A new study from Sage, the accounting, financial, HR and payroll technology provider for small and mid-sized businesses, has found that Canadian nonprofits are investing in digital transformation to drive efficiency and growth.
The study on the Canadian nonprofit sector, Grow Together: How digital transformation empowers Canadian nonprofit organizations to embrace change, reported that nine in ten Canadian nonprofits consider their digital transformation efforts a top priority in their efforts to update business processes and gain efficiencies.
Sage partnered with national research and analytics firm Leger to survey 75 nonprofit financial directors across Canada between January 12th and January 25th, 2022. The two firms also conducted focus groups with six nonprofit financial directors between January 27th and February 7th, 2022.
The organizations surveyed by the two entities say they have seized the opportunity during the pandemic to rethink and change the way they operate to gain efficiencies and better serve their communities, despite the difficulties caused by COVID-19. The pandemic has pushed them to seek new ways to work and deliver services.
- Twenty-seven per cent have already gone through their transformation and are digital-first
- Forty-seven per cent are in the process of digitizing key processes
- Sixteen per cent have plans to digitize key processes
Nonprofit organizations that have begun their digital transformation say they are beginning to reap the benefits, with clear efficiencies, including clearer data and reporting mechanisms, stronger tools to stay organized across the business, easier transition to working remotely, and time saved on administrative duties.
The need to accelerate digital transformation initiatives is pressing
The pressure on nonprofits to transform their operations is driven by both external and internal challenges, the study found. The pandemic has inflicted the following top five common external challenges on nonprofits:
- Program disruptions (43 per cent)
- Staffing shortages (39 per cent)
- Decreases in funding (36 per cent)
- Uncertainty related to service delivery mechanisms due to the pandemic (36 per cent)
- Increased demand for services (32 per cent)
Furthermore, two-thirds say they believe these external barriers will persist in 2022. Thus the need to accelerate or continue digital transformation initiatives is pressing, to help overcome these acute challenges.
In addition, four in five Canadian nonprofits said they are experiencing the following internal challenges, which are causing operational friction within their organizations:
- Lack of staff with the right skill set to manage the digital transformation journey (25 per cent)
- Inefficiencies and delays due to multiple, disparate systems (23 per cent)
- Manual, time-consuming reporting (23 per cent)
The road to digital transformation is not easy
The nonprofit sector believes that technology is vital for both the immediate well-being of their teams as well as for its long-term success.
However, supporting digital transformation has been difficult for them when resources, financial or otherwise, have been stretched to their limit during the pandemic. In fact, 28 per cent of Canadian nonprofits say they experienced a decrease in 2021 revenue, with four in ten experiencing more than 25 per cent decrease in revenue. One-third say they saw a decrease in funding from both foundations and corporations over the last twelve months.
The need for making strategic choices: nonprofits must change their approach to utilizing new technologies.
Facing both resource constraints and the need to overcome operational challenges, the management of nonprofits are changing their approach to utilizing new technologies.
“The very interesting mindset change that really occurred for us with COVID-19 is technology was not seen as a cost centre, but technology was seen as an enabler – we invested money to make money,” said Jennifer Neal, director, Corporate Services, AdaptAbilities, an Edmonton-based nonprofit that provides services for individuals with special needs and their families.
Growth is top-of-mind for the nonprofit organizations that were surveyed. Four in ten are planning to prioritize the expansion of their donor base, build their digital presence on social media and increase brand awareness. To achieve these priorities, they say their top investments will include the increased use of digital/automated platforms, increased marketing budget, and hiring skilled staff.
“We continue to admire the resilience of our nonprofit customers,” said Daniel Oh, country manager (interim), Sage Canada. “As a technology partner to many Canadian nonprofits, we are encouraged by both the strategic and cultural shifts of these organizations. We recognize the dedication and hard work of nonprofits to support many important causes and are proud to be helping them uncover efficiencies and deliver insights so they can provide more and better service to their communities.