Nonprofits are adopting data-driven decision making to replace reliance on tradition or instinct.
Key takeaways
Successful transitions require cultural change, starting small and fostering internal champions.
Advances in AI allow nonprofits to analyze data more effectively.
Many organizations base their decisions on experience, instinct or tradition. While this approach can be valuable, relying solely on this method can limit a nonprofit’s reach or lessen its efficiency.
As such, nonprofit organizations are increasingly turning to data to sharpen their impact. And in an environment where artificial intelligence and advanced tools are readily available, this shift to data-driven decision making is no longer just a best practice—it's a necessity for mission-driven organizations that want to make informed, transparent and effective decisions.
For many nonprofits, the process of analyzing data can feel overwhelming. What data should be collected? How can it be trusted? Will the process require a hefty budget or new resources?
Here are some key concepts that nonprofits should consider as they embrace data-driven decision making.
Making the transition
Data helps organizations evolve. Instead of diving into projects based on hunches, nonprofits can set goals based on facts.
For example, with access to good data, nonprofits can better understand when and how donors are giving, what programs are performing and how resources are being used. The use of good data empowers organizations to accomplish their missions more effectively. Data allows nonprofits to gain insight rather than go in blind, and it enables more efficient operations and measurable impact.
However, shifting from “the way we’ve always done it” requires cultural change. Organizations ready for this change will be altering how people work. The change can be intimidating to some, so it’s crucial to help people see the value of a data-driven mindset.
Nonprofits need to identify internal champions and key performance indicators that are clear and logical. Organizations should also adopt phased approaches to avoid overwhelming staff or creating resistance. It’s important to start small, show early wins and build from there.
Change management isn’t about buying the latest technology. The focus should always be on guiding people to the new and improved process.
Not all data is equal
One of the biggest hurdles to using data effectively is ensuring its quality. Many nonprofits have siloed systems with fragmented data. If the data isn’t centralized, it’s hard to rely on the outputs. Building a single source of truth is essential.
To address this, organizations should perform the following:
- Establish a clear data strategy.
- Assign data stewards or owners.
- Use tools that integrate and standardize data across platforms.
While each nonprofit has unique goals, one common area of focus is constituent data—how donors, members or clients interact with the organization. Analyzing constituent data is often the quickest way to make a significant impact. For this reason, nonprofits should look at the following:
- Giving patterns: How frequently donors contribute and through what channels.
- Engagement trends: Information on event attendance, email open rates and volunteer involvement.
- Retention: Whether supporters return and why they stay.
This type of data tells the story of how the organization is fulfilling its mission and how well it is connecting with the community.
Avoiding obstacles
Many nonprofits believe reorienting their approach to data will be costly and time-consuming. However, thanks to rapid advances in AI and user-friendly tools, the process does not have to be cumbersome. Organizations can invest in low-code or no-code platforms, which allow staff members to pull insights from data even if they do not have a technical background.
Of course, nonprofits should establish proper governance at the outset. Without clear governance, conflicting versions of the same data could emerge, leading to chaos.
Furthermore, nonprofits should prioritize use cases and build iteratively. The goal is for leaders and staff members to continue learning, which helps organizations adjust and evolve their strategy as they grow.
As with all aspects of organizational realignment, it is the people who will make the difference. Training and upskilling staff members are vital to success. To maintain momentum after an effective rollout, organizations should track the progress of their approach and make sure that staff members are on board with the new focus on data-driven methods.
The takeaway
Regardless of a nonprofit’s mission, there is likely a smarter, more efficient way to pursue it—with the use of data. Organizations that emphasize facts, not feelings, position themselves for success in a data-driven world.
RSM contributors
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Morgan ClarkManager
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