How charities are using digital tools and AI

The Charity Digital Skills Report 2026 highlights how charities are using digital tools and AI, the pressures affecting further progress, and the governance questions emerging as technology becomes more embedded in the sector.

The Charity Digital Skills Report 2026, released in July, provides an annual snapshot of digital and AI skills, trends, funding and support needs across the charity sector. This year’s findings show a clear increase in digital progress, with 81% of charities reporting that they had moved forward digitally, compared with 60% in 2025.
However, the report also highlights that this progress is taking place against a difficult backdrop. Many charities continue to face financial pressure, rising demand for services, skills gaps, governance challenges and concerns around trust in AI.

Key findings from the report include:

• 79% of charities are now using AI.
• 63% say squeezed finances are their biggest barrier.
• 58% of funders say AI is changing the bids they receive.
• 56% say a lack of skills is their biggest AI barrier.
• 55% of funders do not know if applicants use AI.
• 44% say training staff is their top funding need.
• 35% do not trust AI tools (more than double last year).
• 33% of charities say their board has poor AI skills.
• 28% of charities have a digital strategy in place.

The key message is that AI is no longer a future consideration for the charity sector. A majority of charities are already using AI in some form, and these tools are beginning to influence how charities work, how they access information, how they apply for funding, and how they deliver services.

This creates significant opportunities, but it also means charities need appropriate support, training and oversight to manage the pace of
change responsibly.

The report notes that AI adoption may be helping charities address capacity pressures, particularly where tools are used to save time on administration and project management. However, greater reliance on AI also brings risks.

If organisations become dependent on tools without sufficient internal skills or oversight, sudden cost increases, reduced access or inappropriate outputs could create financial, operational and
reputational challenges.

For charities already facing squeezed finances, these risks should be considered as part of wider budgeting, reserves planning and risk management.

The finding that a third of charities say their board has poor AI skills is particularly important. Trustees do not need to be technical experts, but they do need enough understanding to ask informed questions about risk, cost, data protection, ethics, over-reliance and the potential impact
on beneficiaries.

As AI becomes more embedded in day-to-day operations, board-level awareness and challenge
will be an important part of good governance.

PEM’s view

Digital and AI adoption presents real opportunities for charities. Used well, these tools can improve access to knowledge and resources, support fundraising and communications, assist with administration, and help charities deliver services more efficiently.

For some organisations, AI may also provide access to capabilities that would otherwise be difficult or costly to obtain, such as translation, research support or operational guidance.

However, the pace of adoption means charities need to approach digital and AI use thoughtfully. The risks include over-reliance on external tools, increasing costs, inconsistent skill levels across teams, data protection considerations, and limited understanding at board level. The reported increase in distrust of AI should not be ignored. Trust is central to the charity sector, and organisations should be able to explain how they are using AI, what safeguards are in place, and how decisions remain subject to appropriate human oversight.

Trustees and senior management should consider whether their organisation has clear guidance on AI use, appropriate training for staff and volunteers, and proportionate governance arrangements.

AI does not need to be avoided, but it should be introduced in a way that supports the charity’s mission, protects beneficiaries and stakeholders, and remains affordable and sustainable.

The full Charity Digital Skills Report is available on the Charity Digital Skills website.

If you would like to discuss how PEM can support your charity, please get in touch.