The issue of how much charities spend on running costs is a sensitive one that attracts ever more media attention. It’s not just the pay of charity chief executives that has been hitting the headlines, but other areas of spending too, from the cost of publicity to the amount spent on websites.
At a time when charities face falling grants, sharper competition for fundraising revenue and the cost pressures familiar to other sectors, board-level decisions on where and how to invest scarce money are as tough as ever. As an area where the impact of cost-cutting tends to be invisible, IT spend is frequently where charities choose to freeze or defer investment.
There might have been a time when a charity could get away with this approach to technology, but it isn’t the case today. In fact, I would say that failing to invest adequately in IT is among the biggest strategic mistakes a board can make.
The first reason for this is the impact of outdated IT on the effectiveness of how a charity works. Where IT is treated as a cost to be minimised, systems will remain outdated and the ability to communicate, collaborate and work effectively will be seriously diminished.
I have seen first hand the impact this has on the way people work. On a day-to-day basis, volunteers lose patience with baroque systems for doing simple tasks and decide to end their association with the charity in question (increasing the costs of recruitment and training). Employees waste time – for which, read money – working inefficiently. Strategically, the impact is more grave because investment in IT has to accommodate legacy systems that might not work with the best or most efficient solution or service for the future.
Linked to this is the issue of culture. Charities can see IT as something to be outsourced or left in a silo. But they should ask these questions: is IT a strategic issue? And how is it represented on the board? If IT is seen as a tactical side issue, a charity is clearly missing the point that, in our digital age, the ability to leverage technology must now be a core strategic competence with a voice at the top of the organisation. Failure to invest in people or skills in this area risks hastening the demise of many charities.
A third area where low investment in IT has a negative impact on charities is in the ability to attract new revenue or create cost savings by changing the way they deliver services based on the information available from shared data and open application programming interfaces (which make it easier to build computer programs) from commercial, public and other third-sector organisations. Forward-thinking charities use data and APIs to manage demand, build apps to improve access to their services and optimise fundraising. Charities that are unable to do this are increasingly missing out on the opportunity to win grants to deliver new services, work with councils or health authorities and attract fundraising revenue.
One final area where slack IT investment causes problems is technical debt. Technical debt represents the costs of not investing in IT: among these might be a backlog of patches, the inability to upgrade to the latest version of a system and, perhaps most pressing, the overall health of the architecture, in particular from a security perspective. In the past, the biggest risk of technical debt might have been internal, such as a server falling over or a long period of downtime in the working day caused by an unexpected IT issue. Today, with the ever-heightening risk of cyber crime, the risk to a charity of having its data stolen because of poor security or even falling victim to ransomware is very real, not a far-fetched theoretical one.
There will always be a fight over the scarce resources in a charity, but when it comes to considering technology it is important to remember one thing: unlike many other costs to a charity, when directed to the right area IT spending is now perhaps the most effective way of ensuring that services and activities can be delivered sustainably in the future.
Tim Cockle is head of digital strategy at Eduserv