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May 29, 2023 - 11:32

6 Ways Data & Technology Will Transform Philanthropy In 2022

2022 is going to be a record year in philanthropy, both in frequency and – more importantly – in effectiveness.

One of the main reasons is that philanthropic decisions will be driven increasingly by data and technology. This technology will not only streamline and accelerate the pace at which charitable gifts are given, but also help funders to make more informed, intelligent decisions about where their money is given and how it can be deployed most impactfully.

Below are 6 ways we predict technology and data will transform philanthropy in 2022 and beyond.

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1. Funding Networks Will Help Philanthropists Increase Impact

Online platforms and data sharing technologies will allow philanthropic organizations to shift their approach from silos to networks, dramatically amplifying the impact of their work.

To truly move the dial forward, philanthropic foundations need to see the full picture. They need to understand who else is working to address the same social problems, how they're connected and the impact they're having. And to be truly impactful, philanthropists need to understand not only which geographies and populations are receiving the most attention and resources, but also which are being left behind.

Funding Networks Will Help Philanthropists Increase Impact

But right now, data in the nonprofit sector is extremely fragmented, and pulling together a cohesive picture of even one cause area or region (say for example, youth homelessness in the city of Boston) requires weeks of research. The result is strategic myopia: funders are flying blind, only able to see a fraction of the social ecosystem they are trying to change.

To truly effect real, lasting change it takes a village. It requires a community of funders, nonprofits and neighbors working together, in tandem, to truly move the dial forward on deep, complex issues like poverty, housing and education. In 2022, online platforms and data sharing technologies will make this easier than ever before. They’ll empower the nonprofit sector to share information so each member can see where they fit in, how they’re connected, and how they can work in partnership with their community to maximize impact.

2. Big Data Insights Will Help Funders Find “Invisible Communities”

There have always been gaps in the philanthropic market. These gaps are the organizations, neighborhoods and populations that are overlooked, while others – sometimes just a few zip codes away – receive noticeably more attention, and more funding.

These are the so-called “invisible communities” that fall under the radar of philanthropy. But in 2022, the deep insights pulled together using big data – whether from Form 990s, census data, or state and local data collection efforts – will help funders find, and support, these overlooked communities.

By gathering and analyzing huge amounts of funding data, connecting it with specific markers, like causes, populations, and geographies, and then layering it over key indicators like median income or food stamp prevalence, technology will allow grantmakers to pinpoint exactly where these gaps are. And it will mean that in the future, grants can be specifically targeted to the communities and causes that are currently being overlooked – so they can make sure their gifts and grants are deployed to where they’re most desperately needed.

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3. Centralized Online Platforms Will Reduce the Reporting Burden on Nonprofits

Centralized online platforms will make it easier than ever for philanthropists and their beneficiaries to stay up to date on a nonprofit’s progress and remain engaged in their work.

2022 will see the rise of technologies that let nonprofits, funders and other stakeholders in the community instantly and iteratively share important information about their work and their impact. Instead of the status quo, where nonprofits need to report to multiple funders at multiple points in the year, centralized platforms will allow these organizations to add a single update to their platform profile, and then immediately push it out to their entire network.

Centralized Online Platforms Will Reduce the Reporting Burden on NonprofitsAt the same time, this will also reduce the data maintenance burden on grantmakers, who will no longer need to waste precious time manually update their records each time a new update or piece of data comes in.

Importantly, these platforms will increase accountability – and more importantly, build trust – among donors and grantees, allowing philanthropic foundation members, stakeholders, and beneficiaries to stay connected to one another, track their donations’ effectiveness, and maintain a detailed, analyzable history of past giving.

4. “Lean Philanthropy” Will Replace The Philanthropy Industrial Complex

2022 will signal the beginning of the end of the behemoth process of poring over foundation grant applications, undergoing dozens of interviews, and trolling through nonprofit websites. Billionaire Jack Dorsey and other big donors are promoting this new way of giving, which has been labelled “lean philanthropy”.

In this approach, there are no lengthy nonprofit grant applications or review processes. There is no need for the donor to spend months or years obtaining the data that will allow them to make an informed decision supporting a potential grantee. This data will be available immediately via cloud platforms and due diligence sharing applications. And by the time the interview rolls around, much of the due diligence work and underlying review process will already be complete.

As a result, increasingly grant interviews will be done virtually, and decisions will be made quickly. As we’ve seen with Dorsey, often the decision to give or not was made within a matter of hours. This way the donor can fund a new grantee within days and speed up the giving process, rather than having to wait months or days to complete a lengthy bureaucratic vetting process.

The power of technology to share significant data will allow lean philanthropy to succeed. In turn, it will also enable nonprofit organizations to accomplish their mission more quickly, and cost efficiently.

5. Online Accountability Will Require Philanthropists To Be More Transparent With Their Giving

Going into 2022, online accountability will require donors to be more transparent with their giving.

Some funders are already making huge strides in that direction. For example, billionaire philanthropist Mackenzie Scott is creating a website with a “searchable database of grants.” This provides the public with essential data to keep the donors for those grants accountable for their donations.

In 2022, data-sharing platforms like this, as well as other easily accessible public records on cloud-based platforms, will continue to set the standard for transparency among philanthropists and their donations. 

Online Accountability Will Require Philanthropists To Be More Transparent With Their Giving

6. Crypto Philanthropy Will Reach Smaller Organizations

A study released by Fidelity Charitable in 2021 shows that cryptocurrency investors have been more giving than investors in traditional stocks and bonds.

Larger organizations are already using digital platforms to accept cryptocurrency and convert it to cash. This trend will trickle down to smaller charities, as well. Expect cryptocurrency to continue to boom in 2022, particularly as more charities realize the huge opportunities that cryptocurrency donations pose.

There is a big opportunity for crypto philanthropists to come out on top, as well; by donating cryptocurrency, they can potentially enjoy certain tax advantages, like avoiding capital gains.

Conclusion: Data And Technology Will Make 2022 The Most Transformative and Most Impactful Year Of Giving In History

The future for philanthropy is at its brightest in 2022. Despite the grim shadow that the COVID-19 pandemic cast, this year we predict a shining outlook. And much of the reason for this will be the outsized, impactful effects that technology and data will have on the philanthropic and nonprofit worlds. From the billionaires and millennial crypto investors to local community members and household givers, everyone will have an opportunity to plan transparently & intelligently, give impactfully, and effect real, lasting change.

That’s a lot for one year to live up to but trust us: this will be the biggest year of giving in history.