Can Big Data transform charitable giving and investing?

Can Big Data transform charitable giving and investing?

Mobile devices have become essential tools in today’s society, with an estimated 2.5 quintillion1 bytes of data created every day – and 90% of the world’s current data created in the last two years alone2.

But how will Big Data change the way we work, invest and give to charity? Can these voluminous amounts of structured, semi-structured and unstructured data steer new forms of value creation, in terms of both financial value and social impact?

“With Big Data, finance for good can become the mainstream,” argues Patrick Odier, Senior Managing Partner at Lombard Odier. This summer Bank Lombard Odier & Co Ltd hosted twin events in Geneva and Zurich, where internal and external experts met to debate the promise and challenges of this new data revolution.

Lionel Bodin, Europe Lead of the Accenture Development Partnerships (ADP) team, said he expects the effect of Big Data on development and philanthropy to be a “slow burn” rather than a big bang – but with a huge impact.

“Smart phones and mobile payment systems are just the tip of the iceberg,” he notes.

“As data helps us better understand and serve people’s needs, and digital working becomes part of organisations’ DNA, Big Data will help us identify the most powerful interventions - including evidence-based, targeted resource deployment.”

Mr Bodin believes that collaborative digital eco-systems, sometimes financed via new forms of giving such as crowd-funding, “can put people back at the heart of international development.”

Data collection and analysis is already allowing charities to make better-informed funding decisions. Mr Bodin gave the example of the Living Goods project in Uganda, an initiative of the Children’s Investment Fund Foundation, offering locals essential health products such as diarrhoea and malaria medicines, bed-nets and contraceptives.

Data from cluster-randomised trials showed positive effects in children’s health (including a 26% reduction in under-five mortality) and postnatal care in treatment villages, versus villages that did not receive project support. This evidence led to a second, larger investment in the Living Goods project. 

ADP has also helped develop an e-learning App for health-workers in rural Africa, providing instant access to training resources, collecting data and connecting co-workers spread over large areas via a group chat facility. The App demonstrates that improved data accessibility and collection can provide multiple benefits, including increased employee retention and a new-found sense of community.

Antonella Notari, Executive Director of the Womanity Foundation, believes charitable foundations can use the new opportunities offered by a data-driven world to their advantage. At the project level, the foundation’s experience with data includes the first coding and web-development courses for girls in public schools in Afghanistan, and the first development impact bond to educate girls in India with impact-based funding.

And while charities are already seeing multiple operational benefits and opportunities at the project level, Robert de Guigné, Head of Socially Responsible Investing & Environmental, Social and Governance solutions at Lombard Odier Investment Managers, believes the world of responsible investing is at the verge of an analogous disruption.

“Cheaper and more abundant information is enabling us to invest capital in ever more efficient ways,” he notes. “At Lombard Odier, our proprietary data analytics platform allows us to gain deep insights into what corporations say and do about sustainability.”

“Big Data will enable investors to zoom in even better on the risks associated with unsustainable corporate behaviour, and the resulting implications for reputation and financial performance.”

“This is also relevant for philanthropic actors, who want the management of their assets to be aligned with their missions,” he adds.

The momentum behind data accretion, and its collection may be amazing - but analysing and acting on it requires tapping into the right skill sets.

“The world of foundations may only be starting to explore it, but the potential is significant,” argues Dr Philipp Kudlich, who works with family offices and foundations at Lombard Odier Asset Management (Switzerland) SA.

“Data from the internet and social media is increasingly driving financial performance and social impact. Our platform approach to responsible investing allows us to tailor solutions to our clients’ needs.”

The data revolution is only just beginning. The digital universe will be an estimated 40 times larger by 20203. Applying new sources of data to investment decisions and philanthropic giving is a powerful way to help us seize opportunities and deal with humanity’s urgent challenges, and we are excited to put this huge potential at our clients’ fingertips.

1 A million raised to the power of five (1030), or 1,000,000,000,000,000,000,000,000,000,000
2 IBM estimates
3 Source: EMC Dell IDC Country Brief, ‘The Digital Universe in 2020: Big Data, Bigger Digital Shadows, and Biggest Growth in the Far East- United States.’ 

Important information

This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

Read more.