What’s wrong with digital in the social sector?

Avoiding magical thinking

There are a couple of standard responses to this challenge, and they go something like this.

• Charities and social enterprises need to embrace digital technology! They need people and skills to do that – every charity should have a board member with digital experience and skills, and then its leaders and staff should develop their digital awareness and skills.
• Tech businesses have loads of digital people and skills – they should embrace social impact! They need partners with understanding of social issues to do that – every business should partner with a charity to build great apps.

I’m oversimplifying, of course, but that’s pretty much the way we trot out the standard solutions, and I’m afraid that it’s magical thinking to believe they can really address the tremendous opportunity and challenge of tech for social impact.

Charities’ business model sucks

Capacity-building is an overused, and under-interrogated term in the social sector. Essentially it says that for any area of skills or practice (digital, evaluation, financial management, comms) that a charity needs to strengthen, we can provide guidance, best practice, training and consultancy, and they can build that capacity.

What we do less frequently is ask why there might be capacity gaps in the first place.

To some extent, we would expect to see capacity gaps or needs in every organisation, in every sector – that’s the nature of changing skills in a modern world. But I believe the challenge is much more pronounced in the social sector, because the business model sucks.

Private companies make a surplus, some of which can be reinvested into skills and capacity. If they don’t do this, they go bust and the problem goes away. Public sector organisations are publicly accountable, so it’s unacceptable for them not to have skills they need to do their jobs, and (in theory) they get resourced accordingly to develop those skills. Of course it’s not quite as simple in practice, but that’s another story.

Capacity gaps aren’t a flaw of the charity sector, they’re a design feature

But charities are working on issues that aren’t a priority in today’s society, and scrabbling around for the resources just to get by. The vast majority of them are tiny, or small organisations, and they’re lucky if they can pay the bills for heating and lighting, let alone invest in digital skills, service designers or data analysts. Their business model is to not quite lose money at the end of the year, making as many cuts as they can as they go.

The point is, capacity gaps aren’t an accidental flaw that we happen to find in the odd charity or two. They’re a design feature.

And we can no more harness the benefits of digital technology by entreating each individual charity to embrace it than we can just ask them to shake the magic money tree and find the resources they need to make their business model not suck.

Market failures can’t be unimagined

So if charities need tech skills, and the tech sector has loads of them, is just putting the two together the answer? At a basic level, anyone who’s seen a tech company build an app in three days as part of a social impact hackathon knows that the answer is categorically no. But actually, I believe we do need the best of both social and private sectors to come together – we’ll get to that shortly.

But for the moment, here’s why the tech sector can’t do social impact as it stands. It has all the digital skills and products, but it has profit steering the ship. And that means it can’t (or won’t) serve the markets that are most costly and least profitable, even though that’s where the greatest social impact is to be found. The poorest customers are excluded from commercial products and services by design – and while profit still drives behaviour that will always be the case.

Even if those barriers could be magicked away (and there’s a school of thought in the impact investment world that seems to imagine they can) those tech companies themselves wouldn’t have the skills and characteristics they need to deliver on the social impact promise. They don’t have the knowledge of social issues, or the contexts in which people experience those issues, to develop meaningful solutions. And they generally don’t have the relationships, legitimacy or trust needed to work effectively in communities that have been on the wrong side of inequalities and social injustices.

It’s not all bad

Of course the picture I’m painting is too sweeping to be an accurate generalisation.

There are great non-profit organisations embracing digital technology. They tend to be big organisations who can invest in their own teams and talent, develop the skills and knowledge to work effectively with digital agencies, and have the right (unrestricted) funding model to resource their investment in technology sustainably.

And there are great social tech start-ups, developing exciting models for delivering social impact, whilst bringing both the social and tech skills and experience they need to bear on the challenge. Almost none of them achieve scale in the way we expect start-ups to, because they’re not backed by a limitless social VC market, so how they’ll fare in the end isn’t clear.

But neither model is representative of the social sector, and neither model alone will allow us to embrace the digital opportunity. We need to find new models for the social sector to truly be digital.