Digital Transformation

What Does Nonprofit Digital Transformation Look Like?

Digital transformation among nonprofits lags behind other industries. Find out how they lag behind, what they need, and how to get started.

Blog Post

10 minutes

Jun 24, 2021

Nonprofit digital transformation is as important now as it has ever been.

We often talk about how transformation today is crucial for small and midsize businesses, regardless of industry, but nonprofits have a particular necessity to embrace technology implementations within their organizations.

The objectives of nonprofits are essential; whether it’s fighting climate change or poverty, it’s in the interests of everyone that they have the tools they need to succeed.

Unfortunately, nearly 9 out of 10 nonprofit organizations don’t believe that their digital technology implementation is of a high enough standard.

If we are to see nonprofits meet their goals, we must take a look at the areas they can improve and the technology they can use to do it.

Today, we’re taking a look at nonprofit digital transformation, and how businesses are implementing technology to save money and develop a more agile business.

Why Do I Need Digital Transformation for My Nonprofit?

The same reason anybody needs transformation: to have better business functions that allow you to cut waste and have a more profitable business.

You can essentially boil down every digital transformation effort as a project that is intended to create a more competitive business by investing in tech.

digital hand with heart | 11% of nonprofits graphic

Demystifying Digital Transformation

Digital transformation can be a frustrating buzzword for decision-makers, because it doesn’t refer to any one process, but rather it’s an overarching long-term commitment to improving an organization through technology.

It is fundamentally a disruptive process in that it seeks to take an established norm and digitize it to save money and quicken the task.

For example, automating invoices saves a substantial amount of labor costs and reduces the time it takes to send them to recipients; this would be a common example of how you can improve a process and save some cash.

Making the change can lead to average cost savings of up to 30% within five years for many payers

Banks are a great example of early adopters of digital initiatives.

Back in 2012, online banking and new automation processes resulted in an improvement in customer service and productivity of 50% among organizations that adopted them.

One large universal bank categorized its 900-plus end-to-end processes into three ideal states: fully automated, partially automated, and “lean” manual. This bank determined that 85% of its operations, accounting for 80% of the current full-time employees (FTEs), could—theoretically—be at least partially automated. At the time of this analysis, fewer than 50% of these processes were automated at all. If an ideal level of automation were reached, then almost 50% of the FTEs in operations could be relieved of their current back-office tasks. (source)

Since then, other industries have been following suit with fervor, and now, for virtually every organization, digitization to some degree is desirable.

Underneath all the buzzwords, that’s all digital transformation is really about: taking an open approach to tech adoption and having a thorough look at how processes can be improved with it.

How Can Digital Transformation Help Nonprofits?

Digital transformation has often been thought of as viable for the for-profit, private sector, but the proliferation of tech—particularly cloud technology—has made it a lot easier for SMBs and nonprofit organizations to implement tech.

But digitization is not a blanket strategy; no two companies will have the same course of action for their plans.

Organizations should always conduct an audit to determine what solutions they might need and the implementation timeframe for adopting them.

The evaluation phase is complex, so for that reason we typically recommend using an MSP to help you get a clear understanding of your situation.

Related Post: Managed Service Providers: What to Look for in a Partnership

Having said that, there are underdeveloped areas that businesses in certain industries have in common, like a lack of digital document workflows in law firms, for example.

Common Pitfalls for Nonprofits

According to a study of nonprofit employees conducted by NetChange, there are a number of areas in digital transformation where companies are falling short.

Missed Opportunities for Engagement

A ladder of engagement strategy is used to ease people into your final goal. It can start off as simply as getting someone to like your Facebook page, all the way up to donating to your cause.

This is one example of a framework that’s designed to engage with your base, yet three-quarters of respondents indicated that they do not track user engagement through this or a similar method.

Additionally, one-third responded that their nonprofits do not measure user engagement at all.

Outdated Campaign Methods

Nonprofits, like every company, have to engage with the views of their customers in order to better understand where their position is on certain issues and what campaign approaches they should be making.

It’s discouraging to see, then, that 73% of respondents noted that their campaigns were almost solely dedicated to sending materials to supporters on how they can contribute.

Of course, this is naturally a big part of fundraising, but what’s notable is that just 10% said they regularly surveyed supporters to collect input on what they should campaign on, meaning a large disconnect with nonprofits speaking “to” their audience, not “with”.

Engagement is Not a Priority

Without the right technology (in this case a CRM would be ideal for its engagement analytics), nonprofits can struggle to determine what the needs of their supporters are in order to accommodate them effectively.

The issue here is that many nonprofit workers recognize the importance of solutions to improve engagement, but aren’t being backed financially to do so.

In fact, 64% of them say their dedicated engagement budget isn’t sufficient to do what is expected of them.

Given the lack of a digital approach that many nonprofit organizations have, for many this could well be a situation where their existing engagement practices are overspending resources and a tech solution could be adopted to meet the demand.

Lack of Cross-Departmental Communication

Internal collaboration is more important than ever, as businesses attempt to rid themselves of costly data silos but, nonprofits are a long way off where they should be.

69% of CFOs said that keeping information siloed in departments is the biggest or most common financial mistake that companies make today

Roughly one in five nonprofit workers consider their internal collaboration for organization, campaigns, and fundraising to be effective—the remaining four at best consider their approaches to be “somewhat effective”.

What does this mean?

Well, internal teams and departments without the right collaboration tools often find themselves separated from one another, making work between them time-consuming. At worst, silos will form, and data will be irretrievable for workers who need it.

To address this, businesses are implementing collaboration software for their employees.

This has been turbo-charged by the 2020 pandemic, which has seen adoption of this tech skyrocket, but the end result is the same: workers are able to more freely and effectively work with one another within a business.

Related Post: Which Kind of UCaaS Providers Are Best for Your SMB?

Digital Maturity Among Nonprofits In 2021

With all this being said, where exactly are nonprofits with regard to digital transformation today?

The answer to this is that nonprofit organizations tend to vary in terms of their digital maturity.

When we talk about “digital maturity”, we’re referring to the level at which a company has progressed in their digital transformation.

Digital maturity is an important aspect to consider, as maturity is a key indication of how a business will cope in times of rapid change—of course, the coronavirus pandemic is a present example of this.

Salesforce conducted its Third Nonprofit Trends Report in 2020, asking respondents about their organization’s digital capabilities, how they were affected by the pandemic and, and how they were able to respond.

Let’s take a look at some of its findings and learn how much of a difference digital transformation makes when it comes to nonprofits.

Program Delivery

Salesforce found drastic differences in program delivery results between organizations rated as having “High Digital Maturity” compared to medium and low.

When reporting the success of meeting goals as they concerned program delivery, 13% of organizations with low digital maturity reported exceeding their goals during the second half of 2020, compared to 22% of organizations with high maturity.

In other areas too, like “Marketing and Communications” (20% vs 7%), “Overall Mission” (25% vs 12%) , and “Fundraising Revenue” (27% vs 7%), digitally mature organizations far outperformed their less mature peers.

Especially notable is the comparison between nonprofits when it comes to fundraising, with high-maturity entities reporting a far better ability to raise funds.

When you consider what was required of nonprofits to shift their fundraising practices—most notably having to scale back door-to-door and other in-person ways of fundraising in favor of online outreach—it’s not hard to see why those nonprofits that have yet to digitally transform would struggle in the conditions brought by the pandemic.

Organizations should also consider that the changes brought by the pandemic—as regards the need for them to digitize—are not going anywhere.

Pandemic Changes Are Here to Stay

The most significant changes that occurred as a result of COVID as far as organizations were concerned were undoubtedly related to the need to quickly implement digital solutions to adapt to new working environments—particularly remote work.

Nonprofits were not exempt from this, and like commercial businesses had to pivot and adopt digital solutions to adapt.

These changes, and the increased emphasis to utilize digital in communications and outreach, will remain, and the kinds of experiences people expect to have with organizations will be largely driven by their interactions in the online space.

How Do Nonprofits Rank In Their Use of Technology Today?

We are now confident in two things.

First, the disparities between nonprofits in their ability to meet their goals and mission correlates strongly to their level of digital maturity.

Of course, we should take note that there are a number of factors that determine how well nonprofits perform—one being that people were simply reluctant to donate during COVID because of their own economic circumstances and pressures.

Nonetheless, those nonprofits that have invested in their digital initiatives have shown a clear ability to better navigate the challenges of operating in a predominantly online-only environment.

In simple terms, these initiatives can be as simple as having quality unified communication software or an effective CRM for marketing and donor outreach.

Second, it’s unlikely that many of the changes that have happened due to the pandemic are going to be reversed, and in many ways, the pandemic merely accelerated existing digital trends.

In effect, organizations have to step up their plans to digitize or risk being left behind, and nonprofits are not exempt from this.

How Do Low- and High-Maturity Nonprofits Differ In Their Operations?

According to Salesforce’s report, the differences between the operational ability of high digital maturity nonprofits compared to low digital maturity nonprofits are significant.

As we discussed above, we already know that there are big convergences when it comes to the high-level goals of nonprofits depending on their maturity.

This same disparity in the use of technology is reflected across virtually every important area of business operations.

In program management (51% vs 21%), online fundraising (53% vs 22%), reporting to stakeholders (45% vs 18%), offline fundraising (44% vs 19%), data collection (36% vs 14%), and marketing (39% vs 16%), high-maturity nonprofits outperformed low-maturity nonprofits by large margins.

The conclusion is clear: in order to compete in today’s environment, it’s essential for nonprofits to implement digital solutions and start their digital transformation journeys.

The Bottom Line

So, what does this all mean for nonprofits?

Well, it means that many organizations within the industry aren’t utilizing digital technology as much as they perhaps should, and there are clear areas for improvement among them, particularly with regards to engagement with supporters, internal communication, and document management.

For many of them, it’s likely not for a lack of trying, especially when it comes to IT—many simply don’t have tech budgets that stretch far enough.

This is why it’s a good idea to get an expert consultant in from an MSP to make an assessment of your tech infrastructure and make the appropriate recommendations.

We don’t have to look far to see how digital transformation solutions can help nonprofit companies. Take a look at our case study of Campagna Academy, an educational nonprofit that needed help with their IT, cybersecurity, and compliance.

“Financially, we’ve been able to allocate funds to what really matters to us here, and to our mission, which is really to invest in more direct care staff and services for our children.” – Elena Dwyre, CEO, Campanga Academy

For more information on how our managed services helped Elena and her organization, download our case study on the partnership between Campanga Academy and Impact Networking.


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