Digital technology: what NFP boards need to know

Guide

How to not get left behind

Many industries are facing digital disruption and the not-for-profit (NFP) sector is not immune to these changes.

New technologies can help NFPs lower costs by automating administration processes and, through apps and social media reach a much broader donor audience. But with that change comes greater accountability as stakeholders have far more visibility of an organisation’s outcomes.

Senior Manager at Macquarie Wealth Management, Wendy Scott-Hamilton, specialises in providing advice to the not-for-profit sector. She says boards should reconsider the thinking that technology is too complicated and expensive and realise that the way of the future is to become digital.

“Every stakeholder group – from clients to supporters – has increasing expectations that NFPs will interact with them using digital technology.”

Now, more than ever, boards need to find new ways of generating good returns without taking unnecessary risks.

She advises NFP boards to consider the advantage of technology to:

  • Enhance service delivery


    “Leading NFPs are using mobile apps and data analytics to improve service delivery and empower their customers and stakeholders. They are also harnessing big data to better understand customer needs, map supply and demand – and even to benchmark their organisations.”

  • Improve supporter engagement


    Wendy says that NFPs who rely on traditional forms of funding are under threat at multiple levels, as supporters are targeted by a growing band of organisations that are not traditional charities.

    “Individual donors get increasing amounts of information via their social media networks, making it essential for NFPs to build an online presence which is far broader than just their websites. Otherwise, potentially they will be bypassed by crowdfunding schemes, which use more sophisticated social media strategies and direct giving options.” Further, crowd sourcing through social media has made it easier to establish a social enterprise leading to additional competition for the donor dollar.

    Engagement with corporate donors also requires a different engagement strategy.

    “With corporates now seeking clear alignment between their operations and social outcomes, there is an increased need for NFPs to demonstrate alignment to corporate goals” according to Wendy.

    She says that donors also expect to be able to give directly through digital means, to see exactly how much of their donation reaches the ultimate beneficiary and even to be put in touch with the beneficiary directly. “The public now expects far more information about the project the funding is being sought for and will actively engage through social media to find this detail. It’s a greater level of scrutiny than many NFPs are used to.”

  • Drive organisational efficiency


    NFPs should use technology to streamline their operations for maximum efficiency.

    “Effective use of digital technologies can increase productivity across the organisation. The more an NFP does online, including connecting with stakeholders and underlying users, the lower administration and marketing costs.” says Scott-Hamilton.

  • Produce more granular reports


    She notes that digitised systems also support an NFP to easily provide the level of detailed reporting that stakeholders and governments are demanding.

Governments increasingly require demonstrable outcomes from funding commitments. This creates pressure on NFPs to become more sophisticated in measuring impact and outcomes. Without digitised systems, producing regular detailed reports is enormously time consuming.


Funding models require different investment strategies

Scott-Hamilton is also talking to NFP boards about the cash flow implications of new consumer directed care delivery models. “Rather than the organisation receiving a known amount of government funding at the start of the year, the funding is going to users who will choose from one of a number of providers. This means boards must be far more conscious of cash flow.”

“With funding uncertainty and a drip-fed cash flow, boards must prepare for funding gaps coming into play. You need to have a strategy to smooth out the uneven cash flow. This means many NFPs should revisit their investment strategies. Previously, a growth investment may have been appropriate. Now, boards must consider using some assets to generate regular income to make up for the lag in payments.”

“At the same time, NFP boards need to drive every dollar that bit harder – and be prepared to defend their investment policies under the scrutiny of stakeholders. Now, more than ever, boards need to find new ways of generating good returns without taking unnecessary risks.”


Time to embrace digital

NFPs are facing a different world, with changes to government funding, new challengers attracting philanthropic funding and shrinking supporter engagement. “Boards need to understand how to harness technology to stay in the game,” says Scott-Hamilton.

She believes NFPs that use digital technologies effectively will be better placed to respond to stakeholder demands in the current challenging environment. “They will have better control over their investment and funding sources, better infrastructure that enables staff to be productive in changing conditions and an established online presence that maintains continuity in client and supporter engagement.”

“This is the time for the sector to embrace the changes, and engage some of the innovative tools that are available to do things differently.”

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