Not All Data Is Good Data: Leveraging Technology for Nonprofit Benchmarking
Nonprofit organizations are vital to making meaningful change in the world and they have significant amounts of untapped potential in their data. But why do some nonprofits struggle to use data while others have successfully harnessed information to drive better decision making?
For many nonprofits, data is still being used merely to count results. When you count things, you’re usually successful. The same is not always true when you start measuring things. For example, a person who counts things can only tell you that the organization raised $500,000 online last year. Yes, that’s a number, but there isn’t much value in it. Not a lot of insight. It doesn’t quite pass the “so what and who cares” test. A person who measures things, on the other hand, wants to know a lot more: What was raised in past years? How much has been raised so far this year? Where do you want that number to be in the future? These are the questions that help organizations measure and find answers.
But as we all know, not all data is good data, and not all data can help us get to these answers. Self-reported data is always susceptible to problems in any benchmarking effort. Thankfully, technology is making more and more types of benchmarking based on actual results possible. As more and more organizations are leveraging technology solutions to empower their fundraising efforts, more and more data on actual fundraising results is available. The Blackbaud Index is one example of a tool that uses technology to provide insight into what happened in fundraising across multiple subsectors on a monthly basis. This information allows organizations to benchmark their performance against the actual performance of other organizations in the same subsector.
And keep in mind—the top performer in a benchmark is not always the best metric to aim for. The Contributor Development Partnership (CDP) is a benchmarking group of PBS stations across the nation that have developed a core set of metrics across all member stations. In developing their measurement model, they found that the best goal benchmark is actually one standard deviation from the mean—in other words, one level up from the average. This means that multiple organizations have found success at that level, and that other organizations can likely replicate their strong results.
The adoption of benchmarking in the nonprofit sector continues to grow as more organizations understand how useful it can be across their programs and as more tools become available to help organizations benchmark against actual performance data. In a nonprofit with a culture of growth, the use of benchmarks is simply part of their DNA. There is the old adage: If you and I were being chased by a bear, then I wouldn’t try and outrun the bear. I would just try to outrun you. That’s benchmarking.