Digitalization of NGOs: opportunities or challenges?

  • Home
  • >
  • Analysis
  • >
  • Digitalization of NGOs: opportunities or challenges?

China’s charitable organizations received nearly 10 billion yuan ($1.48 billion) from over 10 billion donations made through online platforms in 2021.

The 2016 Charity Law and two standards to regulate charitable organizations’ online public fundraising issued by the Ministry of Civil Affairs in 2017 seem to have laid the legal basis for the NGO sector to move online. Meanwhile, companies including tech giants Tencent and Alipay have launched several initiatives to promote digitalization, providing platforms for charitable organizations to showcase and fundraise for their projects.

As digitalization becomes a buzzword in the NGO sector, what opportunities or challenges does it bring?

The current state of digitalization

NGO2.0, a Shenzhen-based NGO advocating for the technological transformation of China’s NGO sector, and the Institute of Knowledge Management at the University of Science and Technology of China jointly released “the Eighth Research Report on Internet Usage and Communication Capability of Chinese Charitable Organizations”.

The report summarized and analyzed the data collected from 1,001 non-profit organizations in China.

According to the report, more than 45 percent of the organizations surveyed claimed to have a digitalization plan. However, the amount of money being invested in digitalization is low. Nearly 40 percent did not have a budget for digitalization and 36 percent invested less than 3 percent of their overall budget.

Xie Dong, secretary-general of NGO2.0, said: “In the research, we did not elaborate on the term ‘digitalization plan’, so organizations might have answered the questions with a more generalized understanding of it. Nearly half of those organizations have a digitalization plan, which is inconsistent with the reality.”

A digitalization plan commonly includes three components: digitalizing project management systems, digitalizing services and products, and communication digitalization. According to Xie, many NGO’s digitalization efforts merely refer to communicating on digital media platforms, with communication officers acting as their digitalization professionals.

Besides the lack of money and professionals, the digitalization of charities faces more fundamental problems. For example, charitable organizations often have insufficient understanding and knowledge of “digitalization”, and the digitalization of charities is still in its very early stages.

“Over the past two years, the philanthropy sector has been deeply involved in the digitalization wave. Developers, digital service providers, organization directors and communication officers are all talking about it. But everyone has their standards, and it is often difficult to reach a consensus,” said Guo Runmiao, co-founder and CEO of Lingxi, a company “dedicated to empowering non-profit organizations in China with digital capabilities.”

To Lingxi, digitalization means accumulating reusable core data assets internally and providing efficient and low-cost services externally. Guo pointed out that digitalization is not the ultimate goal of an organization but a solution.

Xu Jialiang from Shanghai Jiaotong University shared more detailed indicators to assess the level of digitalization of charitable organizations in China. Internal indicators include digitalization strategy, data management, staff management, the available talent pool, project management and business management — while external indicators include the digitization of communication channels and content, information disclosure, fundraising and donor management.

Leadership is essential

“I think one of the reasons for the low digital capabilities of non-profit organizations is the lack of awareness,” Xu said. “The leadership of an NGO — the secretary general, chairman of the board of directors, directors and other leaders, play a key role, and awareness of digitalization needs to be improved.”

According to the research, 35.76 percent of organizations are uncertain about how they will develop future information systems or digital business models. And 81.82 percent have no plans to build such systems and models in 2022.

Chen Hongtao, secretary-general of the China Foundation for Poverty Alleviation, said that since the establishment of its IT team in 2009, the Foundation has gone through platform integration, strategic planning and comprehensive digitalization building. The process has been difficult, with several iterations of the system and even some detours, but the results are “remarkable and worthwhile”, he said.

“Digitalization has removed the need for workers to carry out a large number of repetitive and less creative tasks,” Chen said. “In 2021, our automated financial system auto-checked 2 billion donations from different platforms, with an automated processing rate of 98 percent. The roughly 310,000 electronic invoices have saved us nearly 1.2 million yuan in mailing costs.” Digitalizing operation processes not only improved the efficiency of the organization, but the accumulation of a large amount of data also provided insights into market changes, which can improve the decision-making process.

SF Foundation, established in 2012 by SF Express and other companies, provides another perspective. Lai Yaolong, the firm’s deputy secretary-general, said the foundation has taken a bottom-up approach where it is often the front-line staff who express a need for digitization leading to management crafting an overall digitization strategy.

As a corporate foundation, they initially saw the power of “mobilization” in the employee volunteer program and felt the need for information technology maintenance. Following explosive business growth, which led to skyrocketing project management costs, the team realized the necessity of further developing its IT system. Currently, SF Foundation is at the stage of “fully promoting digitalization”, including digitalizing its personnel management, project management and donation systems.

The future

NGO2.0 builds an index system for the internet communication capabilities of non-profit organizations, which is divided into seven capability indicators: information acquisition, resource acquisition, publicity and advocacy, public credibility improvement, internet collaboration, knowledge management, and data analysis.

According to the survey, the capabilities of China’s NGOs are quite unbalanced: the ability to obtain information is prominent while the ability to analyze data is relatively weak.

To promote digitalization, organizations should pay more attention to digital services, data analysis and “breaking down data silos”, said Wang Xin, deputy secretary-general of Shenzhen Commonweal Fund Federation, based on his finding that the extensive use of digital tools does not necessarily improve the performance of an organization.

“A high-quality database is the prerequisite for high-quality data analysis. Based on the database, organizations can then resolve the problem of data silos and conduct effective data analysis,” said Tao Ze, founder and president of Yishan, a data-driven social enterprise with a mission to create a transparent philanthropy sector in China.

In Brief

Table of Contents