Subscribers | Charities Management magazine | No. 142 New Year 2022 | Page 2
The magazine for charity managers and trustees

Doing digital the right way

In 2019, Martin Francis Campbell, the chief information officer of international children’s charity World Vision and chair of the Digital Collective, said: “Digital is essential for charities to be relevant”, adding that if they don’t improve their digital strategy they will lose out on opportunities.

Certainly, the role of a finance professional in charities has changed, with individuals – now more than ever – relying on digital tools to drive forward recovery in an uncertain landscape. So improving digital strategies right across charities becomes evermore important.

While many UK charities have begun to implement a digital strategy, according to the Charity Digital Skills Report of 2021, it’s crucial that those yet to adopt these technologies understand their value, including what to do and what not to do during the digital transformation process.

Financial challenges

Across the board, the difficulties charities have faced have been unprecedented – even for an industry that has long faced financial challenges. During the Covid-19 pandemic, many charities have been forced to close, facing liquidity issues and serious financial losses. At the close of 2020, the sector was faced with a £10 billion funding shortfall and that devastating impact led to the loss of over 60,000 jobs.

The Charities Aid Foundation recently reported that for all charities, “increasing financial resilience and closely monitoring income levels will be vital going forward”. Crucially though, charities must recognise that much of that will come down to the robustness of the organisation’s financial management system and forward financial planning.

It is important to realise that even though the Government has lifted Covid restrictions, there is still the underlying risk of new strains and the prospect of increasing demand for services and pressures on finances due to difficult economic factors.

The pandemic has put a strain on the industry, but many charity leaders have remarked that the pandemic has only emphasised their desire to help more people than ever before. With fundraising events still on the backburner, volunteer numbers - of which 91% of the UK’s charities solely rely on to run services operations - are still lower than normal, so charities are going to need to brace themselves for another challenging period.

Urban farm and Nottingham-based charity Stonebridge City Farm’s volunteers are vital to its operations and, ultimately, the financial lifeblood of the organisation. Volunteers help with running the on-site café, shop, gardens and animal boarding – services that normally generate 25% of its annual income.

Workforce shortages

However, because of the pandemic, the farm was forced to close due to workforce shortages, leaving it with a significant financial gap to fill and a mass of animal residents to continue to care for. Having lost nearly £100,000, it was clear that good financial planning was needed, including monthly reforecasting and cashflow modelling, to help the charity plan ahead.

The charity sector is experiencing a period of unrelenting change, and whether your charity is large scale, high profile or a small high street charity like Stonebridge City Farm, the likelihood is your risk mitigation strategies will follow a similar theme.

Many charities were still reducing their forecasted income for 2022 and cancelling or reinventing flagship fundraising events – whether fun runs, auctions or galas - to account for Covid related risks. Even though all restrictions have now gone, possible continued reticence by potential participants will make it hard for the UK’s charities to have their fundraising results reach pre-pandemic levels by the end of 2022.

While digital focus by charities has been improving and hopefully will continue to do so, there is a lot of ground to make up. Looking back over the course of 2020, a shocking 48% of charities failed to access any form of digital fundraising due to an existing lack of online awareness. For others, limited funding was the biggest barrier to kickstarting a digital transformation plan.

More so than ever, with demand for services increasing and the added factor of inflation, having a digital system in place that can provide the flexibility to forecast and monitor a charity’s financial performance is crucial. With a digital system in place, charities will be able to evaluate which routes they should take in order to achieve financial stability. This will give charity leaders the confidence to invest further in new digital technologies like online fundraising that may secure their future.

Think about the culture

No matter what type of charity you’re involved in, when embarking on digital change you should think first about the cultural impact of introducing new technology. This consideration should be paramount in the charity sector and, as such, should be at the top of your “do” list for 2022.

Since the Government relaxation of restrictions in July, volunteer numbers are said to have skyrocketed across the country – just in time to meet renewed demand. Now that restrictions have gone completely this trend will intensify.

During the pandemic, many people who had been furloughed from their 9-5 private sector jobs were volunteering for opportunities within the sector. In fact, 62% of adults in England volunteered for the time at least once in 2020, with a steep rise in interest from people aged between 16 – 49. Naturally though, before the pandemic began, 45% of the volunteer population were 65 years of age or older.

While there was an overall decrease in volunteer numbers, one of the most significant dips can be attributed to the 65-74 bracket dropping from 31% to just 22%.

The drop in volunteer numbers from that age bracket can most likely be attributed to the fact that many charities throughout the pandemic switched their services online. The sector has undergone a significant transformation since the onset of Covid – organising online fundraisers to plug the financial gap left from in-person events, to workforce e-learning training and development courses.

Older volunteers feel disempowered

But the transition to online services has come at a cost for many, and older volunteers, according to a Social Policy Research Report, believe they have less flexibility in their roles and have feelings of disempowerment.

Often a demographic that is perceived to be less quick to adopt digital technologies, arguably this volunteer age bracket is being phased out among the changes. This is why any charity should think carefully about how the adoption of a new system, even if it can save the charity thousands of pounds, can change the charity’s culture. Digital solutions must be inclusive, and any that do not encompass this ethos should not be considered.

For many charities’ older volunteers who have given years of loyal service, they will have seen their usual processes removed in order to keep the charity afloat. Manual processes may have been their “comfort blankets” and it’s important that the wider organisation is considered in the digital transformation process.

Do not assume that going digital will be an easy transition for your workforce, instead create a plan to support the changes. Consider people and processes; it’s crucial any application is simple to find, operate and preferably all accessible on one platform. Ultimately, it has to benefit end-users – in this case, both the volunteer workforce and senior teams, and the service users.

Once those factors have been addressed, technology can be introduced to support the charity and its aims.

Upskilling a workforce

Do use the opportunity of going digital to upskill your workforce to ensure you can come out of the pandemic full-strength and with your finances on the straight and narrow.

Martin Baker, chief executive and founder of training provider Charity Learning Consortium, says that when the first lockdown was introduced in March 2020, his organisation recorded a 300% increase in the use of online learning resources.

Ordinarily, face-to-face training would cost charities thousands each year, but e-learning solutions could be a more cost effective approach for those cash-strapped charities which are looking to save money and spend their donation funds wisely.

Above all else, e-learning solutions could help workforces overcome barriers to new software and ensure that the technology implemented is easy to use and configured to the individual’s needs in order for them to continue to be an asset to the charity. Especially as 75% of charities in the UK reported they have a shortage of digitally trained staff, holding them back from using digital tools in an effective way.

While you may be planning to now move your training solutions online, don’t forget that in-person communication – where possible – is still incredibly important in a charity. Although the communication process can be streamlined by digital applications, the value of real relationships for this considerably volunteer-based sector should not be underestimated.

Modernising for future demand

Whether you’re a charity which has a £2m turnover or £50m plus, internal reporting requirements can be complex.

The solutions you put in place must be able to adapt and grow as the charity itself grows. So often there are charities needing to reinvest in technology as the organisation strives for greater automation of key processes, resulting in another upheaval for the workforce (staff and volunteers) and their routines, not to mention the cost implications of doing so.

And right now, in the current charity landscape, financial stability is critical. Good financial planning, underpinned by a robust financial management system, will set your charity in good stead and enable your finance teams to lead with strong analytical insights driven by performance figures.

Unfortunately though, where many charities fall foul is that growth in delivering service can come with drawbacks especially if there isn’t a sufficient level of financial management in place. Added to that, financial controls may not keep pace with increased provision and the charity might find costs are even more difficult to manage.

That’s why it’s important for any charity - before it embarks on digital transformation - to consider where the charity may be in the next three to five years. It can be difficult to predict what’s around the corner, especially in this uncertain sector, and that’s where a platform with “one single truth” concerning the charity’s performance will prove useful.

In any charity, being able to provide up to date figures to grant makers and donors about key milestone moments, especially on the route towards growth in provision, are vital for proper recognition of the charity’s progress.

With the finance team’s insights, CEOs and external funders can make judgments about the charity’s future.

With a new financial management system in place, not only will finance teams be able empower budget holders through clearer and more understandable live reports, the system should be easily translatable to those non-finance users. It’s important you do not exclude any of the workforce from this new model when considering the transition.

Digital inclusion a key issue

It is encouraging to read in the Skills Platform Report from 2021 that 60% of charities now have a strategy in place for digital, an 11% increase on the year previous. Added to that, 83% of charities have started offering online services and, crucially, digital inclusion has become a key issue for the sector with over half of charities considering the impact of digital technology on some excluded groups.

I’ve stressed the importance of charities adopting digital technologies to secure their future, and exactly what steps they should and shouldn’t take in that transition period. So I’m pleased to see the report reveals that over two thirds of charities now view digital as a prime concern for their organisation, with similar numbers planning investment in digital infrastructure.

I would wholeheartedly encourage any charity without a digital plan in place to strike while the iron is hot and use this time to put measures in place to meet expected demand for services. Without improving their strategies, many could be at risk of losing out on efficiency opportunities, not to mention being unable to support their individual communities. I believe with the right digital solutions in place, supported by a robust financial management system, charities will once again go from strength to strength in the coming years.

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