Far from being analogue or paper-based, today’s charitable organizations have unique challenges to their operating models and their people demand state-of-the-art systems.
Non-profit organizations are often viewed as being distinct from their commercial peers. In fact, they experience many of the same challenges and opportunities, as well as some that are unique to them. Just like businesses they have to scramble for every point of differentiation, strain for operational efficiencies. At the same time, they must be creative and innovative to succeed against their many rival recipients for acts of giving. In this article, I want to draw on a lifetime of personal experience supporting non-profits and working in the technology sector to outline how non-profits can make optimal use of IT.
Three key factors are transparency, traceability and governance
One non-negotiable hygiene factor here is transparency and traceability. Non-profits live or die on trust and they win that trust via forensic standards of document management and auditability. They must make it absolutely clear how they are conducting themselves.
They must state why they are raising funds and what they plan to do with those funds. If a donor wants to specifically name a project, country, or region for their giving, they must respect that wish and demonstrate that they are acting on that instruction.
Often, there may be tax implications that they must acknowledge. Clear communication is critical, and information sources and disclosures must be available and easy to discover. Having this transparency creates a virtuous circle where people feel more comfortable about working with them and thus, they enhance their brands. Technology can help by providing robust records of transactions that can be surfaced to whoever needs to access them. The ability of the Cloud to facilitate this end-to-end visibility is one of the many advantages online platforms offer to non-profits.
They must also have very high standards of governance because any criticism of the way they are run will divert donors to another cause. Often these are global concerns so they have complex operating models that must encompass various languages, legal structures and tax regimes.
Collaboration is also important to them as they will frequently need to cooperate with other organizations. Again, cloud systems can afford the necessary scale, global reach, and scope for collaboration.
Going digital
Similarly, the digitization of payments makes it easier to see what has been donated for both parties. Digitized payments are booming in the non-profit sector, and during the Covid pandemic, online giving grew by 12.1% compared to a rise of 4.1% for overall giving. Smart non-profits are doing everything to automate what were paper-based processes.
It’s encouraging to see non-profits invest in digital transformation generally. A Unit4 study of non-profits points to 86% aiming to complete moves to cloud ERP over the ensuing two years.
Even tougher than business
However, IT needs to do more than just provide a system of record. Many of the people who work in non-profits are ambitious individuals who want to change the world. Indeed, they often come from a technologically enabled segment or even the tech sector itself. They demand modern systems, and any remnants of legacy infrastructure will make them harder to hire and certainly harder to retain.
It is also important to note some of the ways that the non-profit sector differs from the commercial world. Non-profits are eager to funnel as much of their income as possible to their stated goals, so they cannot tolerate huge overheads. That means they must be even more efficient than a commercial organization. Running a non-profit is like running a commercial company but with very limited funds and often very strong and demanding boards replete with talent and experience from the business world.
This is a highly competitive sector capable of attracting very smart people on the ground and in executive positions. Some of the most successful, wealthy people, from Bill Gates to Warren Buffett, work directly or indirectly in the non-profit sector today. They often demand that non-profits’ infrastructures be just as capable and resilient as those of the enterprises that they owned.
Nonprofits must also deal with spikes and troughs in their income streams. They must also accommodate part-time workers, people who work atypical working weeks, or those who give their time freely. So, they need financial management and HR IT systems that can scale up and down. Again, this nonlinear, unpredictable characteristic requires an IT infrastructure that is agile, scalable, and robust.
Getting ahead
Innovation is coming more to the forefront as non-profits invest in live-streaming events, apps and other digital experiences that make them stand out from the crowd. That crowd is very large and still growing, with research suggesting there are 3.87 million non-profit associations active in the European Union, and the US has almost two million.
However, some barriers remain with the Unit4 study, noting that 75% say internal factors are the biggest issue. The top four barriers include user reluctance to change (75%), information residing in silos across the organisation (73%), integration issues (72%) and resistance to change or investment among the leadership team (70%). Those barriers are understandable and familiar but need to be hurdled.
The non-profit sector is a remarkable force for good in society, but it has to be supported by systems that are just as good as those enjoyed by the private sector. We need to dispel the myth that charities cannot excel in operations and enable them to get on with addressing the many challenges that the world faces today.
Unit4’s next-generation enterprise resource planning (ERP) solutions power many of the world’s mid-market organizations, bringing together the capabilities of Financials, Procurement, Project Management, HR, and FP&A to share real-time information, and deliver greater insights to help organizations become more effective. By combining our mid-market expertise with a relentless focus on people, we’ve built flexible solutions to meet customers’ unique and changing needs. Unit4 serves more than 5,100 customers globally across a number of sectors including professional services, nonprofit and public sector, with customers including Southampton City Council, Metro Vancouver, Buro Happold, Devoteam, Save the Children International, Global Green Growth Institute and Oxfam America. For further information visit www.unit4.com.
