Digital civil society emerging

Digital technology and data are driving the use of private resources for public good, and the shape of that emerging social economy will depend on how nonprofits, philanthropies, business and government address critical questions about the ways that data are collected, shared and used, a new report says.

“How we use private data for public benefit will be a definitional issue for our future social economies in Europe, the United States, and across the globe,” says Philanthropy and the Social Economy: Blueprint 2013.

The annual industry forecast was written by Lucy Bernholz, a visiting scholar at Stanford University’s Center on Philanthropy and Civil Society, and produced in partnership with GrantCraft, a joint project of the Foundation Center and the European Foundation Centre.

Key digital issues

The report focuses on three areas in which the adoption of “digital practices, not just digital devices, is changing the root structure of work in the social economy.”

Those include the “nature of voluntary association which requires a degree of privacy that may be in jeopardy online;” the “nature of ownership and governance,” both of which are being looked at differently in the digital era; and that way data could “become a backbone resource for the digital economy.”

The report also looks at the emerging trend of tech-savvy individuals volunteering for local governments.

Associations and privacy

In associating with one another to do work that benefits others, people count on “making private choices to act publicly,” the report says. “We are most likely to take these actions if we are certain that we can do them voluntarily, without retribution or fear.”

The U.S. constitution “grants the right to ‘peaceable assembly’ in its First Amendment,” and European countries mainly “put the full force of their laws behind the right to individual privacy and enforce these protections on the Internet and in corporate behavior,” the report says.

Yet the “current digital infrastructure shares certain elements with some governmental regimes, both present and past, which made associations and private voluntary action unsafe,” it says.

“The trails of evidence created through the use of digital tools are long-lasting, remotely stored, and not controlled by the users but instead by the owners of the digital infrastructure or network interface,” it says.

The collection and storage of digital communications “metadata” are the “equivalent of a tap on every phone or an intercept of every piece of mail,” it says. “This can compromise users’ privacy and make digital tools unsafe.”

While nonprofits and foundations are using social media and digital video to “tell their stories, build movements, and raise awareness,” the report says, doing so may be “jeopardizing their existence as private alternatives outside the public sphere.”

So the organizations that make up “digital civil society,” it says, need to think about their own practices involving digital privacy.

And because their existence “depends on the right of people to gather outside the bounds of the market or the state,” the report says, those organizations “have an obligation to participating in shaping the rules and norms regarding digital privacy.”

Ownership and governance

Unlike the era when goods and money “could not be endlessly reproduced,” the report says, digital goods “can be infinitely copied, with no degradation to the original,” thus requiring the invention of “new rules and software to control how digital copies are made, shared, sold, and stored.”

New approaches to owning and sharing digital good now are expanding to apply to digital databases, the report says.

A small group of organizations such as Mozilla Foundation, Creative Commons, Open Knowledge Foundation and Wikimedia foundation are working to seek “redress or exemption from the tax or oversight authorities wherever they are based.”

That work is creating a model for many associations, and the “challenges they face and rule-exceptions they seek now will become norms for many organizations,” particularly as a growing number of organizations become “inherently global in membership and ownership.”

Data as a ‘starting’ resource

Data have become “core resource of the digital age,” the report says.

And data include not only numerical information on grants but also images, stories, movies, music and “almost anything that can be digitized,” it says.

And while major efforts are underway to “collect better information about nonprofits and foundations and the revenue that supports them,” it says, “we still have a long way to go before this information becomes a valuable resources of and for the work of the social economy.”

Early examples, it says, include shared maps of commonly-coded grants data that are being used by funders interested in black male achievement, and a shared platform used by philanthropic education funders to track federal education proposals that need matching funds.

The ability gather, store and share digital information “can change the fundamental practice of social economy actors,” the report says.

The emergence of “impact investing” over the past five years, for example, “has depended on the development of shared metrics for social and environmental return,” it says.

“Data did not create impact investing,” it says. “But the movement would not have grown with the momentum it has if digital solutions hadn’t been available to meet the demand for both common language and metrics.”

Shared, comparable data “are a prerequisite for the impact investing movement,” it says. “Their use here demonstrates how data can catalyze new enterprises, behaviors and investments.”

Yet the “human and organizational resistance to new practices and behaviors is significant, and the pressures to change philanthropic behavior are weak,” the report says.

Still, some groups are pioneering the use of digital data.

GiveWell, a nonprofit charity review group, and GoodVentures, a philanthropic funder, for example, have teamed up to use data-driven analysis as the basis for individual and shared philanthropic funding decisions, and where all the data and analysis used by the partners are share publicly, the report says.

It also says the role of data in the social economy raises a number of issues, including disclosure of data on donors to social welfare organizations and charitable nonprofits.

No common practices exists to guide the sharing of data “funded by, used by, and resulting from grants given by philanthropic organizations,” it says.

And because “every funder has individual requirements,” it says, a nonprofit with two funders can find itself in the “impossible position of presenting the same information under two different standards.”

What’s more, it says, because many organizations “rely on revenue earned from data in either raw or analyzed form,” while they “may see a benefit to sharing the data freely, they also need to keep the lights on.”

Civic tech

In recent years, tech-savvy individuals in a several cities have been volunteering for local governments, the report says.

While those efforts are driven by volunteers, it says, public agencies also are reaching out to residents and inviting them to improve city services.

And citizens are connecting with one another.

Cities, for example, provide data that coders use to build apps that give public transit riders arrival and departure times, the report says, and clean air advocates reuse data from those apps, along with open mapping software, to propose new bike routes.

Citizens also use software games that let them play with city street grids, and can redesign streetscapes, rally neighborhoods and work with city agencies to build new parks, the report says.

“From superficial efforts to suggest new library logos to substantial engagement through participatory budgeting processes, communications technologies are changing the way we interact with our cities, our elected officials, and our civil servants,” it says.

Todd Cohen

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Data seen driving change in social economy

Digital information is playing an increasingly pivotal role in the emerging “social economy” as “doers” and “donors” look to philanthropy, political giving and impact investing to find the most effective options for putting private resources to work for public good, a new report says.

And as they compete in the social economy, which includes the broad range of “business ventures, charitable efforts, philanthropy, and investment capital geared toward producing positive social results,” nonprofits and organized philanthropy will need to be smarter about the way they share data, handle mobile payments, and deal with the issues of transparency and privacy, says Philanthropy and the Social Economy: Blueprint 2013, a report from GrantCraft.

“We are standing at a new ‘starting line’ for data in 2013,” says the report, which was written by Lucy Bernholz, visiting scholar at the Center on Philanthropy and Civil Society at Stanford University.

That starting line, the report says, “is about putting the data we have to use, looking for relationships between nonprofit/philanthropic data and larger data sets from the public and private sectors, and experimenting with new practices that start from the premise that we now have access to enough useful data that we can move on to explore what to do with it.”

While philanthropy and nonprofits play important roles in the social economy and occupy a “privileged long-term position that allows them a front row seat to the changes underway,” the report says, they “are not the unchallenged center of the economy any longer, nor should we assume that their status, impact or privileged positions are unalterable.”

The next phase for the social economy, the report says, will be driven by a new discussion about “the unique role of organizations like those we know as nonprofits and foundations.”

Data overload

In a world of “digital overload,” with foundations, donors and nonprofits “soon to be drinking from the ‘data firehose,’ the most successful organizations will be those that “figure out how to manage this and thrive within its contexts,” the report says.

Some organizations will deal with data overload “by hiring data analysts to manage data flows, analytics and learning,” while an increasing amount of data “will be made public and transparent for the rest of the sector and any curious others,” it says.

“Data are a resource like money,” it says. “They are critical to success, unevenly distributed, and fundamental to the pursuit of privately resourced, public benefit activities. They are tools for reinforcing or redistributing power.”

Yet the decades of the “information age” have gone “essentially unnoticed by most foundations at least in terms of sharing their information quickly, readily and in a form that would allow easy comparison,” the report says.

By 2009, for example, only 29 percent of foundations “had hung out their nameplate on the Internet,” it says.

That has changed, it says, with over a dozen “meaningful efforts at sharing philanthropic data,” representing “real progress toward a ‘data backbone’ for nonprofits and philanthropy.”

Second phase

With new tools for “sharing raw data and make it useful to the public,” philanthropy has entered the “second phase of a data age” that will focus on “using it ourselves,” the report says.

That phase, it says, will be marked by “finding new ways to compare, analyze and present the data; asking new questions with it; and using the information to inform out work.”

Aggregated foundation grants data now can begin to be used “in ways that simply weren’t possible before,” it says.

With access to over 170 online giving platforms, the report says, the tools that individual donors have for giving are “light years ahead of most foundation check-cutting processes in terms of real-time information, targeted feedback loops, and the ability to  galvanize additional support by reaching out to social networks.”

And, in isolation, data about foundation grants and nonprofit data from IRS Form 990 are of limited use, the report says.

“They may reveal trends in funding interests, geographic density, and patterns of shared strategy,” it says. “But they say little about either an individual enterprises’ operational strengths or the financial/operational healthy of a group of organizations. These data tell us almost nothing about an organization’s strategies or the results it is achieving, nor do they shed light on the status of the larger issue, be it health access, student reading scores, or the number of hungry elders in a community.”

Foundations and nonprofits, the report says, “still lag behind governments and business in making good use of data.”

Digital engagement

Mobile phones and other digital devices represent the next phase of giving and volunteering, the report says.

“We’ll make smaller, more frequent donations, sparked by social network requests, by tapping a bank account or credit card number with a single swipe,” it says. “Freelance fundraising for our own favorite causes or organizations will be easier.  Crowd-sourced and -funded groups will be clean beaches, feed the homeless, help the elderly, respond to disasters, all while not relying on or turning to an organization for help.”

Because mobile payments can be handled through a smart phone, the report says, the individual donor “has all the pieces of big philanthropy — information and money — in one device. The technology has leapfrogged the big institutions in favor of networked individuals.”

Those developments are “not all positive,” the report says. “Ever-smaller donations to organizations can require ever-greater organizational investments in technology to manage.”

Mobile donations and digital data also raise issues of private and security, and underscores the gap  between people with access to a smart phone and those without access.

And while “networked individuals are good at starting things,” the report says, “the jury is still out on how effective they are at maintaining services over time.”

Privacy and transparency

In the social economy, nonprofits “will be defined by how they use their data for public good while protecting the personal privacy rights of all who contribute that data,” the report says.

Initially, it says, nonprofits will define themselves through “good practice,” while later they may be defined through legal requirements.

“We will all be well served if nonprofits take a leadership role in defining and demonstrating the practices they want to see encoded in future regulations,” it says.

Nonprofits continue to earn “higher trust ratings” than business or government, the report says, and how they use personal information will influence that standing.

And as the nonprofit sector tries to catch up on data, transparency and innovation, it says, “we need to differentiate data about people from data about enterprises.”

Organizations that seek to use private resources for public good need to get the issues of “private” and “public” right, the report says.

The way that enterprises “navigate the tensions of private data and public good will become a differentiating factor for organizations in the social economy — not all will make the same choices,” the report says. “These practices and choices about data may eventually serve to distinguish and define organizations within the social economy the way financial profit motive does now.”

Regulation in the social economy

Organizations and financing systems in the social economy are “not created equal,” the report says.

“Nor should they be,” it says. “They should be complementary. For that to be possible, we need to think about accountability, governance mechanisms, the use of free labor (volunteers), the role of incentives and oversight, and information ownership.”

As politicians resume talks this year about the tax code and limiting charitable tax deductions, the report says, the nonprofit sector “will need to make new arguments to preserve those privileges.”

And those argument “should not just be standard issue self-preservation,” it says.

The political battle may be “fought narrowly over maintaining the tax deductibility of charitable gifts,” and may not include “serious discussion about the most effective ways to provide incentives for private involvement on behalf of public benefit” or any discussion of “data as a public good” or “more substantial regulatory change.”

Yet regulatory change is needed in a social economy increasingly driven by “new networks of ‘doers’ and ‘donors’ using their non-hierarchical, distributed authority, open source model of the Internet and using it for political action and community change,” the report says, citing Future Perfect, a 2012 book by Steven Berlin Johnson.

“We’re reaching a point where impact investing and philanthropy are increasingly intertwined,” the report says, an emerging hybrid characterized as “enterprise philanthropy” in From Blueprint to Scale, a 2012 study from the Acumen Fund and Monitor Institute.

“Whatever you call it,” the report says, “more and more donors and institutional funders are looking at how they can best use a dollar — whether as a donation or an investment — based on the outcome they hope to achieve.

While the thinking of donors and funders now is shaped by rules government donations and investments, the report says, those rules “don’t always serve the larger purpose.”

And with data “beginning to gain traction in practice” as a philanthropic resource, the repot says, “it would be wise for philanthropy and nonprofits to take up the policy issues of data use, ownership, and privacy themselves, rather than wait for a regime to be imposed.”

— Todd Cohen