Nonprofits face unique risks when it comes to the management of digital data and civil society has a role to play, argues Lucy Bernholz.

We live in an age of data. Billions of gigabytes of data is generated every day, poured into the sea of information known as the internet, and organisations are only just seeing the tip of the iceberg when it comes to what this data can be used to do.

For three years I’ve been working alongside Perpetual in Australia, and we’ve made it our job to try and understand how people create, fund, and distribute shared social goods in the digital age – what I call the ‘future of good’. Perpetual advises a number of NFPs in Australia and identified early that they face unique risks when it comes to the management of digital data, and it has been very interesting to collaborate on a range of initiatives designed to assist NFPs globally.

Digital data and infrastructure have opened up new possibilities for nonprofits to conduct charitable work and serve civil society. There are now so many ways to use social networks to connect with people and develop better insights into the way they engage with charities and nonprofits.

Although the benefits of the digital age are significant, it has exposed NFPs to a number of threats and new ties that bind the social sector in ways for which we are not fully prepared. Governance issues, questions about the social contract and the need to create new institutional capacities are all emerging as risks to any organisation that handles data.

Data was once like bottled water in that it could be contained and managed. In the digital age, by contrast, data is like steam. It cannot be held together. It takes on a life of its own, travels quickly and you are often unable to see where it has gone. It cannot be contained in the same way it used to be.

For instance, we think of email as a conversation between two people, but when two people are talking in person there is a certain level of privacy. To mimic this simple private conversation in the digital space would require a high level of encryption and both parties would have to agree to destroy the evidence afterwards, which of course is not what usually happens.

Despite this reality, we have been habituated to trust our devices and use them to do things in exchange for what feels like free access to all services online. But free flowing data, not bound by privacy, data protection, and the awareness of what that data can be used for, can actually make marginalised populations more vulnerable.

Back in the US, we have several NFP organisations that collect data about their communities’ immigration status and keep this on Google docs, a format easily accessible by anyone. This can become very dangerous if the information is accessed by people with a malicious motive.

NFPs carry a social mandate to conduct charitable and socially beneficial work. Even if intentions are good, any misuse or accidental sharing of data by an NFP organisation will have stronger negative implications for that organisation than it would for many profit-driven businesses and may even erode the trust in the NFP sector as a whole. This is because as socially attuned organisations they are held to higher account.

It is, therefore, vital nonprofits know what information to collect on the people they serve, where they store it, who has access to it and how they gain permission to access it. Even an awareness of these elements is progress in our circles.

I think the best place to start with making positive change is with the people. Developing lightweight apps that help people understand where the digital data they generate is going, what companies and apps have access to it, and what they’re doing with it will help progress the language and tools that are needed to enable people to figure out what problems they are faced with.

We then need to encourage NFPs to bring digital data into the mainstream conversation and think about it as a key part of their businesses. In a recent study by Perpetual, it was found that NFPs are generally under prepared for the challenges that data management poses – with one in three respondents agreeing that mismanagement of data is a major concern for their business. However, over half of all board members are unaware of the steps taken by their organisation toward making a data governance plan.

NFPs need to think about what data is used for, who can access it, how many people ‘touch’ it and its implications on different stakeholders, including the community and the organisation itself. A key finding of Perpetual’s study was that 43% of board members agree protecting data is a more important focus than using it to their advantage, though interestingly only 7% of employees agreed. The truth is both are equally important.

I also feel civil society has a role to play, which is to work on behalf of those who are not being served by the majority’s decision (whether government or business); where they aren’t given an opportunity to exercise their rights. Civil society can and should give the minority a voice.

It is our role to work with legislators on universal new laws about corporate data collection and storage. More importantly, it is our role to make people aware of data privacy laws and ensure the government is paying attention to them.

The future of good is here. Now it’s up to us to make sure it’s a bright future for generations to come.

About Lucy Bernholz

Lucy Bernholz is a Senior Research Scholar at Stanford University’s Center on Philanthropy and Civil Society and Director of the Digital Civil Society Lab. She has been a Visiting Scholar at The David and Lucile Packard Foundation, and a Fellow at the Rockefeller Foundation’s Bellagio Center, the Hybrid Reality Institute, and the New America Foundation. She is the author of numerous articles and books, including the annual Blueprint Series on Philanthropy and the Social Economy, the 2010 publication Disrupting Philanthropy, and her 2004 book Creating Philanthropic Capital Markets: The Deliberate Evolution. She is a co-editor of Philanthropy in Democratic Societies (2016, Chicago University Press) and of the forthcoming volume Digital Technology and Democratic Theory. She writes extensively on philanthropy, technology, and policy on her award-winning blog, She studied history and has a B.A. from Yale University, where she played field hockey and captained the lacrosse team, and an MA and PhD from Stanford University.

About Stanford PACS

The Stanford Center on Philanthropy and Civil Society (Stanford PACS) in Stanford, California develops and shares knowledge to improve philanthropy, strengthen civil society and effect social change. Stanford PACS connects students, scholars and practitioners and publishes the preeminent journal Stanford Social Innovation Review (SSIR).

About Perpetual

Perpetual is a financial services group operating in funds management, financial advisory and trustee services. Our origin as a trustee company, coupled with our strong track record of investment performance, has created our reputation as one of the strongest brands in financial services in Australia. For further information, go to the website.

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