Australia’s not-for-profit (NFP) sector plays a vital role in addressing fundamental societal needs and promoting social cohesion. Moreover, it holds significant importance within the economy.
NFPs and charitable organisations in Australia encompass a wide range of organisations, from large service providers to focused advocacy groups and global sustainability leaders. This sector contributes significantly to the economy, employing 11% of Australia’s workforce (1.38 million people) and contributing 4.8% of the country’s gross value added, approximately AU$129 billion. While the sector has shown resilience during crises, it faces a myriad of issues that can threaten its survival and well-being.
There is a united national endeavour to understand the digital challenges NFPs face and implement ways to overcome them so that the sector can bring about transformational change in the society and significantly contribute to a balanced, inclusive, and sustainable recovery and future for the nation.
Here, we explore the top five challenges for not-for-profit sectors as well as the digital tools and solutions that can help them thrive in the digital age.
Digital Transformation
As the need to operate more efficiently and effectively with limited resources and funding continue to grow, NFPs must leverage digital tools and technologies to automate processes, reduce costs, and increase productivity. Amidst global challenges like inflation, supply chain disruptions, and turnover, NFPs must ensure seamless supply delivery not only for digital transformation but also for organisational functioning.
The Amazon Business 2022 State of Business Procurement Report underscores a 91% preference for online purchasing, underlining the need for workplace convenience mirroring personal lives. Particularly significant for NFPs, the Salesforce Nonprofit Trends Report’s Fifth Edition emphasises the pivotal nature of digital transformation, with 74% acknowledging its importance, yet only 12% achieving digital maturity. This gap highlights the journey NFPs have towards digitisation. Notably, cost efficiency and data optimisation drive digital transformation in not-for-profit sectors, aligning with their pursuit of impactful goals, where e-commerce platforms offer valuable partnership opportunities.
Cloud Considerations for NFPs:
- Cloud technology can help NFPs optimise their data by providing a secure, scalable, and reliable platform for storing, managing, and analysing data.
- Cloud technology empowers NFP employees with the mobility, flexibility, and seamless communication to accomplish their tasks.
- Azure migration can help NFPs gain insights from their data that can help them improve their operations and achieve their goals?
Cybersecurity Concerns
NFPs collect and store sensitive information about individuals, making them a prime target for cybercriminals. They also often don’t have the financial resources of for-profit companies, making them more vulnerable to cyberattacks. A cyberattack on a not-for-profit organisation can have serious consequences, such as exposing the personal data of clients and damaging the organisation’s reputation. PwC’s 2022 Global Digital Trust Insights report indicates that over 60% of NFPs anticipate a rise in reportable cyber incidents this year. Despite this alarming trend, cybersecurity training is surprisingly ranked low among the essential skills identified by NFP leaders for their employees to navigate the impact of technology.
Interestingly, PwC’s 25th Australian CEO Survey revealed that 100% of NFP CEOs express concerns about cybersecurity. This is especially concerning considering the increasing cyber threat level, particularly for NFPs that handle personally identifiable information, leading to potential exposure risks. Approximately one-third of NFP leaders have not taken steps to establish cybersecurity and data privacy uplift programs, creating a significant security gap that needs urgent attention. Addressing this gap is crucial, not only for data protection but also for eligibility for government grants that often require robust data privacy protocols.
Transitioning to cloud can enhance the digital environment of NFPs in a number of ways:
- Centralised Security Management: Cloud platforms provide robust security tools and features that can be centrally managed, offering better control over access, authentication, and permissions across various devices and locations.
- Enhanced Data Protection: Cloud service providers implement advanced data encryption and backup protocols, reducing the risk of data breaches and loss.
- Access to Security Expertise: Cloud providers have dedicated teams of cybersecurity experts who continuously monitor and update security measures, helping NFPs stay current with the latest threat protection strategies.
- Disaster Recovery and Business Continuity: Cloud services often include disaster recovery solutions, enabling NFPs to recover data and resume operations more quickly in case of a cyber incident.
- Reduced Physical Security Concerns: Cloud migration can reduce the need for on-premises data storage, minimising the risk of physical breaches or theft.
Funding and Sustainability
Not-for-profit sectors often struggle with securing consistent funding sources and maintaining financial stability, especially if they rely heavily on grants, donations, or government funding. Grants may be awarded for a limited period of time, donations may fluctuate from year to year, and earned income may be affected by economic conditions. Government funding, on the other hand, is also declining due to a number of factors, such as the COVID-19 pandemic, rising healthcare costs, or the need to focus more on other areas such as defence and law enforcement.
There is also stiff competition for funding, both from other charities and from for-profit organisations. There are a lot of worthy causes in the world, and the number is growing all the time. There is only so much money available for funding NFPs, and donors are becoming more discerning about where they give their money.
Moreover, there is no assurance that these sources are guaranteed for the long term. Donor fatigue, changes in donor priorities, and lack of personal connection between donors and NFPs can also make it difficult to maintain a steady stream of funding.
How digital tools and solutions help?
- Improved donor relationships: This can include things like sending targeted emails, tracking donations, and providing donors with updates on their impact.
- New fundraising opportunities: NFPs can use social media to raise awareness about their cause and solicit donations. They can also use online fundraising platforms to accept donations from people all over the world.
- Cost-effective marketing: NFPs can use email marketing to promote their events and stay in touch with their donors and supporters.
Governance and Accountability
NFPs that do not follow good governance practices risk losing the trust of donors and other supporters. In Australia, they are subject to comply with the Australian Charities and Not-for-profits Commission (ACNC) Act, and failing to do so can lead to penalties and sanctions. This can damage the reputation of the non-for-profit organisation and make it more difficult to attract funding. In extreme cases, it could even lead to the closure of the organisation.
NFPs with weak governance and accountability may experience the following:
- Mismanagement of Funds: Donors and investors contribute to NFPs with the expectation that their resources will be utilised for the intended purpose. Failure to ensure responsible fund allocation can lead to financial waste and undermine donor trust.
- Loss of Credibility and Trust: When stakeholders, including donors, investors, and the public, perceive an organisation as lacking transparency or failing to adhere to ethical standards, it diminishes trust and may lead to decreased support and donations.
- Legal and Regulatory Violations: NFPs are subject to various legal and regulatory requirements, such as tax laws, reporting obligations, and employee rights. Inadequate governance can result in unintentional violations, which may lead to legal penalties, fines, and reputational damage.
- Operational Inefficiencies: In the absence of proper governance, decision-making can become fragmented or overly centralised, hampering the organisation’s ability to respond effectively to challenges.
Why leverage a powerful cloud platform like Microsoft Azure?
- To effortlessly organise and experience stress-free retrieval of NFPs’ financial data
- To monitor and track the flow of funds in real-time
- To minimise manual data entry, reduce the risk of errors, and enhance financial accuracy
- To ensure accurate and transparent allocation of funds throughout the fundraising process
- To safeguard against misallocation of funds, promote financial accountability, and foster donor trust
Talent and Upskilling
The main reason NFPs struggle with staffing is pretty simple. Compared to other industries, NFPs usually can’t offer as much money, and that makes it hard to attract and keep good people. This pay gap is a big issue when it comes to getting and holding onto talented workers. In fact, a 2022 survey from Society for Human Resource Management (SHRM) found that not-for-profit leaders were most worried about being able to pay their employees fairly.
Retention of top talent within the not-for-profit sectors also reveals a significant disparity not only in compensation but also in upskilling. According to PwC’s 3rd Annual Not-for-Profit CEO Survey, more than 50% of NFP CEOs indicated that they did not provide skills and training to their employees over the past year to help them adapt to the technological changes. This is despite their belief that upskilling is an effective tool for talent acquisition and retention.
The absence of skills and training initiatives in NFPs can hinder their ability to effectively embrace and harness technology, impeding their operational efficiency and innovation. This disadvantage may lead to reduced competitiveness, limited outreach, and a compromised ability to fulfil their mission in an increasingly digital landscape. By contrast, NFPs that invest in upskilling are better positioned to navigate the challenges posed by technology, optimise their operations, and remain relevant and impactful.
Another thing that often gets overlooked is that NFPs tend to be a bit behind when it comes to using technology to run things. This means that people who work for NFPs often end up spending a lot of time doing basic tasks manually, which can be boring and not very satisfying. They’re so focused on just keeping things going that it’s tough for them to find real meaning in their jobs. A Harvard Business Review article explains that without the integration of smart technology within NFPs, employees lose a valuable “dividend of time” that is redirected toward more meaningful activities. This perpetual state of “survival mode” can dilute the sense of purpose among not-for-profit employees, inadvertently hindering their capacity to drive deeper positive change within their communities and prompting contemplation of alternative opportunities.
How Intelliworx Can Help
Amidst the ongoing challenges not-for-profit sectors have navigated and those that lay ahead, a remarkable sense of community spirit and collective determination to aid those in need has emerged. To sustain and build upon this newfound unity, NFPs must ensure its continuity by facilitating easy ways to contribute and nurturing the collaborative relationships forged during lockdown. This could pave the path toward a community-driven approach to providing care and services, potentially alleviating the burden on charitable resources.
Recognising that digital transformation presents both challenges and solutions, the importance of effective systems and processes for the long-term success of NFPs has become evident. Whether embarking on virtual fundraising endeavours via Microsoft Teams, optimising data security, or migrating existing NFP workloads to Azure – Intelliworx stands ready to empower NFPs in achieving their mission.
If you want to minimise growth obstacles, maximise financial sustainability while staying relevant and efficient in the digital age, request for a FREE consultation with Intelliworx experts today.
