Digital challenges facing the third sector

July 07, 2016

We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. (Bill Gates)

It’s remarkable how new technology becomes everyday. We’ve moved from marvelling at the features available on a smartphone to nonchalantly using them in our everyday lives as though they had always been there - as a torch, a camera, a fitness tracker, a map- the list goes on. The digital age means new technology is coming at us thick and fast, bringing new challenges and vast rewards to those ready to harness them. To cope with these changes, charities, like all other organisations need to have a business strategy for the digital age.

By 2020, there will be a higher proportion of ‘digital natives’ in the world (people with more familiarity and understanding of technology having grown up with it as a child), than traditional consumers or digital converts. To thrive in this new digital age, charities will have to consider the changing ways of transacting and engaging with a broader range of their stakeholders, including donors, beneficiaries, volunteers and staff. In our recent annual charities survey ‘Managing in the new normal 2016’, 65% of respondents said that they had experienced an increase in demand for their services this year and this is only set to continue, particularly in the light of Brexit and the further constraints this is likely to put on public sector funding. The combination of changing styles and increased demand means charities must adapt to provide the right support, in multiple ways to their different audiences needs and preferences.

Many charities have significantly upped their game in moving their presence online and using this to spur the further development of their brand, alongside a way to transform their services. They are also increasingly using digital channels to not only promote themselves, but also connect, deliver services and engage with customers’ and supporters’ lives. This means making sure that the ‘brand promise’ and service you expect from the organisation is consistent, whatever the channel.

The opportunities that digital can provide to charities are widespread. For example, the charity version of online dating has already arrived with applications such as VolunteerMatch, making it easier to pair people with charities needing help. And as with dating, it means both parties making themselves as attractive as possible to the other. The ALS ‘ice bucket challenge’ made over $150m in donations by connecting a relatively small charity with a global audience in a short space of time.

At the heart of digital transformation is the opportunity for new ways of engaging with each other, offering new experiences and different interactions. Shopping online is an obvious example, but also engaging with a charity through applications, podcasts and videos, can add huge value, when the organisation can be more easily accessed across whichever device the customer chooses. With nearly 80% of surveyed charities exploring new fundraising options and planning more fundraising in the future, digital will provide an abundance of opportunities.

The most successful charities will be able to create a meaningful long term relationship between their brand and customers, whether they are in shops, donating or using and advocating their services. They will need to keep up with the expectations of a constantly connected society, where people are continuously fed real-time information and expect instant responses. However, crucially they will need to do this without alienating existing supporters and ensure they build trusted relationships, with 83% of Managing in the new normal 2016 respondents stating trust as one of the biggest challenges in the sector.

There are lots of opportunities from digital but the challenges are real, and significant. New platforms bring with them increased competition for financial donations, alongside increased competition for grants. The growth of discount stores and online retailers offering lower prices than on the high street, has also negatively impacted charity retail outlets. These factors put greater pressure on charities to develop new fundraising initiatives and find alternative sources of revenue.

When taking all of this into account, the digital age means charities need to deliver services to a range of stakeholders with different preferences on how they interact, and how they wish these services to be delivered. Charities whose business strategies seek to address these digital challenges will ultimately bring only benefit to their organisations. Those that will thrive in this age need to define their business and operating models more clearly, and recognise the role that digital technologies can play in the delivery of their outcomes. This will provide the flexibility to adapt, to connect with people and to build trust.