Discover Why Your Nonprofit Is Using Data to Create a Game Plan

The aspiration to become a data-driven organization has become well-accepted, applauded and, in many cases, an expectation. Hiring professionals or consultants to assess an organization’s impact is quite common. Before investing in a specialized skill set, it is important to be honest as an organization about why you want your organization to be data driven. What is the purpose you want data to serve? Leaders who neglect to ask these questions are at risk of increased costs rather than savings, wasted resources, burdening key stakeholders and a PR battle that positions your organization in the “data game” for optics only.

There isn’t one right reason to want to use data. In some cases, it may not even make sense to be data-driven (ironic, given my role as a chief impact officer at Jewish Federation of Greater MetroWest NJ). Here, I will offer three primary purposes for using data. Once you’ve identified the primary purpose for wanting to use data in your organization, you can then build your strategy and determine the resources needed to ensure your success.

1. Help Make Pressing Decisions

Often being data-driven or data-informed means that you or other key stakeholders want data to help make decisions. Data can help determine anything from where to make grants, to where to scale, to how to raise money, to whether to hold a large-scale event.

Here are some indications you may need data to make pressing decisions:

• You want to know how much you’ve done in order to know how to move forward (e.g., how many people have been served by a program you funded? How many new donors contributed? How many people did you reach with an event last year?)
• You need to know how well prior investments have paid off before you can decide to re-invest or change investments.

Even if these resonate with you, there may be some factors that suggest it may not be realistic to use data to make decisions. Because tracking and analyzing data requires significant investments in technology and skilled personnel, it is worthwhile to review some considerations to determine if these investments make sense. If either of these realities apply to your organization, you might consider investing elsewhere.

• You tend to operate similarly year over year (fund the same grantees, administer the same programs, prioritize the same level donor).
• You’re not empowered to make changes (money is restricted, or those who make operational or financial decisions don’t rely on or require data).

If decision-making is your primary purpose of using data, your organization will require a strong data collection system as well as data analysis of the activities of interest. You’ll need a tool that identifies each performance measure of interest (my organization uses the success equation) and a system that tracks, counts or observes the outcomes you’re seeking. Most importantly, you’ll need an analysis professional — or team — who can help translate the data into meaning, including answering the question “so what?” from the data collected.

2. Understand What You Do

As the CEO or another senior leader, you may want strong data for informational purposes. Do you want to answer questions like:

• What has your organization accomplished over the past month?
• How was your level of production compared to last quarter?
• Who is overperforming and who is underperforming?

For some managers, answering these questions is about accountability; for others, internal knowledge sharing is driven by the desire to feel well-informed. Therefore, in many cases, using data in this way can be a personal or company-wide decision. To know if the investment in collecting and tracking data for informational purposes is worthwhile, it is up to each leader to know if they are going to value and learn from the data.

If your primary purpose is internal knowledge sharing, the primary skills required on the team are tracking and counting. You will need a professional, team or, at the very least, a spreadsheet that answers the questions, “What are we doing?” “Who is doing what?” and “How many?” For example, “How many partners are we working with?” “How many donors were solicited?” and “How many new investments did we bring in?”

3. Inspire Others and Raise Funds

While the previous reasons use data primarily for internal purposes, many organizations want data to tell others what they are doing. Organizations want to share how many have been helped, how wide was their reach and what was the return on investments. You may want to use this data to differentiate yourself from competitors to maintain your unique role in the market. Or, you may want to use this data to build confidence in your donors and to raise additional funds.

The key difference in this data purpose is that you have an external audience to whom you want to tell a story and you want this story to compel the external audience to do something, such as give you more money, spread the word about you or stay on your board. To determine if using data in this way is part of your “why,” it is important to first learn if your external audiences are looking for or would be compelled by data. Some organizations have many donors who will give no matter what. Either your cause is personal to them or giving to you is just what they do. If this is the case for most of your stakeholders, investing in using data to tell stories and ground marketing efforts may not be necessary.

Finally, if your primary purpose for using data is to communicate to external audiences, you’ll need a professional or team that is skilled at translating data into compelling stories, bite-sized information that is palatable quickly, and that inspires action, feeling or emotion. The desire to use data in this way requires a marketing and communication skill set, as well as data visualization. In my organization, our marketing and impact analysis teams are in the same impact department. This ensures these functions are not in silos from each other and we are seamlessly translating data for external storytelling.

Regardless of your leading reason (or combination of them) for using data, you’ll want to identify this first. It is only after understanding your primary purpose for using data that you can be sure you’ve devised a structure and hired for the specific skill set that will help you achieve this goal.