Canadian Nonprofits Are Investing in Digital Transformation to Drive Efficiency and Growth, Sage Study Finds

• Pandemic has pushed organizations to seek new ways to work and deliver services

Sage, the leader in accounting, financial, HR and payroll technology for small and mid-sized businesses, released a new study on the Canadian nonprofit sector, Grow Together: How digital transformation empowers Canadian nonprofit organizations to embrace change. The study found that nonprofits have seized the opportunity during the pandemic to rethink and change the way they operate to gain efficiencies and better serve their communities, despite the difficulties caused by COVID-19.

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Transforming operations to overcome challenges

In partnership with Leger, a Canadian research firm, Sage found that 9 in 10 nonprofits consider their digital transformation efforts a top priority to update business processes and gain efficiencies:

• 27% have already gone through the process and are digital-first
• 47% are in the process of digitizing key processes
• 16% have plans to digitize key processes

The pressure on nonprofits to transform their operations is driven by both external and internal challenges. The pandemic has inflicted the following top five common external challenges on nonprofits:

• Program disruptions (43%)
• Staffing shortages (39%)
• Decreases in funding (36%)
• Uncertainty related to service delivery mechanisms due to the pandemic (36%)
• Increased demand for services (32%)

Furthermore, two-thirds of nonprofits believe these external barriers will persist in 2022. As such, the need to accelerate or continue digital transformation initiatives is pressing to help overcome these acute challenges.

In addition, four in five Canadian nonprofits said they are experiencing the following internal challenges, which are causing operational friction within their organization:

• Lack of staff with the right skill set to manage the digital transformation journey (25%)
• Inefficiencies and delays due to multiple, disparate systems (23%)
• Manual, time-consuming reporting (23%)

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Making strategic choices

Supporting digital transformation has been difficult for nonprofits when resources, financial or otherwise, have been stretched to their limit during the pandemic. In fact, 28% of Canadian nonprofits experienced a decrease in 2021 revenue, with four in ten experiencing more than 25% decrease in revenue. One-third of nonprofits saw a decrease in funding from both foundations and corporations over the last twelve months.

Facing both resource constraints and the need to overcome operational challenges, management of nonprofits are changing their approach to utilizing new technologies.

“The very interesting mindset change that really occurred for us with COVID-19 is technology was not seen as a cost centre, but technology was seen as an enabler – we invested money to make money,” said Jennifer Neal, Director, Corporate Services, AdaptAbilities, an Edmonton-based nonprofit that provides services for individuals with special needs and their families.

Nonprofit organizations that have begun their digital transformation are beginning to reap the benefits with clear efficiencies, including:

• Clearer data and reporting mechanisms
• Stronger tools to stay organized across the business
• Easier transition to working remotely
• Time saved on administrative duties

The nonprofit sector believes that technology is vital for both the immediate well-being of their teams as well as their long-term success.

“As a result of implementing these technologies, stress will go down – we’re investing in less stress,” said Rémi Straus, Finance and Corporate Services Director, Duke of Edinburgh’s International Award.

Planning ahead

Looking ahead into 2022, nonprofits are beginning to express some optimism:

• 4 in 10 are forecasting a revenue increase for 2022, with 44% expecting an increase of 25% or higher
• 35% expect year-over-year revenue to remain flat
• 15% expect a decrease in revenue
• 8% are uncertain of their revenue projections

Growth is top-of-mind for these nonprofit organizations. Four in ten are planning to prioritize the expansion of their donor base, build their digital presence on social media and increase brand awareness. To Sage achieve these priorities, their top investments will include the increased use of digital/automated platforms, increased marketing budget, and hiring skilled staff.

“We continue to admire the resilience of our nonprofit customers,” said Daniel Oh, Country Manager (interim), Sage Canada. “As a technology partner to many Canadian nonprofits, we are encouraged by both the strategic and cultural shifts of these organizations. We recognize the dedication and hard work of nonprofits to support many important causes and are proud to be helping them uncover efficiencies and deliver insights so they can provide more and better service to their communities.”

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