When you think of organizations using big data to improve their operations, nonprofits are likely not the first to come to mind. However, like businesses of any kind, nonprofit organizations can greatly benefit from data-centric strategies. Insights from data analysis can empower nonprofits to improve their grant applications, project planning, supporter engagement, and overall operations. Data-driven nonprofits are better positioned to cost-effectively achieve their mission compared to ones that do not utilize data.
Yet, unlike large companies, nonprofits often lack the internal resources and large budgets needed to implement certain technologies. As a result, they struggle to harness the full value of their data and are left to rely on ad-hoc or empirical decisions. In fact, 60% of nonprofit professionals report that they don’t use data to aid decision-making.
In this article, we lay out a guide to developing and implementing a data strategy to help nonprofits establish a solid foundation for data in their organizations. We’ll cover everything from developing an initial strategy to managing, securing and continuously improving the data ecosystem.
A strong nonprofit data strategy is made up of data initiatives that are clear, measurable, and based on relevance to the organization as a means of impacting their goals.
The backbone of data strategy lies with how data is collected and processed within an organization. This is known as an organization’s data infrastructure, which is made up of both physical and virtual components. If the data infrastructure is solid, strategy can be built around it, to include policies and procedures of data governance, data lifecycle management, and compliance. An assessment can determine where an organization is in terms of data maturity and what is needed to advance the infrastructure, policies, and culture to move the organization in a strategic direction.
For many nonprofit organizations, data has evolved from a fringe asset to mission-critical capital. Just like financial capital or human capital, data needs to be effectively managed to maximize its contribution.
Data management for nonprofits requires a confluence of sound policy and technology. Below are some examples of the best practices of nonprofit data management and how software can help with implementation.
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Data Management Best Practices
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How Technology (Software) Supports Implementation
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Establish Standardized Data Procedures
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Customizable template-based data entry standardizes data ingestion, ensuring data consistency across all programs and departments.
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Maintain Data Privacy and Security
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Data management software includes security features, like encryption and multi-factor authentication, and is compliant with standards like SOC 2 (System and Organization Controls).
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Promote Data Accuracy and Quality
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Automation promotes data accuracy. For instance, the software can automatically reference the National Change of Address (NCOA) database to ensure donor data is up to date.
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Ensure Universal Data Access
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More limited; single leader expertise; local talent pool
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Implementing best practices supported by technology can transform data management. However, not all software is built equally and picking the right one can be difficult. Nonprofits can ease this burden by partnering with an unbiased IT advisor to help with software evaluation and selection.
In an ideal scenario, the first step in creating a data-driven decision-making framework is to define relevant metrics and KPIs that will serve as the data to inform decisions. With those in place, the next step is to establish a data pipeline. A data pipeline is a structure for how raw data from various sources is brought together for analysis. If an organization uses business intelligence (BI) software, that software can receive the data, catalog it, and perform analytics to inform executive decision making.
Descriptive and diagnostic analytics help measure program impact by providing insights into the effectiveness of existing strategies. Predictive analytics, on the other hand, help program administrators anticipate future events, such as increased demand for services or periods of low donations. This foresight helps the organization plan resources more effectively.
Nonprofits are custodians of highly sensitive information, including personal details of donors and beneficiaries. This makes them a prime target for attackers and thus data privacy and security compliance need to be at the forefront of their data strategy.
Internally, data security can be improved by implementing principles like zero trust and least privilege. This means no system user, no matter their position, is exempt from security measures. They must log in before accessing any data, and they can only access the data and resources that are relevant to their projects. This approach significantly reduces risks to data security and integrity.
To safeguard against external threats to data privacy and security, data-driven nonprofits can employ measures such as the use of private networks, regular systems updates to fix vulnerabilities, and conducting comprehensive cybersecurity training for all employees.
Data security frameworks and privacy regulations provide a roadmap for nonprofits to follow. Many states have already passed regulations that govern general data privacy as well as specific types of data, such as health information or data on minors. The applicability of these regulations to nonprofits may vary.
For example, the Texas Data Privacy and Security Act exempts all nonprofits, while Delaware’s data privacy code only exempts nonprofits that focus exclusively on insurance crime or provide services to witnesses or victims of certain crimes.
Data isn’t just useful for making operational decisions. It also plays a key part in driving the overarching strategy of the nonprofit. Insights from data analysis help leadership and boards identify opportunities, trends, and risks, and subsequently prioritize focus areas in the near and long term.
To drive this process, data-driven nonprofits can assemble a committee composed of representatives from relevant departments to review data, including numerical data like financial records and empirical data, such as beneficiary feedback. Analysis of this data can reveal issues that may impede progress, such as inequitable program reach and inefficient resource allocation. This data can also reveal opportunities for enhancing key areas of nonprofit operation like service delivery and fundraising strategy.
As a nonprofit organization evolves and external factors change, some unpredictability in its data strategy is expected. To maintain alignment with the nonprofit’s mission, it is essential to regularly assess and adjust the components of the data strategy.
The data architecture should be regularly updated or replaced if there are better options on the market. This works to improve data quality by providing more effective data collection, storage, and processing tools, such as social media analytics, multimedia surveys, and real-time analysis.
Improving data governance is also crucial. Benchmarking with other nonprofits and working with a strategic IT advisor can help you gauge the performance of your compliance, data protection, and disaster response strategies.
Another vital component of the data strategy that requires continuous improvement is the data-driven culture of the nonprofit. There should be continuous training, coaching and mentoring, to build a conducive environment for data activities.
An iterative approach to data strategy development is key to future-proofing your nonprofit organization.
Many organizations are hungry for a data strategy but find themselves paralyzed when it comes to thinking about where to start and how to make sense of tons of data found in disparate systems and spreadsheets.
Hartman Executive Advisors can help address these challenges and develop and implement a data strategy to help organizations improve their impact and operations. Our team of industry leaders and data experts provide a unique combination of strategic and technical expertise that enables us to craft mission-driven data and risk management strategies to help nonprofit organizations grow and mature.
Contact us today to learn how we can support you in your journey to becoming a data-driven nonprofit.