In corporate philanthropy, data might be worth more than money

Baltimore is one of the cities that benefited from a data donation from Mastercard.
Baltimore is one of the cities that benefited from a data donation from Mastercard.
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Ask economists what global concerns are top of mind, and they’ll likely respond with two hot-button issues: income inequality and slow growth. In a recent speech, IMF managing director Christine Lagarde warned that the sluggish pace of global growth could seriously damage the wellbeing of many countries. Meanwhile, despite increased awareness, income inequality has only continued to worsen. To cite one statistic: the top 1% of the US population averages over 38 times more income than the bottom 90%.

A series of new reports released by the Mastercard Center for Inclusive Growth suggests that an approach known as “democratizing productivity” could be one of the most powerful levers to simultaneously create growth and close the income gap.

It’s a strategy that has been steadily gaining more traction in the development community. As laid out by Mastercard Center chief economist Yuwa Hedrick-Wong, the central idea is that both developed and developing countries are home to billions of people who remain trapped in lower income brackets and lack the means to transcend them. While traditional notions of productivity have typically revolved around an individual’s desire or capacity for work, social science is increasingly defining productivity as an outlay of one’s access to vital networks.

These include service networks such as education, finance, and information; infrastructure networks like clean water, power, and transportation; and, just as important, social and cultural networks. Remove these and even the most highly educated, specially trained professional can accomplish very little.

By connecting the vast, economically marginalized segments of global populations to networks that empower them, countries could unlock massive labor power by providing skills, capital, and jobs to those who need them most—triggering a seismic increase in productivity.

This, in turn, would activate what economists refer to as a “virtuous cycle.” Rising income and employment opportunities lead to an expanding, prosperous middle class, which ignites domestic demand, propelling business innovation and investment, which then creates more job opportunities.

Taken as a whole, “democratizing productivity” leads to the process of sustainable and equitable growth and ensures that the benefits of an expanding economy reach all segments—not just those at the very top. But it’s also an approach that requires a significant realignment of principles and a new conception of poverty—one that sees the solution as multidimensional, requiring a more comprehensive vision beyond just attending to the immediate needs of the poor.

One of the most innovative strategies that looks beyond purely financial solutions to the problem of poverty is data philanthropy: a nascent but growing field in which private sector companies donate data or data resources to aid the public good.

The rapidly expanding role that data plays in our society—we produce 2.5 billion gigabytes a day, according to one recent estimate—has in turn created a new form of inequality. Smaller countries and cities, charities, and social work organizations often lack access to the troves of data which could prove relevant to their task, or don’t possess the analytic tools to effectively use it. In some cases, a collaboration between a data-savvy company and community might even be of more value than a cash donation alone.

In an effort to close the data information gap, the Mastercard Center for Inclusive Growth has committed to data philanthropy on a number of fronts that show the diversity of ways that data can be applied to social ills. In one case, the Center provided data scientists to work with the non-profit Single Stop to improve benefit distribution models for low-income New Yorkers. In another, they performed an analysis for the city of Baltimore that helped show the impact of crime on local merchants and its effects on employment opportunities.

And in collaboration with the Center for International Development (CID) at Harvard University, the Mastercard Center made a grant of data to inform Harvard’s research on inclusive growth. For example, the data yields illuminating new insights about the effect of tourism on emerging economies that could be instrumental in helping businesses and governments grow and bolster opportunities.

Policymakers and economists are realizing that when it comes to poverty, inequality and economic development, the methods of the past may not apply in the 21st century. In the global toolkit for improving living conditions for everyone, innovative—if slightly unconventional—strategies like democratizing productivity and data philanthropy may prove to be exactly what’s needed.

Learn more about the Mastercard Center for Inclusive Growth’s goal of equitable economic growth and financial inclusion.

This article was produced on behalf of the Mastercard Center for Inclusive Growth by Quartz creative services and not by the Quartz editorial staff.