NFPs Need the Basic Building Blocks to Survive in the Digital Age

Modernising the digital infrastructure supporting not for profits are the basic building blocks needed for this sector to thrive and deliver social purpose in the digital age, writes Caitriona Fay, Perpetual’s national manager of philanthropy and non-profit services.

Organisations today face a tsunami of new risks born of the digital age, with the most immediate threat being the collection, access and use of digital data. This is a risk to any organisation trying to compete in increasingly data driven sectors, but one sector is emerging as uniquely significant when it comes to tackling data management: the not-for-profit (NFP) sector.

As trustee for nearly 1,000 charitable trusts, Perpetual has spent three years collaborating with the Stanford University Center on Philanthropy and Civil Society (PACS) to conduct research into data and competitive advantage in the digital age, which has revealed some interesting trends across the Australian NFP sector.

While the digital age has undoubtedly benefitted the sector, it is also now exposed to several threats that it mightn’t be fully prepared for. The 2018 Perpetual survey into the NFP sector revealed that governance, questions about the social contract and the need to create new institutional capacities were emergent risks to handling data, and it falls on non-profit boards to turn their eye to how their organisation is investing in the culture, infrastructure and governance structures required to ethically protect, store and use digital data.

This is increasingly coming to the fore as the volume of people using social media, software and other digital platforms are not fully informed of how much of their personal information becomes the “property” of service providers. NFPs need to tread most carefully in this area given the significant amount of personal data collected about donors and members, some of which can place communities at significant risk if it falls into the hands of people or groups with nefarious intent.

Further to this, civil society entrusts the NFP sector with a social mandate to conduct charitable and socially beneficial work that is not shared by the private sector. Even if intentions are good, any misuse or accidental sharing of data by an NFP organisation will have stronger negative implications than it would for many profit-driven businesses and may even erode the trust in the entire NFP sector. This is because as socially-attuned organisations they are held to higher account.

Interestingly, our survey revealed the majority of NFP directors feel the clever use of digital data is critical to advancing their mission, but only one in three feel like their organisation’s technology and policies around the safe and effective use of digital data reflect their mission and values.

Most NFP boards understand that a clear, easy and transparent consent process, when it comes to the collection of digital data, can inspire trust and new levels of user engagement, but it is challenging to get an organisation to a point where it can facilitate that process effectively.

Modernising the digital infrastructure supporting NFPs are the basic building blocks needed for this sector to thrive in and deliver to their social purpose in this digital age, particularly to address the increasing demand for transparent and regular outcomes reporting. Donors and funders should consider how their philanthropic investments should be directed to support the development of the infrastructure, culture and governance capabilities to ensure our community sector remain a vital part of our civil society.

About the Author: Caitriona Fay is the national manager of philanthropy and non-profit services at Perpetual, and has more than a decade of philanthropic and grantmaking experience in both Australia and Europe.