The pandemic highlighted – but didn’t create –  the need for digital transformation in the non-profit sector. Forward-thinking non-profit leaders have long understood that smart adoption of digital technologies can improve service delivery and outcomes. But the sector — and its funders — have under-invested in technology. 

In a CanadaHelps Digital Skills Survey released Wednesday morning, a majority of the approximately 1,400 charities surveyed said their digital skills were “fair,” “poor,” or they were “not aware” of the digital tools the survey presented. More than half said they don’t have enough funding to boost their digital capacity. 

Meanwhile, Canada’s Budget 2021 commits $400 million in 2021-22 for a temporary Community Services Recovery Fund. This fund seeks to help charities and non-profits “adapt and modernize.” 

This fund is an opportunity to create a truly digital sector. Here’s why — and how.

The non-profit sector is massively under-resourced for the digital transformation it needs 

Digital transformation is difficult even in ideal conditions. According to a Boston Consulting Group study from last October, 70 percent of digital transformation initiatives in the private sector fail. In the public sector, the Phoenix Pay System is a notorious example. In the non-profit sector, this reality is exacerbated by a chronic shortage of funding and digital skills. 

Investment from all levels of government in private and public sector digital transformation far outstrips analogous investments in the non-profit sector. For example, Budget 2021 includes a $4 billion Digital Adoption Program for small and medium-sized business digital transformation. With Digital Main Street, the investment of dollars comes with investment in digital skills. The federal government’s renewed investment in the Canadian Digital Service and ongoing support of Code for Canada demonstrate similar prioritization of government digital upskilling and transformation. 

When compared with these investments, the under-resourcing of digital transformation in the non-profit sector becomes apparent. While there are notable exceptions (like Kids Help Phone, Pathways to Education, and Ontario 211 — all digitally savvy organizations) and nascent efforts (like the Technovate consortium), the non-profit sector typically does not have the expertise or resources required. 

To rectify the sector’s under-investment in technology and meet the needs of non-profits efficiently, equitably, and at scale, we believe the fund should have three investment focuses. Here they are – in order of priority:

First, invest in sector infrastructure

The Fund should focus on building infrastructure to accelerate the sector’s digital transformation overall. There is simply not enough money to address individual organizations’ specific digital needs, and grant application processes tend to exacerbate existing social inequities. What’s more, the Fund is intended as a temporary investment, rolling out $400 million over the course of one fiscal year, but the benefits of sector infrastructure would outlast the program itself.  

The single most effective infrastructure investment would be to establish a Canadian Centre for the Digital Non-Profit. This centre of excellence would deliver a range of interventions in building digital capacity as well as play the important role of field building and coalescing an ecosystem for non-profit digital transformation. This could follow the blueprint of the Future Skills Centre, with a mandate to fund research, communities of practice, and innovation projects or proofs of concept. It could, for example, host a CIO, CTO, and CDO-in-residence to support the sector as a whole or build out an affordable managed services IT model. We recommend that it be incubated by an existing institution.

If the Fund parameters cannot accommodate an investment in a Centre for the Digital Non-Profit, our priority recommendation is to fund an organization to convene a Task Force on Digital Transformation in the Non-Profit Sector. The Task Force would be mandated to make prioritized, actionable recommendations to accelerate the sector’s digital transformation. The hard truth is that nobody yet knows what are the highest value interventions, and flooding the sector with funds will result in waste and duplication. A Task Force can learn from public and private sector experts as well as pacesetter non-profits. This Task Force could be chaired by Minister Hussen or a senior government official in ESDC, with expert representatives from all sectors. The Task Force should be provided with funding to implement its priority recommendations.

The third priority investment is research and case studies. This would look like funding the centre described above or academics and researchers to investigate the baseline of the state of digital transformation in Canada, the benefits to organizations, and the barriers they face. Case studies can illustrate the possibilities, featuring early technology adopters like Kids Help Phone, which is saving lives using Artificial Intelligence and Machine Learning, and Furniture Bank, which is scaling via the cloud. 

Next, invest in talent 

Digital transformation is about talent, not technology. Technology evolves – and today’s cutting edge solution is tomorrow’s relic – so investments in talent can produce more enduring impacts. A Talent Stream should focus on building technology capacity at the board, executive, and staff level – again for the sector as a whole. This could include using matching services to place technology experts on boards, adding digital skills content to sector training platforms, and importing technology education programs from other sectors or countries. In our experience, organizations are more likely to invest in technical skills at the staff level than digital leadership skills among their boards and executives, but digital transformation needs everyone involved.

Last, invest in technology 

Direct investments in technology adoption should only be considered if money remains after funding infrastructure and talent. These are the riskiest projects with the lowest return, and an investment in an organization’s customer relationship management software, for example, is not an efficient use of public resources. To reduce risk, the Fund should set a high bar: applicants must secure contributions from private sector partners and show that the project will support multiple organizations using existing tools. 

What could that look like? The Canada Council for the Arts’ Digital Strategy Fund is a model of a sectoral approach to technology adoption. Existing Canadian supports for small businesses could also be adapted to the needs of our non-profits. US organizations have developed non-profit technology readiness assessments that could be adopted in Canada. In the UK, sector challenges funded multiple organizations creating common outcomes to explore technology solutions with a digital partner. 

Building resilience 

COVID-19 has tested our individual and organizational resilience. Tragically, not all community services agencies will survive this crisis. We applaud the government for recognizing that to “build back better”, the sector must modernize and adapt. This will enhance the sector’s resilience, so that our community services will be there when we need them most.  

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