Over the last two decades, philanthropy—the act of giving—has become a pillar of international development assistance, bringing financial capital, skills, innovation and thematic diversity to help address the most pressing challenges facing our world. However, philanthropy is just one component of a much broader giving sector, where philanthropic donors, intermediaries such as giving platforms and donor-advised funds (DAFs), and the implementing organisations that lead project execution (primarily nonprofits) interact.
The growth of philanthropy has been driven by multiple related trends, including rising wealth in emerging economies, a new generation of donors with fresh ideas and perspectives, and the power of new technologies. In China, India and the United States—the three major economies examined in this report—the dynamics of giving are also changing quickly.
Within the giving sector, donors, intermediaries and implementing organisations operate in a complex global giving supply chain, which encompasses a wide variety of stakeholders including corporations, academic institutions, watchdogs and governments, among others. Each participant in the supply chain faces both unique challenges and challenges that are common across the sector.
For the purposes of this report, we focus on three of the sector’s most noteworthy shared challenges: 1) building and sustaining trust, 2) increasing efficiency, and 3) measuring and maximising impact. The giving sector has a demonstrated capacity to embrace change and innovation. It is therefore important to ask whether and how the giving sector might address these three shared challenges through the use of Fourth Industrial Revolution technologies such as artificial intelligence (AI), blockchain and the Internet of Things (IoT). These technologies have the potential to help the giving sector tackle problems such as high transaction costs, donor engagement costs, financial sustainability and accountability. However, it is unclear how actively stakeholders—donors, intermediaries and nonprofits—are using these new emerging technologies in the five key links of the global giving supply chain we explore: Matching donors and recipients; Motivating and informing giving; Facilitating transactions; Tracking outcomes; Validating performance. Seeking answers, the Bill & Melinda Gates Foundation commissioned The Economist Intelligence Unit (The EIU) to conduct a study of emerging technologies in the giving sector, examining current applications, opportunities and potential challenges.
There are ten key emerging technology applications that have the potential to enhance the workings of the giving supply chain: big data, AI analytics, virtual reality (VR), augmented reality (AR), cryptocurrencies, blockchain payment infrastructure, the IoT, drones, smart contracts and impact tokens. All of these applications are powered by four core technologies: AI, virtual intelligence (VI), blockchain and the IoT. These technologies can be applied to five key links in the giving supply chain: matching donors and recipients, motivating and informing giving, facilitating transactions, tracking outcomes and validating performance.
- To support donor and recipient matching, big data and AI are helping charitable organisations to understand more about the views, behaviors and opinions of current and future donors, and about trends in the giving sector. A key challenge is determining how to take advantage of the benefits of analytics in a way that does not impinge on privacy and is compliant with relevant regulations like the GDPR.
- To motivate and inform giving, VR and AR are allowing donors to see the impact of their investments, overcoming the marketing and communications challenges faced by the sector in the past. A key challenge is the potential for misuse and manipulation when using a powerful tool to unlock empathy.
- To facilitate transactions, block-chain and cryptocurrency can add a new rail to financial infrastructure, with tech companies using these facilities to reduce transactions costs.
- To improve outcome tracking, sensors, drones and the IoT can be used to gather data that humans cannot, including on environmental and pollution challenges.
- To validate performance, impact evaluation can be facilitated by smart contracts, which promote transparency and enable automated pay-outs when a social programme reaches a performance threshold. This gives donors greater control over performance-related disbursements. Tokens can also help to monetize measures of impact and create new economic incentives for donors beyond tax exemptions
With the exception of individual use cases, our research has found that all of the evaluated technology applications are nascent in terms of active use in the giving sector. This is to be expected for the technologies that are still being developed and are yet to reach their full potential. Predictive analytics, automation and VR have only recently been commercialized, and block-chain remains largely limited to pilot projects (although it is being adopted across industries including trade, legal services and healthcare, suggesting significant operational potential). As a result, there is limited evidence of sustained success in the giving sector for these applications, but history shows that development cycles for an available technology can often be long. For this reason it is important to keep track of the course these technologies take in the sector and other industries.
While no single technology can overcome all the challenges inherent to the giving process, our research found that smart investment in appropriate solutions can help to build and sustain trust among stakeholders, increase resource efficiency, and measure and maximise the impact of giving.
Read the full report below.