How to make data analytics work for you
Your nonprofit is accountable to many constituents, including donors, volunteers and the people you serve. A surefire way to demonstrate your effectiveness is through the use of data analytics. With facts at your fingertips, your organization can show the world how you’re meeting your goals in community outreach, program activities, fundraising and more. Data analytics also can help you in day-to-day decision making and strategic planning.
It may be a good time to get started on a full program, or to revisit your current use of data and metrics.
Collect valuable information
Data analytics is the science of collecting and analyzing sets of data to develop useful insights, connections and patterns that can lead to more informed decision making. It produces metrics — for example, outcomes vs. efforts, program efficacy and membership renewal — that can reflect past and current performance. And that information, in turn, can predict and guide future performance. The data analytics process incorporates statistics, computer programming and operations research.
The data can come from both internal and external sources. Internal sources include an organization’s databases of detailed information on donors, beneficiaries or members. External data may be obtained from government databases, social media and other organizations, both nonprofit and for-profit.
Home in on your goals
There are several potential advantages of data analytics for not-for-profits, which often operate with limited resources. The process can help:
- Validate trends,
- Uncover root causes of problems, and
- Take a holistic view of its performance.
Done right, data analytics can allow the management team to zero in on your organization’s primary objectives and improve performance in a cost-efficient way.
For example, data analytics can serve a double-barreled purpose when it comes to fundraising. On the one hand, it may provide a way to illustrate accomplishments to potential donors who demand evidence of program effectiveness. On the other, analysis of certain data may make it easier to target those individuals most likely to contribute.
Initiatives to streamline operations or cut costs can stir up political or emotional waters, but data analytics facilitates fact-based discussions and planning. The ability to predict outcomes, for example, can support sensitive programming decisions by considering data from various perspectives, such as at-risk populations, funding restrictions, past financial and operational performance, offerings available from other organizations and grant maker priorities.
Plan the process with care
Excited about data analytics? If so, it’s important not to put the cart before the horse by purchasing costly data analytics software and then trying to decide how to use the information it produces.
While new technology may be a good idea, your organization’s informational needs should dictate what you buy. Thousands of potential performance metrics can be produced. That means you must take time to determine which financial and operational metrics you want to track, now and down the road. Which of your nonprofit’s programs are the most important? Which metrics matter most to stakeholders and can truly drive decisions? How can you actually use the information?
You also need to ensure that the technology solution you choose complies with any applicable privacy and security regulations, as well as your organization’s ethical standards. Security considerations are particularly important if you opt for a solution that resides in “the cloud,” rather than installed software.
Additionally, you should determine how well the technology solutions you’re considering can integrate with your other applications and data. If software can’t access or process vital data, it will make a poor match for your needs.
Last but not least
While “data analytics” frequently brings to mind the technology involved, don’t forget the human element. You can have the latest software, but without staff and leadership buy-in, data analytics can prove to be a pricey boondoggle.
So, introduce data analytics to your organization thoughtfully. Make sure that everyone understands the process and the objectives. And, remember, follow-through is essential. Even highly relevant information will be of little use if the board of directors, management and staff don’t act on it intelligently.