‘Digital funding’: what we really mean

This resource is for:

• Senior leaders, digital leads and business development people at non-profit organisations
• Grant managers and anyone else assessing funding applications 

It explains:

1. Why and how the term ‘digital funding’ gets conflated
2. 3 types of funding for digital costs, 
3. Examples of each funding type

It does not talk about using digital tools for fundraising. That’s a different subject.

Why ‘digital funding’ gets conflated

The term ‘digital funding’ no longer means what it once did. For 10 years it generally meant funding for websites or digital service innovations. Dedicated grant programmes emerged to support projects that achieved these things. 

The last flush of these programmes emerged during the pandemic. They helped charities embrace digital tools and ways of working. Since then charities' digital costs have increased because charities are now:

• more reliant on digital tools, for both internal operations and service delivery
• investing more in staff digital skills and capacity
• working more on digital strategy
• still wanting to innovate with technology.

These quite different activities can all fall within charities’ digital funding needs. As a result the term ‘digital funding’ has become vague and ambiguous. It gets conflated. We need more precision.

Why ‘funding for digital costs’ is a better term

Verbs are usually clearer than nouns. Nouns are convenient but often more ambiguous. You’ll have experienced the clarity of verbs if you’ve used the GOV.UK website. Its design team leads the way in showing the value of using verbs over nouns to communicate well.

Verbs for ‘digital funding’ could be ‘grant funding for digital costs’. This specifies we mean financial support for technology related expenses.

Grantmakers have changed their approach to funding digital costs

Since the pandemic many funders have reviewed their strategies. Now there are fewer programmes dedicated to funding digital costs. Instead funders want to see digital costs included in regular funding applications. 

But charities’ expertise in how to communicate these costs has not increased. Especially for core costs, for which there are less funding programmes.

“Digital costs are easier to define in projects and services, so we see people being less confident about how to position core digital costs.” - Cat Ainsworth, Founder, Dot Project 

Communicating your costs: 3 types of ‘grant funding for digital’

We can define ‘grant funding for digital costs’ even more clearly. Thinking in these categories can help you communicate your needs when applying. It can also help all of us in how we talk to each other about the challenges of getting digital costs funded

1. Funding for core digital costs

Core digital costs are those that run organisation wide, cutting across teams and services. They don’t have many boundaries. 

Examples of software and platforms that do this include:

• CRMs - used by most internal operation staff and public facing workers. Even beneficiaries where they interact with one.
• Collaboration and information sharing tools - for example Microsoft Sharepoint or using Google Workspace tools. Or even Notion for staff wikis. 
• Websites - now a core part of how your organisation interfaces with the world. And, like any other product, they need testing and updating too.

Core digital costs also include the things that support your organisation’s digital culture and capacity. For example:

• Building staff digital skills and literacy - training costs time and money. Sometimes you may need an external partner’s help.
• Supporting digital leadership across the organisation - training and external support
• Investing in digital strategy - it takes time (and usually external support) to make sense of your digital assets, needs and priorities.

Core digital costs could also include salaries. Digital roles that operate across an organisation could include a digital lead or a communications officer. 

2. Funding for hybrid service or project costs

Hybrid services regularly use both digital tools and people to interact with beneficiaries. 

The level of reliance on digital tools varies and could include:

• Creating a chatbot or using a website CMS to triage referrals on your website (some reliance)
• Using Discord to run an online youth group (high reliance)
• Using Airtable to enable community groups to update their data (lower reliance)

All these examples could still use core organisational tools like CRMs and communication tools like Zoom or WhatsApp. But the cost of these now belongs in core costs.

What doesn’t count as hybrid service delivery?

I’d suggest:

• Using digital tools in ways that beneficiaries don’t interact with
• Using WhatsApp to arrange meetings with beneficiaries
• Using digital survey or evaluation tools to get feedback 
• Running a digital inclusion project
• Using digital design thinking to design your human-powered services

3. Funding for digital-first service costs

Some services rely only on digital delivery methods. 99% of their touchpoints with beneficiaries may be digital. 

Examples of these include services run by Carefree, Access Social Care and Chayn. Their services are ‘digital-first’ and have high potential to scale.

However these organisations still need people to manage projects and research user needs. Access Social Care has a team of legal experts. Carefree has community managers. Chayn has service leads.

Organisations like these still have core digital infrastructure costs. They are usually good at integrating and communicating these. But their delivery models are the most challenging for funders to understand.

Further information

The Charity Digital Skills report created a pledge for funders. Read how they are asking funders to help charities with digital costs. 

Want to understand your core digital costs and integrate them into your budget better? This series of 3 articles will help you:

• How to understand your current digital costs
• How to budget for future digital costs
• How to integrate digital costs into your operating budget

You might also want to read Should you show digital costs separately in grant funding applications?

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Thanks to Cat Ainsworth and Alex Mecklenburg of Dot Project for their contribution to this article.

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Photo by Andrea Piacquadio