The data divide

When it comes to digi­tal matu­rity and the use of data, there are substan­tial diffe­ren­ces between regi­ons, between sectors – and within them. The reasons behind this are complex, but the right approach can have a wide-ranging impact.

At the same time, howe­ver, the data indi­ca­tes that many orga­ni­sa­ti­ons are merely at the start of their jour­ney, espe­ci­ally in rural areas with weak infra­struc­ture. ‘They shouldn’t be left behind,’ cauti­ons Sarah Hermes. 

Digi­tal maturity

A shortage of finan­cial resour­ces is a funda­men­tal issue in the NPO sector. This is parti­cu­larly noti­ceable in the field of IT: IT services are pricey, which exacer­ba­tes the problem. ‘NPOs face the chall­enge of only being able to use a limi­ted amount of their finan­cial resour­ces for admi­nis­tra­tive expen­ses and infra­struc­ture costs,’ says Sarah Hermes. This makes it harder to finance IT projects. Howe­ver, the survey indi­ca­tes that invest­ments in IT alone are not enough. ‘Access to resour­ces also depends on an organisation’s level of digi­tal matu­rity,’ she says. ‘The more digi­tally mature they are, the more access they have to the neces­sary resour­ces and the more effec­tively these resour­ces can be used, too.’ In speci­fic terms, the report reve­als that a third of NPOs lack resour­ces and know­ledge alike, with a mere 14 per cent having enough of both. All told, the shortage of resour­ces is grea­ter than the shortage of know­ledge: 10 per cent of NPOs have the know­ledge but not the resour­ces, while just 1 per cent have the resour­ces but not the know­ledge. Further­more, the report evin­ces a connec­tion between the level of digi­tal matu­rity and an NPO’s over­ar­ching skills. Orga­ni­sa­ti­ons pursuing an evidence-based stra­tegy undergo swif­ter deve­lo­p­ment over the course of their digi­tal trans­for­ma­tion. An inno­va­tion-driven approach and alignment with stake­hol­der groups also support digi­ti­sa­tion. The Digi­tal Report’s findings on how data is hand­led under­line the multi-face­ted nature of the chall­enge at hand and, at the same time, the poten­tial at stake. The majo­rity of NPOs coll­ect data, but most of them do not use it consis­t­ently. ‘This means,’ says Sarah Hermes, ‘that, once they’ve coll­ec­ted this data, most of these orga­ni­sa­ti­ons aren’t actually making it available and using it to opti­mise their offe­rings or review whether they’re meeting their objec­ti­ves.’ The main reasons for this untap­ped poten­tial are an inade­quate aware­ness of the issue itself and a high day-to-day workload, paired with a shortage of resources.

A widening data divide

The data divide is the expan­ding use of data to create commer­cial value and the compa­ra­tively weak use of data to solve social and envi­ron­men­tal chal­lenges. ‘Yes, the lack of finan­cial resour­ces is a signi­fi­cant barrier to bridging the divide,’ she says. But it’s not just money that’s needed. At the root of the problem is actually the old funding models of state and phil­an­thro­pic spon­sors. She menti­ons three factors that prevent social and ecolo­gi­cal progress: Donors support projects, not orga­ni­sa­ti­ons. The funding they provide is often earmarked for a parti­cu­lar purpose and not gene­ral opera­ting costs. Ulti­m­ately, they limit the over­head expen­ses of orga­ni­sa­ti­ons. This narrow, limi­ted approach impairs the ability of an orga­ni­sa­tion to drive forward the impact of data. It means the orga­ni­sa­ti­ons cannot invest in data struc­tures or talents that are crucial to deli­ve­ring effec­tive and impactful services. But it’s precis­ely here that the poten­tial lies. Ms. Deigl­meier says: ‘In a digi­tal and data-driven economy, data is an asset that unlocks know­ledge and makes us smar­ter.’ In a world powered by data, it is a key ingre­di­ent to find solu­ti­ons that work and can be repli­ca­ted, she says. If there is no invest­ment in orga­ni­sa­ti­ons’ data capa­ci­ties, then it is people and the envi­ron­ment that suffer in the end. There is no single reason for the data divide. In fact, seve­ral complex, intert­wi­ned factors are respon­si­ble. The second important reason, apart from finan­cial resour­ces, is that the sector is lagging far behind when it comes to deve­lo­ping a robust data ecosys­tem. This quality is not just charac­te­ri­sed by the data. Struc­ture, plat­forms and decis­ion-support tools are just as signi­fi­cant, in her view. If, for instance, govern­ment autho­ri­ties coll­ect data by a method that means they cannot be proces­sed by exter­nal soft­ware program­mes, then this renders them unusable in any meaningful way. ‘Orga­ni­sa­ti­ons need to open up their systems and thin­king to allow for more robust and wide­spread data coll­ec­tion and use,’ insists Ms. Deigl­meier. ‘Howe­ver, to truly tackle the data divide for social and envi­ron­men­tal impact will require cross-sector colla­bo­ra­ti­ons.’ She calls for long-term commit­ment and global colla­bo­ra­tion between busi­nesses, civil society and govern­ments. Where social impact is concer­ned, she feels that society is only taking its first steps in its rela­ti­onship with data and its under­stan­ding of the data divide. This makes it all the more important to start this jour­ney now. ‘The good news,’ she says, ‘is that there’s pivo­tal work alre­ady happe­ning in the sector that is making it easier to build this func­tio­ning ecosys­tem and make the needed future-forward chan­ges.’ She adds: ‘To drive the power of data for a more just, sustainable, and prospe­rous world, we need to be bold enough to build the complete system and not be satis­fied with piece­meal work.’

Data compe­tence as the bedrock

Ms. Deigl­meier belie­ves that achie­ving this will require more signi­fi­cant social change. ‘We need to start thin­king about data liter­acy as a must-have essen­tial life skill,’ she says. She considers data compe­tence to be central to impro­ving the situa­tion. She compa­res this with finan­cial compe­tence: we need a basic level of know­ledge in order to func­tion in society. And as the world is being deter­mi­ned by data to an ever-grea­ter extent, data compe­tence is criti­cal. ‘We all need the ability to read, under­stand, create, and commu­ni­cate data because it’s the key to unlo­cking infor­ma­tion and buil­ding know­ledge,’ says Ms. Deigl­meier. For NGOs, staff working in program­mes, commu­ni­ca­ti­ons, finance and human resour­ces at all levels need to under­stand data. ‘Inves­t­ing this data talent and skill-buil­ding needs to be a prio­rity for NGO leaders and funders,’ she says.

Poten­tial or disadvantage

Inter­na­tio­nally, the data divide exhi­bits a variety of disad­van­ta­ges and poten­ti­als. Deve­lo­ping count­ries are at a disad­van­tage in bridging the data divide, because their govern­ments and the local NGOs often do not have the tools or resour­ces needed to access and utilise big data. ‘They will likely conti­nue to fall behind,’ predicts Ms. Deigl­meier. Statis­tics reveal a clear divide: accor­ding to a report from the Inter­na­tio­nal Data Corpo­ra­tion (IDC), spen­ding on big data and analy­sis solu­ti­ons excee­ded USD 215 billion in 2021. More than half of this was spent in the United States. Howe­ver, the latest tech­no­lo­gi­cal deve­lo­p­ments offer oppor­tu­ni­ties: ‘Inves­t­ing in and empowe­ring count­ries to use data to address their social and envi­ron­men­tal chal­lenges increa­ses their likeli­hood of success.,’ says Ms. Deigl­meier. Poorer count­ries can catch up with higher-income count­ries, and in crea­tive and inno­va­tive ways. The deve­lo­p­ment of commu­ni­ca­tion tech­no­logy is an exam­ple. With the intro­duc­tion of the mobile phone, deve­lo­ping count­ries became able to circum­vent old systems that requi­red expen­sive infra­struc­ture. They were able to connect their count­ries in chea­per and more effec­tive ways. Howe­ver, indus­tria­li­sed count­ries have to support less deve­lo­ped count­ries along this road. Ms Deigl­meier considers global phil­an­thropy, govern­men­tal aid and busi­nesses to be duty-bound to be gene­rous with their invest­ments, as well as with their data and data support resour­ces. ‘It is criti­cal that all NGOs have access to the data needed to drive their missi­ons forward. To get there, we’ll need all the play­ers to contri­bute.,’ she says. ‘After all, the beauty of data is its shara­ble nature. Then, for exam­ple, count­ries and regi­ons with health data can help local NGOs serving the same or simi­lar popu­la­ti­ons. And so much more.’ 

An uptick in demand

At present, Germany is in a rela­tively good posi­tion as regards the digi­tal matu­rity of its NGOs, compared to other count­ries around the world – even though Sarah Hermes belie­ves that some other Euro­pean count­ries are further ahead. Aspects that deter­mine a country’s deve­lo­p­ment in this respect include its culture and society, along with network coverage and avai­la­bi­lity. Sarah Hermes thinks there are seve­ral ways to further boost the digi­ti­sa­tion of the sector in Germany. Along­side finan­cial support, which is alre­ady being bols­te­red with various initia­ti­ves, she high­lights access to exper­tise: ‘At the Haus des Stif­tens, we’re noti­cing an uptick in demand from NPOs for various services, such as free webi­nars or IT work­shops,’ she says. There is a growing willing­ness to engage with this topic, some­thing that is also reflec­ted in the use of tools. While digi­tal tools have long been seen prima­rily as a way of making work easier, Sarah Hermes is noti­cing how they’re incre­asingly being used in the sector to boost impact: ‘This topic has visi­bly gathe­red momen­tum over the crises of the last few years, be it the coro­na­vi­rus pande­mic, the cata­stro­phic floods in Germany or the war in Ukraine, which has empha­sised the need to use digi­tal tools.’ Further­more, she belie­ves ‘that the use of online fund­rai­sing plat­forms can really acce­le­rate impact – with nonpro­fits also turning to this approach more frequently.’