Charities are working hard to balance significant financial pressures as the cost-of-living crisis continues to squeeze the sector, with 69% of charities saying their strained finances remain the biggest barrier to digital progress.

This is according to the Charity Digital Skills Report 2025 which surveyed 672 charities, finding tension between the charity sector’s reality and ambition with digital.

The systemic issues dating back to the report’s inception in 2017 still exist, including charities without a strategy (just 44% now operate with a digital strategy in place, down from 50% last year); inability to use data to inform decision making or strategy (52% say that they are fair at this and a quarter say that they are poor) and lack of basic digital skills.

Yet, despite the significant challenges, the sector is working hard to keep pace and adapt to accelerating technological change. It is positive that 63% of charities have still managed to make digital progress this year, and 75% continue to prioritise digital within their organisations.

Equally, digital is a priority (medium or high) for 74% of charities and they are feeling confident in using digital tools in everyday work, with 92% rating themselves as fair or excellent in this area.

The research also reveals substantial growth in AI adoption, with 76% of charities now using AI tools compared to 61% in 2024.

However, it is concerning that so many charities rate their CEO and board’s AI skills as poor, with many reporting that their AI governance is lacking.

This may well improve in 2026, with half (49%) of charities prioritising developing their strategy for digital, data and AI, 74% recognising that AI developments are relevant to them and 48% currently developing an AI policy (68% of large charities).

However, the findings show the charity sector is facing a leadership crisis. Just over a third of charities (36%) say that their CEO has poor AI skills, while 4 out of 10 (44%) state their board is also poor.

In addition to this, 64% of charities want their CEOs to develop a clear vision of what they could achieve with digital, a significant increase from 55% last year. Leaders must urgently prioritise digital upskilling, especially with AI adoption on the rise and ensure their charity’s vision is linked to the organisation’s strategy, mission and values.

Otherwise, how will charities have a clear idea of what success looks like? They need to be confident in how they can work towards success, making it easier to make decisions and plan next step, which includes adopting AI responsibly.

Upskilling on AI is not just a leadership problem. Over a third (35%) of charities say they are poor at using AI tools in everyday work, while 29% say they don’t do this.

This means that almost two-thirds (64%) of charities either struggle with or are not using these tools. Equally, 45% of charities want support with using AI tools to analyse their data, and 42% need help with storytelling with data.

Almost 4 out of 10 (39%) are poor at website and analytics data, an increase from 31% last year.

Half (50%) of charities are also struggling to use AI to keep up to date with emerging tech trends, either finding it a challenge or are not being across these trends. More than 4 in 10 (41%) are poor at this and 9% don’t do this.

Improving digital skills and data capabilities has always been important, but it is now business critical.

Otherwise, how are charities going to move forward? The risks of charities getting AI wrong are huge and will ultimately impact their ability to scale use of AI.

If you haven’t got the right skills, data, infrastructure and governance, how can AI or other positive trends be leveraged effectively? The lack of progress in improving data skills revealed in the report is also really worrying because it’s even more pressing now because of AI in terms of data security and governance.

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With 23% seeing the need for good governance and data security a low priority, this means it will be much harder to move forward safely with AI and doing so without the right skills could be reputationally damaging.

“Funding for digital is more important than ever during the cost of living crisis, with squeezed organisational finances being the biggest barrier that 69% of charities now face when looking to progress digitally,” Zoe Amar, founder of Zoe Amar Digital and founder of the Charity Digital Skills Report, commented.

“We urge funders to consider how they might meet these needs and recognise that charities also need funding for core staff or cover staff time to spend on digital/data, a huge increase from 30% in 2024.”

Nissa Ramsay, co-author of the Charity Digital Skills Report, added: “This year’s report reveals a nuanced picture of digital progress. The gap between large and small charities continues to grow, with 68% of small charities at an early stage with digital, compared to 32% of large charities.

“However, small charities are finding an invaluable role for AI tools in bid writing, fundraising and communications. Black led charities are showing strong digital skills and progress, particularly with AI, diversity and inclusion in digital service design. Yet, like last year, 44% still say they cannot find a funder for their digital work, compared to 27% of all charities.

“Charities in Northern Ireland, the North of England and the Midlands are at an earlier stage with digital compared to other regions. For those with limited digital skills and capacity, only 30% accessed funding which covered digital costs, compared to 55% of those at the advancing stage. The report really demonstrates why we urgently need to find ways to make digital tools, skills, approaches and funding more accessible.”