How does your nonprofit make strategic decisions? Are you relying on intuition or guesswork? A better way to make decisions is using data. Leveraging data for strategic decision-making has many benefits–from improving your efficiency to increasing the success rate of campaigns or strategies.
Additionally, leaders can use data to tell the story of their organizations, giving you a better overall picture of the state of your nonprofit.
Learn more about using data for decision-making in your nonprofit in this complete guide.
What Does Nonprofit Data Look Like?
Like for-profit businesses, nonprofits can use a variety of data sources to make informed decisions for their organization.
Let’s look at what types of data nonprofits can use for decision-making and the challenges that go with data usage.
Types of Data for Nonprofits
The types of data a nonprofit might use for decision-making can vary between organizations. Most nonprofits will use at least one of three types of data:
- Financial data: Financial data includes any data relating to the finances of the organization, such as revenue or expense data.
- Program-based data: Program-based data helps organizations create insights into the effectiveness of their programming or services.
- Donor and stakeholder data: Donor and stakeholder data can refer to informational data, such as names and addresses of donors, as well as more in-depth data, such as donation amounts or communication preferences
Challenges of Nonprofit Data Collection
One of the biggest reasons nonprofits avoid using data to make decisions is the challenges of collecting and storing data. Common challenges a nonprofit might face when collecting data include:
- Limited resources: Purchasing software or digging through data insights can strain resources, and many nonprofit organizations worry they don’t have the money or time to use data.
- Data quality issues: Data-driven decisions are only as good as the data they come from, so nonprofits must ensure their data is clean and high quality.
- Compliance and privacy concerns: As more states introduce legislation regarding digital privacy, nonprofits must be able to keep up with regulatory compliance and keep data safe.
Leveraging Data in Nonprofit Leadership
How can you use data effectively as a nonprofit leader? There are many ways to put data to use effectively in your organization. Check out these tips for leveraging data as a nonprofit leader.
Cultivating a Data-Driven Culture in the Organization
First things first when implementing a data strategy at your organization: you need to set the tone from the top. Creating a data-driven culture throughout your organization will help bring staff and volunteers on board with using data.
You can set this data-positive tone by fostering a mindset of learning when using data. As you implement your data strategy, show the benefits of using data and how it will help staff and volunteers. For example, collecting a certain type of data might make it easier for staff to do their jobs.
Investing in Data Technology
Data technology, such as data management software, makes implementing and benefiting from a data strategy easier than ever. You’ll need to carefully consider your options–and the costs–before implementing your strategy. Consider working with knowledgeable data and financial teams, such as The Charity CFO, to help create your data plan.
Once you have a data technology and a data governance plan in place, make sure to invest in staff and volunteer training on the programs and policies. Well-trained staff will be much more likely to embrace a data strategy than those without the knowledge or skills to use the data tools available to them.
Aligning Data with Organizational Goals and Mission
Your data strategy should go hand-in-hand with your mission and nonprofit goals. As you explore data strategies, be sure to pinpoint specific key performance indicators (KPIs) that relate to your goals and data metrics. In addition to identifying KPIs, you’ll need to establish benchmarks for success.
After choosing KPIs and their benchmarks, you can start incorporating data insights into strategic planning.
Using Data for Program Evaluations
Data can be a great tool to evaluate the effectiveness of your nonprofit programs or services. You can use data to help track the outcomes of your programs, such as participant numbers or revenue.
In turn, tracking these outcomes helps you make data-informed adjustments to your programs and services.
Improving Fundraiser Efforts Through Donor Analytics
Data can help you track, predict, and better understand donor behavior. For example, you run two ads for your fundraising event on social media. Using data insights from the ads, you can determine which was more effective for increasing ticket sales or donations.
Donor insights and analytics give you a better idea of how to effectively reach out to donors. You can use donor data to create communication and cultivation strategies that are more likely to hit the mark with donors.
Improving Financial Management
Improving your organization’s financial management is one of the biggest benefits of starting a data strategy. You can use data in almost all aspects of financial management. For example, historical financial data can help you with budgeting or creating financial forecasts for your organization.
Additionally, analyzing financial data helps you identify cost-saving opportunities as well as chances for increasing your revenue streams.
Improve Decision-Making
Leveraging data for decision-making can change your organization for the better. Data-driven strategic decisions help your organization operate more efficiently, effectively manage risks, and create a bigger presence in your community.
Learning how to collect, store, and use data properly, however, can be a daunting task, especially when you’ve got other things to do to keep your organization running. That’s where The Charity CFO comes in. Our experienced team of financial and accounting professionals specializes in nonprofits. We use our specialized knowledge to help you find the right data management strategy and technology solutions to create a culture of data within your organization.
Contact us today to use data to drive decisions.
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