28 October 2005

Capital expense or operating expense?

For some reason, it seems inconceivable to nonprofit decision-makers and to funders that information technology can be both a capital expense and an operating expense.

Yes, a new IT initiative can cost a major chunk of change, and then it costs more money to keep it going. Information technology expenses are not one-time crises, although you can expect your share of those. They are ongoing costs, integral parts of program operations, administration, fundraising, and other normal tasks that fall to nonprofit organizations.

It would be a great leap forward if not only nonprofit decision-makers but also grantmakers and philanthropists would learn to live with this reality.

3 comments:

Anonymous said...

Well, light is a both a particle and wave!

Phil Anthropoid said...

You make an important point. The attitude of grantmakers toward IT costs is at an awkward transition moment. Just a few years back, these expenses were regarded as "exotic" and generally as one-time overhead costs. More and more funders are getting a clue. Give us another 15 years and we'll join you in the 21st century.

Anonymous said...

I agree with you. I work with the Finance Department of a nonprofit org. And i find that IT expenses are part and parcel of the operating expenses. The initial purchase of it would of course be a capital expenditure; the maintenance of it is altogether another story.

Kudos to you! Big help :)