Digital technologies have potential to transform charities

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China’s government is comprehensively promoting digital transformation, accelerating the formation of a data-intensive society, where data empowers social entities to pursue a sustainable future. As crucial members of civil society, are Chinese charities ready to undertake digital transformation?

According to Tencent Research Institute’s survey of 270 charities, 66 percent expressed an urgent need for digital transformation but only 34 percent surveyed have invested more than 1 percent of funds in building their digital capacity. The contrast is stark, the problem contradictory. For organizations with the need and will for digital transformation, the combination of insufficient funds, lack of skilled staff, absence of planning and lack of staff awareness holds them back.

Although the status quo does not seem promising, the potential for transforming charities is limitless. By innovating services, organizational structure and the ecosystem, digital transformation enables organizations to deliver long-term social benefits more sustainably.

Transforming projects

Most projects non-profit organizations implement have three phases: need identification, project management and evaluation. First, using mathematical modelling, AI algorithms, information systems and other digital tools, organizations can break the shackles of traditional charitable projects, target urgent problems more accurately, and optimize the allocation of resources.

A convincing example is how the Global Burden of Disease map developed by the Institute for Health Metrics and Evaluation helped the Bill & Melinda Gates Foundation ensure its funds reach the neediest. Such maps and databases may not be the magic bullet for all the issues we face, but as Kofi Annan said, “Such fine-grained insight … shows governments, international agencies and donors exactly where to direct resources and support. …… Without good data, we’re flying blind. If you can’t see it, you can’t solve it.”

Second, by bringing projects online, organizations can significantly reduce costs, expand project scales, and enrich project scenarios. The digital project model has advantages that traditional charity work models simply cannot compete with — enabling the integration of multiple resources to solve social problems on a large scale.

Since its debut in 2016, Alipay’s Ant Farm has driven more than 600 million people into its “low-carbon lifestyle” initiative, gathering over 20 million tons of “green energy” for planting trees in barren parts of China. Users can easily access this program through Alipay and become part of a broad social movement to promote biodiversity and environmental protection by making manageable changes to their everyday life. Unlike traditional models of philanthropic work, a digital model gives the public instant feedback on their contributions and thus reinforces their willingness to participate. In a digitally transformed charity, the continuing impact comes not only from the organization but also the public.

Third, databases and data analysis tools enable philanthropic organizations to conduct more effective and systematic evaluations of their projects and make the results more transparent to the public. Corporations in China have already implemented data-generated methods in their ESG evaluation process. From the newly released ESG reports of Ant Group, JD Logistics Inc, Meng Niu and LONGi, readers can effortlessly gain a holistic picture of the company’s environmental and social impact through well-presented charts. Data concerning emissions, resource usage and equality become the primary source of corporate ESG evaluation and serve as an open window for the public to see through. The aforementioned companies benefit from digitalization in evaluation, both inwardly and outwardly. The same holds for charities.

Transforming organizations

Digital transformation will remake charitable organizations in at least three aspects: fundraising, impact building and organizational structure.

One of the most crucial factors for fundraising is trust. Nowadays, donors — both private and public, no longer rely solely on their intuition and emotions for donation decisions. A more rational process typically takes place. Thus, organizations are expected to give their donors open access to the whole process of donation, project execution, fund distribution, and impact evaluation. Data is the most accessible and effective tool for organizations to fulfil these expectations, alleviating the “black box” effect in traditional charity fundraising. Some domestic organizations, such as the Ai You Foundation, have already introduced blockchain and AI technologies to improve information transparency and data traceability.

Another way that digitalization transforms fundraising is through precise targeting. Within the boundaries of protecting users’ data, organizations can build donor databases covering donation preferences and history and deliver personalized project promotion to expand pre-donation outreach and post-donation services. In this scenario, charities will be able to lower donor attrition and lift re-donation rates.

As mentioned in the Ant Farm case, creating an online platform enlarges the participant pool for a particular cause and maximizes social influence. Digital technology reduces the cost of communication for charities and the cost of participation for the public, enabling everyone to become an initiator, supporter, and communicator of social good. At the core is a sense of connection created by digital platforms.

China Foundation for Poverty Alleviation launched its Nutritious Meals Program in 2008. In recent years, the foundation has been using the comment area on its official WeChat account as a space for donors to share their opinions, lives and heartfelt wishes. This has created a positive feedback circle where pre-existing donors are more willing to re-donate and potential donors more likely to participate. The foundation is not alone in this transition. More and more charitable organizations are building and enhancing the structure and interactivity of their WeChat accounts.

The transformation of the organizational structure involves changing how organizations manage their documents, projects and departments, but most importantly, creating digital mindsets among staff members, volunteers and higher-level management. Such mindsets nurture awareness and understanding of digital technologies which reduce barriers, expand external support and boost internal productivity and innovation.

Transforming organizational structures also means reducing highly repetitive and time-consuming management procedures. Cross-departmental collaboration and data sharing will be more accessible, maximizing operational efficiency. With the assistance of an online office system, Adream Foundation can integrate information from different stages of projects and break information islands within the organization, substantially boosting efficiency. Their staff members can access information about customers, project processes, personnel and work-related issues through the WeCom app with one click, saving precious time for more valuable tasks.

Transforming the ecosystem for the post-Covid era

What will the charity ecosystem look like after digital transformation? Open, inclusive, supportive and sustainable. Charitable organizations, donation recipients, digital service suppliers and governments will be able to cooperate more closely, openly and effectively under a digitalized charity framework. By relying on the framework’s infrastructure and open resources, independent service providers can become part of the digital ecosystem of charities at a lower threshold and external cross-sector organizations and individuals will be able to play a more significant role in supporting charity work. The transformed charity ecosystem will be able to positively reinforce itself in the cycle of creating social benefits, for it has fewer barriers and more resources.

For charities globally, the pandemic has taught them a valuable lesson: one should seek change before being forced into it. Despite the initial shock, more and more organizations have noted the benefits of going online with their project operation and staff management. In China, challenging work needs to be done by charities, donors, service suppliers and the government to foster digital transformation on a large scale. But fortunately, with new research and discussions on this topic, change might be on the way.

In Brief

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