With aims to assign a dollar figure to data, NGOs have a new financial avenue

Kathryn Matthews discussing the 2018 Digital Pulse Report on June 27 in Canberra, Australia. Photo by: Lisa Cornish / Devex

CANBERRA — Data lies at the center of the digital age. It is continually created and consumed, and drives decision-making, business directions, and profit. For NGOs, calls for new business accounting methods could see data become a source of future financial stability and security.

At the launch of the 2018 Digital Pulse Report in Canberra, Australia, on June 27, Australia’s minister for digital transformation, Michael Keenan, emphasized data’s business and economic benefit, reminding the audience that “information is useless if it just sits there.”

“In the last two years, 90 percent of the world’s information has been created,” he said. “It’s an amazing statistic, and it shows that we are living in a time where there is a tidal wave of information and data bearing down on us. That could mean nothing, or it could mean something very significant.”

“Existing accounting models and standards generally prevent the capitalization of data and information on financial statements, even though these meet the established definition of a business asset as a resource being used to generate company value.”

—  2018 Digital Pulse Report, by Deloitte Access Economics and the Australian Computer Society

As data becomes increasingly critical to government, business, and nonprofits’ operations, there have been calls to make data a business and operations asset that forms part of the bottom line — an asset that can be reported to investors and partners, and that has a true value associated with it.

The authors of the Digital Pulse Report, Deloitte Access Economics, are the latest to suggest that providing a monetary value for organizational data could lead to significant benefits for digitally enabled organizations across all industries and throughout the economy.

“With data becoming an increasingly important determinant of growth and success, greater visibility of information assets enable greater investment in data-related capabilities and more opportunities to seek financing against the value of these assets to fund business operations,” the report says.

For NGOs, this means bringing organization data out of the shadows to create value both internally, and externally.

The challenges in valuing data

According to the report, current methods of business and operations accounting means almost half of assets are excluded from reporting — including data.

“This is because existing accounting models and standards generally prevent the capitalization of data and information on financial statements, even though these meet the established definition of a business asset as a resource being used to generate company value,” it reads.

Quoting research from the Australian Bureau of Statistics, the report finds that this is a key barrier in businesses that are actively innovating accessing funds. The ability to formally account for data on the books can lead to improved access to external financing.

With United States research suggesting that companies here could hold more than $8 trillion in unmeasured, intangible value, attempts are being made to bridge that gap. In 2016, the U.S. Financial Accounting Standards Board investigated the potential to update their accounting rules, to require data be recorded as an asset on the balance sheet. But the process has hit a snag in determining how a company could estimate the value of their data fairly, as well as measure depreciation over time.

Deloitte, however, is calling for new policies and measures to be introduced to break down barriers to providing a true value to data.

An opportunity for NGOs

Speaking with Devex, Kathryn Matthews, a partner with Deloitte Access Economics, explained that the value of data is not in what you hold, but what you do with it.

“Looking at consumer data from retailers, for example, … the insights they can draw on what is happening broadly from a consumer perspective allows them to direct and change their organization and address what is happening,” she said. “It’s like customer feedback, but through analytics, and it’s clearly very valuable for them to stay one step ahead of what consumers are demanding.”

NGOs, she believes, could make their data valuable by thinking about the broad insights that can be drawn — especially if their data is collected across time, jurisdictions, and countries.

“It’s about pulling data together,” Matthews said. “That is where the value lies, and making sure it can be accessed. You often find that when you bring government datasets combined with consumer insights or other private data, you can connect dots that have never been connected before.”

“That is where the magic really happens. And this creates a lot of value for consumers.”

Scarcity of data protection laws in Africa leaves NGOs exposed

A landscape of patchy privacy regulations across the African continent is leaving NGOs vulnerable to government attacks, and inhibiting international groups from partnering with local organizations.

Concerns of privacy and security are important in NGOs’ decision-making — especially if data concerns at-risk populations. Yet Matthews says that having an approach where you think about deidentifying data, and breaking through other barriers that are places in terms of use and access to data, is important for the future of assessing organizational value.

And data that can be used to generate insights and help external partners find value in it for their own business purposes may be a way for NGOs to drive demand and investment.

“Governments do this by putting all their data together on websites and making data accessible,” Matthews said. “From a business perspective, it is difficult to promote it in the same way because that is an asset they own. What I would start to think about are organizations that would have data with some synergistic relationship with what you have — and go to talk to them about collaborating.”

“So you would have to think about value proposition of your data, who would be able to make money or see value in accessing that data and why — and then you could think about the process of making data available so it can be combined with other data for new insights.”

To benefit from future changes in the way organizational value is assessed however, it is important to be asking these questions now and not wait to be operating under an obsolete business model.

About the author

  • Lisa Cornish

    Lisa Cornish is a Senior Reporter based in Canberra, where she focuses on the Australian aid community. Lisa formerly worked with News Corp Australia as a data journalist for the national network and was published throughout Australia in major metropolitan and regional newspapers, including the Daily Telegraph in Melbourne, Herald Sun in Melbourne, Courier-Mail in Brisbane, and online through news.com.au. Lisa additionally consults with Australian government providing data analytics, reporting and visualization services. Lisa was awarded the 2014 Journalist of the Year by the New South Wales Institute of Surveyors.