Dr Lucy Bernholz, a world-recognised thinker on digital and data trends, says funders must take more responsibility for improving how data is handled and managed for the organisations they're helping, including how much information they're demanding in the first place.
Australians have been among those affected by a global spate of big data and privacy breaches, exposed by new laws or scandals such as the leak of the data of 87 million Facebook users to political consultants Cambridge Analytica.
The Digital Civil Society Lab's director, Bernholz is based at the Stanford Center on Philanthropy and Civil Society in California but travels the world examining digital trends, and her latest interest is the shape of the emerging "digital civil society". She says one of the biggest changes she's noticed in Australia in the past three years has been a spike in public concern about personal data and how it is managed.
The well-informed debate about the MyHealth database and the growing opposition to an automatic opt-in for the system is just one example, Dr Bernholz says, of a shift in those attitudes.
Her speciality is helping not-for-profits and those supporting them, to manage digital assets better.
She believes funders must become part of the solution, by being wary of asking too much of their grant recipients, and by thinking carefully about how well "digital ties" between funders and funding recipients are working.
"At the very least, we think that funders of all sorts, just as they are interested in building the governance and management capacities of the organisations they work with, that managing digital resources safely, ethically, and effectively is a key part of that good operating practice."
"For example, if funders are putting certain kinds of data demands on not-for-profits - data demands about counting people or including identifiable demographic information - but if the not-for-profits and the funders can't protect that information safely, they're actually making vulnerable people more vulnerable."
Her catch-phrase on that issue: "If you can't protect it, don't collect it."
Why excessive demands divert grantees from their mission, and become your problem
Unfortunately, the current grantmaking environment has meant many not-for-profits are being hamstrung by the very organisations trying to help them.
"The worst situation is probably the most common situation, in which you've got an organisation that's doing good work, it's collecting certain amounts of data in order to run its operation and make sure it can keep the lights on, and keep the services flowing. And then, you get these funders coming in from the side saying, "No, we want this", and then funder B says, "No, we want this", and then funder C etc."
"What you've done is created a situation where the organisation is distracted from doing its work. It spends all this time complying and gathering all this other information. Then all of that is potentially a liability [if breached] and might make people more vulnerable."
"I don't think there's a funder out there that wants that to be the situation".
She gives the example of a funder seeking proof that a homelessness initiative is working.
"The trap we fall into is thinking we need everybody's name, age, birth date, race, religion.
"Really? No, you don't. You probably need some basic numbers to make sure you're not double-counting or under-counting something, and you can track people over time. But you probably don't need that level of sensitivity."
Gathering and using that data is also often beyond the capability of the not-for-profits that funders are trying to support, unless they get additional resources.
"Most not-for-profits are not going to wake up on Monday and suddenly have two data scientists and a really high-level technological security system on staff.
"So having all that information lying around waiting for the "unicorn moment" when you have the ability to analyse that stuff is just making people vulnerable now."
"You don't want to put that onto your not-for-profits, and you certainly don't want them then sharing that information up the chain with you, where it's now sitting in your office - on your servers - and you've got to worry about it."
Her prophetic warning for funders who demand more information from grantees than they need because they're pursuing the latest outcomes measurement trends also comes with the observation that their own data practices aren't always of the highest standard.
"You often see a few sheepish looks. Their data practices may not be any better than the under-resourced non-profits'."
Dr Bernholz says people need to "reflect on their own data practices" before making demands of others.
"If everybody in your organisation is constantly on their phone, is not using basic passwords, isn't using two-factor authentication, isn't taking care of their basic data, chances are that organisation's not doing even the first-line easy things.
"What's important when you step into the workplace is to remember that while what's on your phone is yours, what's at your office is not yours. It comes from the people you're trying to serve, and you want to do better by them."
How to be smarter, with less data
What's needed, Dr Bernholz says, is an "honest conversation between funders and grantees about what are we actually trying to show, what are we trying to prove, and what data do we need to do that".
Dr Bernholz has seen what can go wrong, and the costs involved. And she has this advice for funders: "What's the least amount of data that you can collect to answer the questions you're trying to answer?"
She acknowledges that this is counter-intuitive for many organisations, who face a barrage of marketing from companies that specialise in data management, marketing software, the cloud and any variety of apps, pressuring them to collect every scrap of information they can.
"We've been marketed it by companies that have a vested interest in us acting that way, [but] we need to put our thinking caps on and get a little bit more sceptical about this."
For example, instead of simply demanding more proof from the organisations they're funding, Dr Bernholz says funders should increase their focus on building the data capacity of those under their wings, which will benefit the funder too.
"Not-for-profit organisations are mission-driven, and most of them are really focused on doing the work they're trying to do.
"The information they may need to know their own progress should be the information that the funder can then figure out how to use, to prove their own impact," Dr Bernholz says.
Dr Bernholz has seen data models that will work for all parties.
She describes the work of Clara Miller from the F.B. Heron Foundation in New York, which focuses on affordable housing through large-scale social investments.
Ms Miller had spent 20 years in not-for-profits "filling out useless forms demanded by funders" and sought a better way. That better way involved helping all partner not-for-profits to develop common measures, which were stored and managed by a third-party social enterprise, CoMetrics.
"On a daily/weekly/monthly basis, the housing organisations gathered the information they needed to run their business [and] they shared that information with CoMetrics, which allowed organisation A to benchmark themselves against their peers.
"They were only collecting the information that they needed to run their businesses. They benefited because they could benchmark themselves against each other and learn from each other."
When the foundation needed reports, it went straight to CoMetrics to look at the figures - with the prior agreement of the not-for-profits.
"With a little bit of creativity, not only can we improve the process, we could take out grantee reporting. And I bet you can't find me a not-for-profit that wouldn't be thrilled with that possibility."
Why funders' decisions matter for democracy
Dr Bernholz says these types of decisions for funders go to the heart of what makes our democracy function. She is interested in carefully watching the way the way private resources are managed for public benefit in "digital civil society".
"The reason it matters so much is because we're dependent on digital data and digital infrastructure to a degree that's fundamentally changing what we're able to do, and the kinds of resources that we have to manage."
"We're trying to understand what the implications of digital civil society are for foundations and philanthropists and other funders [and] their role in it."
While her views are coloured by US politics, trends and funding, her frequent travel has highlighted trends here to her too.
On this visit, she has been struck by the growing number of not-for-profits contracted into roles previously held by government as they chase vital funding - especially in the disability sector.
She believes the extensive data demands placed by government on not-for-profits who have won those NDIS contracts is concerning.
"The data demands there, the data ties between not-for-profits and the government … they're like an invisible leash [that] are really binding the not-for-profits to the government."
Data security compliance costs are simultaneously likely to squeeze out what she describes as the smaller "homegrown solutions" organisations.
She expects "tremendous consolidation in that part of the not-for-profit sector", which she paints as one of the "trade-offs for civil society organisations" as they give up their independence for financial security.
And Dr Bernholz maintains that civil society needs independent organisations.
"I truly believe that democracy needs an open, private, permission space for individual people to come together and do something that they want that's not sanctioned by the government, and not sanctioned by the markets. That's the definition of civil society."
This is particularly significant in the face of the threats faced by civil societies around the globe.
She says Australia has not been immune and describes the push to limit foreign funding of not-for-profits as "an effort to limit the size of civil society".
Dr Bernholz believes part of her mission is to "equip not-for-profit organisations, funders, and individuals to push back on that, and make sure we always have a space where we can voluntarily come together and do something that benefits other people".
"We know both from democracy theory, and history, that democracies fall when civil society shrinks."
She believes that independent funders, philanthropists and corporate groups have the ability to help arrest the retreat of civil society, by giving organisations crucial alternative funding sources.
"If you think about an organisation's overall revenue: To the degree that they become very dependent on a single funder from any one sector, they make themselves vulnerable.
"Part of that independence comes from being able to have multiple sources of funding and therefore be beholden to their mission, and not to any … funder.
"It's very similar to what we often think of about the media. We want them to be able to be beholden to the truth, and we should want not-for-profits to be beholden to their mission."
Funders face disruption wave
Digital disruption has other implications for funders too, which, if poorly handled, will simply hand more power to the wealthy.
"There's a great deal of opportunity for individuals of great wealth - or of more minor means - to think about: How do you want to use your financial resources for public benefit?"
She says the growth and change in funding and philanthropy whether via crowdfunding, philanthropic fund foundations, donor-advised funds, and family trusts, all have implications for society, because wealthier donors can take advantage of those structures to generate greater influence than most individuals could dream of.
Depending on your wealth, a donor may have different reporting requirements and different levels of "anonymity", but for Dr Bernholz this this begs the question: How much leeway should be given to those big donors?
"Society, as a whole, needs to think about: (Should we) set up systems in our democracies that allow people of great wealth to experience benefits that average people don't have?"
Those advantages might mean greater privilege, privacy and influence out of proportion to others', which she describes as a "dangerous slope".
"Democracies are about self-governance, they're about scrutinising power, and they're about being able to know who's being active in the political decisions that are being made."
Dr Bernholz is in Australia as part of a partnership between Perpetual Ltd and the Stanford Center on Philanthropy and Civil Society, where she has been involved in workshops and events for not-for-profits, foundations and civil society groups.