The UK charity sector is “constrained by the resources and skills required for digitalisation”, according to a new report.

Charities suffer from a severe shortage of financial and technical resources, which could be a barrier to digital transformation within the sector, a report from Brunel University of London and the technology company Renard Group warns. 

“Digital transformation has gained increasing significance across industries, but the charity sector is constrained by the resources and skills required for digitalisation,” it says.

The report, Digital Technology Adoption in the UK Charity Sector, identified several barriers that could prevent the sector from achieving digital transformation, including a significant skills and resources gap.

It says: “A barrier in the not-for-profit sector is the absence of both skills and financial resources in addition to the shortage of technical resources, such as internet connectivity.”

The report says that digital transformation encompasses not only technological tools but also involves significant human involvement in terms of communication and co-operation among teams and departments.

The researchers ran three focus groups with charity leaders for the report, with one respondent saying: “A lot of people had high levels of sort of information technology poverty, didn’t even know how to use the computer or have access to the internet.”

The report also identified a lack of leadership support as a potential barrier when it comes to adopting new technologies, saying: “Leadership support is a crucial determinant of the success or failure of digital technology adoption.

“The absence of support from senior management and a well-defined strategy, backed with a strong commitment, guarantees the failure of any innovative endeavour.”

Other potential barriers included a lack of goals and vision, a resistance to change and a lack of strategic planning. 

The security challenges posed by new technologies were also highlighted as a potential barrier, with the report saying: “The absence of adequate security measures hinders the adoption of digital technologies, and failure to comply with information and data security regulations can lead to legal ramifications.”

The report also says the added pressure from the cost-of-living crisis has made it more difficult for charities to consider implementing new technologies and digital tools.

It says that although charities recognise the potential of emerging technologies such as artificial intelligence to enhance fundraising, service delivery and efficiency, 73 per cent of charities feel unprepared to implement such solutions, according to last year’s Charity Digital Skills report.

The report says: “While the majority of the UK charities have embraced digital technology, accelerated by the Covid-19 pandemic, a deeper engagement with digital technology is needed to transform how charities operate.”

The report calls for a sector-wide effort to facilitate digital adoption and address these barriers, including by establishing a centralised information hub to offer training, resources and strategic advice.

Catherine Wang, professor of entrepreneurship and strategy at Brunel Business School and co-author of the report, said: “The charity sector is at a tipping point. Digital transformation isn’t a matter of choice; it’s a necessity for sustaining the vital services that millions depend on. 

“Charities must adapt to survive in a digital world, or the consequences could be devastating for the communities they serve.”