metro cut is tax year 2023 only and supports no claim about change over time. Cells computed over fewer than 100 reporters are suppressed and stay suppressed, which covers 4 markets inside the $3M to $50M band, and the 50 markets together hold 50.5% of the universe rather than the sector.
Research and analysis by Parker Davis, System Architect, Scottship Solutions.
Data inquiries, including questions about the funnel, denominators, quantile method or any figure in this report: [email protected].
Media inquiries, including interview requests and permission to reproduce charts: [email protected].
Scottship Solutions is a consulting firm that advises United States nonprofits on technology strategy, governance and systems architecture. The firm works with executive teams and boards on how technology decisions get made, budgeted and measured.
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