Do charities face a growing digital divide?

COVID-19 has led to an understandable focus on tech, with charities using digital to roll out new ways of working. Many initiatives have been effective and will no doubt help to deliver even better services. But there is an issue in terms of access and usability. Does the charity sector have a potentially huge challenge in terms of a growing digital divide?

In the Charity Sector Outlook 2021, I wrote about the risk of COVID-19 creating what Warren Buffet called ’deepening economic moats’ – large organisations building their already significant competitive advantage over smaller ones. It’s a commercial sector concept, but might charities face the same risk and, if we do, what is the best way to respond?

The basis of the digital divide

A small number of very large charities already have more than 90% of the income and, with their large and highly-effective digital capabilities, have the potential to secure an even larger share of the now very limited funding.

Even before the pandemic, online giving was increasing year-on-year. In 2019, one-off online donations grew by 26%, and the recent WPNC Donations Report found that income from online giving on their platform had risen by 97% in the last 12 months. In addition, emerging new technologies, such as AI and blockchain offer potentially even greater opportunities.

Looking at the WPNC data, charities with income over £5m per year achieved twice as much as smaller charities. That was perhaps the first evidence that large charities may be increasingly out-competing the smaller ones, in what is becoming an increasingly important area of fundraising.

Small charities can’t directly compete with the very large ones. It’s the largest charities who will be the first to exploit emerging technologies, but small charities have their own strengths. They are usually more agile and more closely connected to their communities.

Moreover, most digital is easy to use and often free, and done well, enables you to very quickly reach large numbers. But, having a Facebook page isn’t exploiting digital, it’s catching up on where soceity was a decade ago.

How are charities performing in digital?

The Charity Excellence Sector Data Store has created big data for the sector, which tracks every area of activity. Compared to the six months pre-pandemic, the individual performance ratings for the 25 digital metrics tracked have improved overall and the number of amber metrics, which are the metrics where charities report they are not doing well, has reduced from 22 to 19. For Digital Fundraising eight of the nine metrics tracked remain at amber. We’re getting better, but we’re still missing out.

The lowest rated metric is Google Ads. Admittedly, it works best for those with a national footprint and a cause the public likes, and it can be a bit ’techie’ to set up, but you can get access to an annual grant and, once set-up, Google Ads demands a low workload.

Other technology areas of weakness include the use of contactless, text donations, and e-commerce platforms, and choosing the right fundraising and payment platforms.

In recent years, advances in technology have made these available to almost all of us and there are now a substantial range of providers to choose from. Moreover, charities fail to claim about £600m a year in Gift Aid and many of these platforms will collect and pay it for you.