A Data Strategy Wake-Up Call for Nonprofits

A sea change is happening in the nonprofit sector, and charitable organizations will have to either get ahead of it or risk falling behind. Charitable giving only slightly outpaced pre-pandemic levels in 2021 (and inflation continues to take a bite of donations), but fewer people are giving to a smaller number of organizations. As demographics change, new giving patterns are emerging, with more people donating online or through apps. 

Younger donors are less familiar with traditional nonprofits and more attracted to the social enterprise model, where they support brands that give back to communities. When they make donations, younger donors tend to give spontaneously rather than contributing regularly as part of an annual plan. And they want to hear about the impact of their donations rather than learning about nonprofit service usage. 

To continue fulfilling their mission in this changing environment and effectively reach the next generation of donors, nonprofits will need to digitally transform their organizations and democratize data, putting information into the hands of people who have the power to act on it in real-time. They’ll need a data strategy with sound governance policies to make this happen. 

Democratize Data to Achieve Greater Transparency

Larger nonprofit organizations tend to use many of the same applications, including enterprise resource planning (ERP) and constituent relationship management (CRM) systems, as their counterparts in the private sector. They’re adding applications all the time — to the point where digital sprawl becomes an issue. In response to greater donor interest in outcomes, nonprofits are collecting and analyzing data to demonstrate impact.

But digital sprawl and siloed information at the center of the organization prevents an effort to democratize data (i.e., collect, organize, anonymize and provide data to people with permission to access and apply it in the context of their jobs). With that capability, nonprofits can lower the cost of insight and research and use predictive modeling to optimize spend rates and adjust plans to drive better outcomes. 

Here are three steps nonprofits can take to acquire and use data more effectively.   

1. Develop a Data Strategy

To rein in digital sprawl and create a data-driven organization that looks to the future, nonprofits will need to develop a data strategy that governs issues, such as how data is integrated, where it is stored, whether it must be anonymized and how it can be used. Data governance policies will regulate treatment of current data and also how new data sources can be used to achieve nonprofit goals. 

2. Invest in Data Analytics

With data governance policies in place, nonprofits can invest in data analytics tools and technologies to help them analyze, interpret and fully understand the implications of their data. Investments might include data visualization tools, statistics analysis solutions and predictive modeling capabilities.

3. Use Cloud Computing and Storage

The next step is to create a permissionless society where people are empowered to use data. Once the nonprofit outlines a data governance policy, they can start to push data to the parts of the organization that need to consume it, using cloud computing and storage assets to manage data more efficiently and enable real-time access to data from anywhere. 

Democratizing data supports a forward-looking approach in direct contrast to traditional reports, which present statistics on service usage or describe outcomes in retrospective terms. That traditional model falls short because it doesn’t empower stakeholders to be proactive in response to leading indicators, so they lose opportunities to address emerging needs or course-correct to maximize donation impact. 

No Time to Hit the Snooze Button

The level of digital transformation described above can help nonprofits achieve a data-driven approach that will support their mission in the years to come. An updated data strategy that democratizes information will arm nonprofits with better insight on which solutions work and which don’t. Critically, it will also allow program teams to make decisions based on real-time information. 

This approach can also help nonprofits tell their story in a more impactful way, demonstrating how they’ve made evidence-based progress on causes close to donors’ hearts and maximized contributions to make a difference. Communication and storytelling will be increasingly important in a sector where affinities are becoming less permanent and giving is more spontaneous.

A presence on Facebook or Instagram isn’t enough anymore. As most nonprofit leaders are aware, there’s a worrisome downward trend in the number of donors each year, so it’s critically important for nonprofits to create more affinity with donors and effectively communicate impact. These trends should be a wake-up call for nonprofits to put a better data strategy in place — starting now. 

The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.