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Digitalization of the non-profit sector: readiness, barriers and effects

The Vladimir Potanin Foundation launched study report “Digitalization of the Non-Profit Sector: Readiness, Barriers and Effects”

The strategic goal of the study is to identify digital practices, major barriers, and incentives for the digitalization of Russian NGOs

The study was conducted by the Centre for Assessment of Public Initiatives of the Institute of Applied Policy Studies (National Research University Higher School of Economics) in a partnership with the Charitable Foundation for Support and Development of Social Programs "Social Navigator". It was supported by the Vladimir Potanin Foundation’s Center for Philanthropy Development. 

“The study is a continuation of the Center for Philanthropy Development’s efforts in analyzing issues related to the prospects of the Russian non-profit sector. Digitalization of NGOs usually marks them as progressive; however, the number of NGOs that could be called, for our purposes, digital is very low. This has to do, among other things, with issues at the level of strategic goal-setting. One of the interesting findings of the study is that the vast majority of interviewed NGOs (over 40 %) viewed digitalization as a way to increase their openness and improve their reputation, while very few look at the digitalization effects from the perspective of raising more funds (7 %). We also see that the pandemic has triggered the adoption of new technology on a very limited scale only. Moreover, organizations with a relatively low level of digitalization have suffered most, which indicates a growth of digital inequality in the non-profit sector,” says Roman Sklotskiy, Director of the Vladimir Potanin Foundation’s Center for Philanthropy Development.

The study consisted of the qualitative and quantitative stages. The qualitative stage included 40 interviews with experts and NGO representatives, while the quantitative stage allowed the researchers to compare the results obtained from 412 NGOs.

The findings show that digitalization of NGOs is mostly viewed as using digital technology to increase NGOs’ effectiveness and help them achieve their social mission. In terms of NGOs’ digitalization levels, three clusters were identified: highly digitalized leaders (13 %); the mid-level “catching up” (71 %); and the “left behind” with a low digitalization level (16 %). 66 % of NGOs employ 10 or more digital solutions at the same time, and 76 % realize the need for digitalization—but only 25 % have funds necessary to successfully implement their digitalization plans; these are mostly fundraising charities.

The study identified five key aspects that NGOs need to keep in mind as areas for development: social media promotion, use of digital technology in fundraising, data handling skills, awareness of existing digital products and services, and creating and developing their own digital products.

It has transpired from the study findings that IT volunteers were playing a significant role in digitalization: 31 % of interviewed NGOs had employed their services. Incentives for implementing technology differed among NGOs with different digitalization levels: leaders are mostly motivated by internal incentives, while the “left behind” are more susceptible to external incentives, such as infrastructure support.

The study paid special attention to the barriers on the path to digitalization. NGOs see most of them as hurdles which they, in most cases, are able to sort out on their own, rather than as unsurmountable obstacles. Different barriers were identified for different NGO groups. For the leading NGOs, the main barriers were unavailability of package digital solutions on the market and their staff’s resistance to changing the ways in which they work. For the NGOs labeled as catching up, the main barrier consisted of lack of funding. The “left behind” identified the following barriers: lack of digital competencies, insufficient understanding how digitalization could help, lack of CEO’s initiative, and insufficient knowledge of the digital solutions market. The study has also identified incentives that could support NGOs in the process of digitalization.

Based on these findings, the study offers concrete recommendations for NGOs undertaking digital transformation, as well as for other actors in the non-profit sector willing to assist in such digital transformation and in general infrastructure development.