How to understand your current digital costs (Budgeting for digital, Part 1 of 3)

The funding landscape for charities in the UK has changed. Funding for digital work has become harder to come by. Dedicated digital funds, common 4 years ago, are now few and far between. The Charity Digital Survey reports that digital is now a priority for 78% of charities and 49% are in urgent need of funds for devices, software and infrastructure. As the cost of living crisis threatens charity income from government sources and increases running costs, the time is ripe to consider different ways to fund your digital costs.

To help you with this we at Dot Project have written a three-part series that centres on:

1. How to understand your current digital and technology costs 
2. How to consider what costs you might need to budget for in future
3. How to position your digital costs as part of your overall operating budget.

Our advice draws on 7 years of experience collaborating with over 800 organisations.

You need to take a proactive approach to managing your organisation's digital costs. This first blog provides tips on how to strategically manage and adapt your current digital and technology usage, and its costs, by exploring:

1. Your current spending
2. Your necessary expenses 
3. How to check you are getting the best value for money from your current tools and systems.

Doing this will give you the knowledge you need to advocate for your needs and find better, more cost-effective solutions. This is essential if your digital costs are going to become sustainable.

1. What are you currently spending and why?

Working this out is an important first step, especially if you don’t know your current expenditure on digital and technology tools. Doing it will give you a clear perspective on the tools and technologies your organisation uses. It can be done swiftly if the right people are involved.  

Start by making a list of costs and invite others to add to it. No single person will know or recognise all the tools you use. Your organisation’s budget holder will probably have the best insight. You might be surprised what you find out!

Use this Technology and Partner matrix. It will help you to list your digital and technology tools, their costs and their risks and opportunities. You can also gather information on any technology-related partners and their contract terms and responsibilities.  

Completing this matrix is best done as a team. For example, those using finance tools are best placed to comment on the challenges and opportunities of these tools. But they may not know much about your organisation's marketing and communications tools.

Tip: Don’t forget to include any costs associated with digital partners - for example any outsourced IT support or website hosting.

2. Review your essential tools vs. nice to have tools

Once you have a complete list, review which tools are essential to your organisation’s functioning. Their costs are your priority. Prioritising them ensures you’ll have the resources needed for running them even in times of financial constraints.

There may also be tools you use regularly, that are not essential but are definitely useful and nice to have. Make sure you’ve identified these. That way if you need to reduce costs you can consider:

• renegotiating the rates you pay to use them
• downgrading your subscriptions for them
• discontinuing their use.

Tip: Consult your team - what’s nice to have for you might be essential to someone else!

3. Verify your costs with partners

Reach out to your platform providers and digital partners who you pay on a less regular or annual basis to assess whether you're receiving optimal deals for their services and products. Account managers can change regularly so emphasise to them your charitable status and budget constraints. 

Make sure you're well-informed about contractual obligations in case you decide to discontinue or downgrade any tools. Some contracts may have a specific end date or roll on automatically so it’s good to manage them proactively.

Finally, make sure you and your team know who is responsible for managing contracts with providers and digital partners. There is so much value in building strong relationships with partners: they can keep you ahead of the curve when it comes to what technology you need.

Tip: Use the Technology and Partner Matrix to log when contracts or subscriptions are coming up for renewal so you don’t get caught out by costs rolling on automatically.

Useful links

• Use the Technology and Partner matrix to help you list your digital tools and their costs.
• Read NCVO’s types of digital costs.

Part 2 will cover how to consider and plan for future digital costs, particularly those which you might not currently be paying for. Read:

• Part 2: How to budget for future digital costs
• Part 3: How to integrate digital costs into your operating budget

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Image credit: CaLcuLaTor by Sykex Tom on Flickr. Used under license.