Framing the Future: Board Oversight of Digital Transformation
CO-AUTHORED WITH GRANT THORNTON
Digital transformation is integral to nonprofit organizational strategy and mission success, and is reshaping how nonprofit organizations operate, provide services and measure impact. Updating technology — from modernizing back-office systems to engaging stakeholders through digital platforms — is not optional.
During the Gupta Governance Institute’s 2025 Nonprofit Directors Dialogue, Matt Unterman, Practice Leader & Principal, Not-for-Profit & Higher Education Advisory Services at Grant Thornton, facilitated a discussion about how boards can lead technology transformation responsibly and strategically.
The accelerating pace of digital transformation raises its degree of difficulty, while also increasing its upside potential. Nonprofit boards play a pivotal role in ensuring investments in technology are mission-aligned, well-governed and sustainable. They must balance opportunity and risk, exercising effective oversight even when they are without deep technical expertise.
Done well, digital transformation is a catalyst for mission achievement, transparency and trust. For nonprofit boards, the challenge is not to master every technical detail, but to lead with curiosity, accountability and vision, ensuring that technology serves purpose, not the other way around.
Transformation is a Strategic Imperative
Technology is no longer a back-office function, it is a strategic enabler of mission success. Likewise, digital transformation is not just a technological upgrade, it is essential organizational transformation.
Effective nonprofit boards view technology as a tool to drive operational efficiency, enhance mission and measure impact. They recognize that the shift to remote or hybrid work arrangements and the ability to engage stakeholders virtually offers opportunities to broaden inclusion and participation and foster new forms of community and belonging across geographies.
Organizations that invest in digital transformation report 96% improved service delivery and 82% better financial stability. On the other hand, boards that view investments in digital transformation as overhead risk falling behind their peers in impact and innovation.
Mission and Strategic Alignment
Digital transformation can give organizations a competitive advantage in everything from donor engagement to impact measurement, but only if undertaken with a clear long-term strategy, an understanding of how it fits into their broader mission, and in alignment with organizational values.
Ill-advised digital transformation or technology implementation risk compromising many of the qualities that set nonprofits apart: equity, trustworthiness, accountability, and a respect for donor and beneficiary privacy.
Management should have a cohesive digital transformation strategy to guide investments and maximize their impact. Boards must ensure this strategy is grounded in mission and understand how proposed investments will enhance outcomes and strengthen organizational resilience.
If management provides materials that are too detailed, yet lack answers to key questions, the board should meet with management to explain what information the board wants and in what format. When management can’t provide the requested data, or do so efficiently, strategic boards see an opportunity for digital transformation.
Governance and Oversight
With innovation comes new governance challenges including increased concerns about ethics, data and donor privacy, cybersecurity and misinformation. It is critical that boards oversee digital initiatives to ensure that appropriate risk management structures are in place to mitigate these risks.
Effective oversight does not require board members to be technologists, but it does demand they are equipped to ask the right questions about cost, complexity, risk, controls and integration.
Before making a large investment in technology or launching a sizable digitally-enabled initiative, the board should ask questions that straddle fiduciary, strategic and generative governance such as:
- Are we optimizing delivery on our mission and strategy?
- Are we effectively leveraging technology to do so?
- How will management provide comfort to the board throughout the project so that we understand this is being well managed?
- What are our measures of success and how will you make certain that they are achieved, while simultaneously ensuring that we avoid risks and challenges?
Boards must ensure management provides them with accurate, realistic assessments of risks and organizational readiness rather than overly optimistic projections. Clear roadmaps, checkpoints, and defined scopes of work are essential tools for boards to avoid “scope creep” and ensure accountability.
It is critical that boards have conversations among themselves and with management to make intentional decisions about resourcing and expected outcomes, especially when it relates to technology.
When technology expertise is limited, boards can establish task forces, tap external advisors, or partner with peer organizations to enhance capacity, efficiency and transparency.
Financial Challenges
Nonprofits often suffer from long-standing underinvestment in modern technology. As a result, they rely on multiple, disconnected software systems for different functions (e.g., fundraising, accounting, client management), which can lead to inefficiencies, lack of integration, absence of controls, or inability to leverage AI or have a unified view of data. Nearly 45% of nonprofits admit they aren’t spending enough on technology.
When technology is viewed as an overhead expense rather than a mission-critical investment, it can be difficult for nonprofits to secure adequate funding. Only 20% of grants currently include funding for technology-related investments. Donor attitudes are shifting, however, and participants recognize underinvestment in technology as a fixable barrier.
Build Capacity
Many nonprofits lack adequate resources and infrastructure to implement desired transformation, or to implement policies to protect the organization against risks from those initiatives it does undertake. For example, while more than 80% of nonprofit organizations have adopted generative AI to some extent, only 10% have internal governance policies over its use.
While today’s focus is AI, tomorrow it may be a newly emergent technology. As such, ongoing leadership training is essential to ensure that board members continue to be aware of the upside and downside risks. With this knowledge and understanding the board will be better able to help management see what may be around the corner or lurking beneath the surface.
Transformation is ultimately about people. Investing in staff, training, and education ensures that technology enhances rather than overwhelms operations.
Guidance for maximizing the impact of technology investments:
- Start by understanding the mission and then create a technology strategy aligned to it.
- Focus on solutions that optimize processes while complementing, not substituting, human expertise.
- Phase implementations so small teams can absorb the change.
- Tie infrastructure investments directly to mission outcomes and long-term savings.
- Focus on ability to measure outcomes not outputs.
- Foster a culture where efficiency is a strategic imperative.
- Ensure stakeholder buy-in across all levels of the organization.
Sustainable Transformation
True transformation is never finished — it must be continuously refreshed and integrated into long-term strategy. Boards should ask how management plans to maintain and evolve digital systems, ensure ongoing alignment with mission, and integrate digital investments into the long-term resource allocation strategy. **Organizations that retool technology without examining their processes up front run the risk of generating the same old ineffective results, but faster. **
An effective technology strategy does more than address current challenges, it also positions the solutions to scale into the future. To do so effectively, organizations must take a balanced approach to transformation that includes modernizing core infrastructure, managing cultural change sensitively, and ensuring stakeholder buy-in across all levels of the organization. Organizations that scale effectively are those that rethink assumptions, invest in sustainable operating models, and approach innovation with purpose and pragmatism.
Key Takeaways
- Think strategically, not technically. Technology transformation is a mission-critical issue.
- Technology should enhance not overwhelm operations. Focus on solutions that complement, but don’t substitute for human experience.
- Ask the right questions. Oversight depends on inquiry, not expertise.
- Get access to experts. Supplement the board’s knowledge diet as needed.
- Manage new risks. Stay abreast of emerging threats and changing regulations.
- Keep evolving. Treat transformation as continuous, not episodic.
- Build a culture of digital literacy. Ongoing education is vital to maintaining informed oversight in a rapidly changing environment.
