Nonprofits that make decisions based on data engage their donors more effectively than those who don’t. This sentiment has been echoed by all the experts in the field, however, it’s a fact that is easy to forget when there are so many fires to put out on a day-to-day basis. The proliferation of new tools and technologies makes sifting through and understanding your data more and more challenging over time.

That may be why, according to one study, only 40% of nonprofit professionals say they make data-informed decisions on a regular basis, even though 90% say they collect data.

This article explores the reasons why nonprofits should harness the power of data, the types of data they should focus on collecting, and actionable strategies for leveraging this data. We also want to give our friends at Sowen, an impact consultancy focused on harnessing data to accelerate social change, a chance to share expert advice from their many experiences working in this space. 

Why Should Nonprofit Organizations Use Data?

Duplicate management, data hygiene, integrations, analytics, reports, and dashboards - the terms surrounding data can be dizzying. Moreover, investing in building trustworthy data sources can feel like you’re spending time away from your mission. After all, you have a constituency to serve, programs to run, teams to manage, and campaigns to plan.

Although it can seem like a distraction, building a culture of data will help in all your activities and will help you make better decisions moving forward. Here are just some examples to show why using data is worthwhile:

Building Stronger Connections - Nonprofits can leverage data to understand donor preferences, motivations, and behaviors. By analyzing past interactions and contribution patterns, organizations can match tailored campaigns to communication channels to resonate with individual donors. Data allows nonprofits to create nuanced donor personas, guiding them to craft targeted messaging that aligns with the interests and values of specific donor segments, fostering a sense of connection and loyalty.

Communicating Impact – Data plays a pivotal role in enabling nonprofits to communicate the tangible impact of their initiatives to motivate donors. By connecting the dots between outcomes and contributions, organizations can vividly illustrate the real-world change brought about by their supporters. Rich and verifiable storytelling can compel donors to care more about and advocate for your mission, helping you achieve greater impact.

Improving Fundraising Strategies - Data-driven insights empower nonprofits to refine their fundraising strategies. Analyzing donation trends, identifying peak giving times, and understanding the impact of various campaign types enable organizations to optimize their efforts, ultimately leading to increased fundraising success.

What Types of Data Matter?

No matter what, you’re collecting information through your day-to-day operations. Whether you’re saving your donor’s contact information, tracking how many people attend your events, or sending out satisfaction surveys, you’re engaging in data collection practices.

You may even have a system of record, like a CRM, that acts as a repository for that information. However, not all data is made the same and it’s important to be clear on what types of data your nonprofit is gathering.

At the most basic level, nonprofits need to consider two types of data: quantitative and qualitative. Quantitative data refers to information that can be measured with numbers, such as dollar values, amounts, percentages, or durations. Qualitative data, on the other hand, refers to descriptive information that can’t be measured, such as names, addresses, feedback, or subjective experiences.
Synthesizing both data types into reports and stories can help in decision-making, development, and goal-setting.

Each technology you use will likely output both types of data. Understanding the meaning behind and the origin of the data will help you decide how it can be used to best serve your mission. Context is key.
For instance, let’s consider the case of the data created by your payment processing solution. Two key functions are carried out for each donation processed, generating both qualitative and quantitative data: processing secure transactions and capturing the donor’s information.

Transactions - Payment processors like, iATS Payments by Deluxe, provide invaluable transactional data, offering insights into donation amounts, frequency, and preferred payment methods. This data allows nonprofits to plan for the future by tracking and analyzing financial contributions effectively. For this particular example, make sure that you’re using a solution that treats data security with the utmost importance.

Donor Profile - Beyond transactions, payment processors offer insights into their donor’s backgrounds and behavior. Understanding who donors are, how they respond to campaigns, and what factors influence their giving provides a holistic view that informs strategic decision-making.

Being able to identify and understand the data from any individual source is a great starting point, however, this information can only be acted upon once it’s matched with the greater goals, resources, and constraints of your organization. To that end, we can recommend a few ‘next steps’ to take this form of analysis across your entire organization.

How to Begin Leveraging Your Data

We’ve now seen the value data can have for your organization. This has been understood for a long time, however, this advice rarely comes with an instruction manual. Reality, of course, is more complicated than theory - time constraints, complexity, and organizational culture can limit your ability to adopt a data-driven approach.

There are, however, some universal best practices you can adopt to start effectively using your donor data.

Decide What You Want to Measure - The first step in leveraging data is to clearly define the key metrics and outcomes you want to measure. Establishing specific goals will guide the data collection process and ensure that the obtained insights contribute to the overall strategy of your nonprofit.

Though it may sound simple, this is a step that many organizations struggle with the most. It may even uncover some conflicting priorities between team members based on what metrics they define as “success.” Keep in mind the Pareto principle, which states that 80% of results usually come from 20% of key activities. Understand what that 20% is and ensure that the metrics you choose are aligned with those activities. By keeping focus and clarity on what you want to measure, you’re able to eliminate unnecessary data collection, free up space in your system of record, and make work easier for everyone on your team.

Audit the Data and Systems You Currently Have - Before diving into new data initiatives, conduct an audit of your existing systems and data hygiene. Evaluate the quality, accuracy, and relevance of the current data sources. You can begin by listing out all the technologies you’re currently using and visually mapping out how data, and which types of data, flow between them. This step helps identify any gaps, inconsistencies, or areas for improvement in the existing data infrastructure. You can also readily eliminate any data that may be clutter, not serving the key metrics from the previous step.

You may even discover redundant or underutilized systems that could help you limit waste and focus your funding on activities that help you achieve your mission. If you have a clear understanding of how data flows to your system of record and where it originates, it becomes easier to measure success.

Create Standards and Gain Organization-wide Alignment - Establishing data standards and ensuring alignment across the organization is crucial for a cohesive and effective data strategy. Define protocols for data collection, storage, and analysis, and communicate these standards. Make sure you have clear definitions of what every term means so everyone is “speaking the same language.”

These standards need to come from the top down. Leadership must believe in a data-driven culture and lead by example by following all the new standards and definitions you set. Changing an organization’s culture is never an easy task. By making sure everyone believes in what you’re doing, you dramatically increase the odds of success.

While these three principles can serve any organization, you may be wondering what some practical ways are to begin using data to make better decisions today. Here are a few ideas to get you started, following the same steps listed above:

Understanding Volunteer Giving Patterns: Say you want to create more volunteer engagement and decide to measure how much your volunteers give versus non-volunteer donors. You’ll want to audit your data to make sure you’re accurately tracking who in your constituency is volunteering, how long they are volunteering for, and when they are donating to your cause. Do you have the tools to reliably track this information? If not, be sure to build out rules for what a formal volunteer looks like, train people running your programs to track volunteer hours and document them in your system of record, and make sure it’s easy for them to do so. You’ll likely begin to understand how volunteers give and advocate vs. non-volunteers and you may orchestrate campaigns to attract more volunteers, thereby growing your base of loyal donors.

Learn What your Constituents Listen To: How do you know if the messages you’re sending via email or social media are getting through to your donors? In the world of marketing, A/B testing is a reliable means to test variables in design or messaging to continually improve your engagement. In this case, we decide we want to measure the success of one email headline against another (email A vs. email B). Make sure the value of “success” is well defined before moving forward, whether it’s click-throughs, email opens, or direct contributions. Review your tools to ensure you can track the performance of one message against the other, teach your team the best practices of A/B testing, and analyze the results to see what message your audience responds to the most. Learn, and repeat.

Segment Donors by Giving Behavior: Many people begin segmenting their donor base by geography, age, or marital status, among other factors. Combining this information with behavioral data, such as average gift size, gift frequency, or donation method can give you deeper insight into how to best focus your fundraising efforts. When auditing your systems, keep an eye out for duplicate sources of information or tools that aren't integrated and require manual effort to capture data in your system of record. This is a great opportunity to simplify your workflows. Use this data to build out robust donor profiles, which you can then communicate to your team to build smarter fundraising campaigns.

Insights from Sowen’s Partner, Sophie Blondeau

Smart organizations understand and accept the importance of placing data at the core of organizational activities, especially when it comes to driving engagement with key stakeholders like donors. They see that when data strategy and analytics are at the center of strategic design, operational excellence, and impact measurement, it drives a virtuous cycle of innovation and growth that ultimately delivers scalable growth for both business and social impact. The reality is that no matter where you are in your social impact journey, data can accelerate your efforts.

Starting the journey is often the hardest part, but it’s absolutely worth the effort.

What we find with the non-profits, foundations, and companies we partner with is that they accept this wisdom, but they have a hard time moving from theory to practice. They know they need to act but are unsure about where to start. They often lack the internal resources or expertise and require an external perspective to help them define best practices and build out a pragmatic roadmap to move them from data to impact.

Here are three steps we recommend to get you started:

1. Assess your data maturity

This means evaluating how data-driven your organization is when it comes to every aspect of your organization, from people, knowledge, tools, and processes, and being realistic about the changes and solutions you want to focus on. For example, do you really need the most sophisticated data tools that will cost you lots of time and money, or is it better to improve usage of existing tools and processes? Do you have the right data to meet the needs of your key stakeholders? Do you have the right tools to share that data across teams? Do you leverage data for critical decision-making and design? This will give you a vital snapshot of your strengths, weaknesses, and, most importantly, available opportunities.

2. Connect with your stakeholders

To create meaningful and measurable impact means knowing who you are creating value for. The first step is to map out your key stakeholders, both internally and externally. This could include your employees, funders, audiences, and partners. Take a deep dive to understand their needs, wants, and ultimate objectives. What does success look like for each of these stakeholders? What barriers and challenges do they face? Next, prioritize and categorize them to understand their influence and interest in your organization. Once you have a clear picture of the needs of your stakeholders you can align those with quantifiable goals, objectives, and metrics which will help you to track your progress and continuously optimize your activities. It will give you a tangible measure of success.

3. Cultivate a data culture

To fuel the virtuous data cycle, it’s critical to ensure that your employees have access to the relevant data to make insight-driven decisions. It’s also important to provide stakeholders with the necessary skills to use and interpret the data available to them. Creating a data culture is about teaching people that facts matter, and that opinions and old habits can and should be continually tested against the opportunity of innovation and critical thinking. It is about enabling people, at all levels of the organization, to make smart and informed decisions that are evidence based, and apply creativity, humility, and a learning mindset.

Conclusion