How to Become a Data-driven Nonprofit (in 3 Simple Steps)

The quest to become a data-driven nonprofit is not simple or easy. Use these three steps as guidelines. If you had a checklist for “becoming a data-driven organization,” these three steps would be on it.

I get a lot of emails, but some of my favorites come from people just like yourself. For example, everytime someone subscribes to this blog, I ask them to fill out a short survey. When someone does, I get an email with their responses:

fundraising report card subscriber survey

When you subscribe you’re posed a few questions; how did you hear about the blog? Why did you decide to subscribe? What type of content are you most interested in? etc.

After receiving 200+ of these emails you start to identify a few patterns and themes. It’s incredibly insightful to see that so many development professionals have the same pain-points, desires, and needs as one another regardless of organization size, budget, or staff. I think this is one of the most valuable experiences I have as a vendor in our space. Rather than being tied down to one or two organizations, I’m able to see issues across the sector as a whole. It’s really quite unique.

Today let’s address one of the most common sticking points I get asked about; how do we become a data-driven nonprofit? Although this is a loaded question, and I’ve written an entire e-book on the subject, I’m going to try my best to break it down to 3 simple steps.

This is meant to be a tool, not a comprehensive guide, to help you move the “data-driven” conversation forward in your shop. If you’re looking to get into the weeds, there is a longer, more in-depth guide here.

3 steps to become a data-driven nonprofit

The quest to become a data-driven nonprofit is not simple or easy. Let’s get that out of the way immediately. Although I have a catchy post title, and supposedly “3 simple steps” to become a data-driven organization, the reality is that this will be a challenging endeavor for you and your team. Why? Because organizational change (of any type) doesn’t happen overnight and can (in many cases) take months or years to occur. (More on that subject here, if you’re interested).

Use these three steps as guidelines. If you had a checklist for “becoming a data-driven organization,” these three steps would be on it, along with a variety of others.

Enough rambling. Here’s step one:

Establish data as a need

Before we can even begin the discussion of “how to become a data-driven nonprofit,” we must first establish the need to become a “data-driven nonprofit.” Without a need, this whole exercise (which will cost time and money) is worthless.

The need for data-driven decision making and a data-backed culture is relatively simple, but conveying its importance to others (some of whom may be “stuck in their ways”) can be challenging. It comes down to framing your justification internally.

From my experience partnering with hundreds of organizations to develop a data-driven approach, I’ve seen a handful of effective arguments for investing in data.

1) Increased efficiency. Effective across organizations of all shapes and sizes, the argument that being data-driven will increase staff efficiency is generally accepted as true. Within fundraising departments I have witnessed Directors of Development compel board members and senior leadership to let them invest in data cleanup and tools by simply stating, “if we do this I can spend less of my time pulling out my hair and more of my time meeting with donors.” This justification works.

2) Better for the donor and those that benefit from programs. Pulling on the emotional strings of your board and leadership can also be a compelling way to convince them that data is important. I’ve seen a handful of cases were fundraising staff (especially in grant funded organizations) were able to compel the board to invest in data-related vendors or consultants because they were able to explain how that investment would either a) benefit those that the organization served (i.e. recipients of programs), or b) enable the organization to better engage and share information with their donor base. Either of these approaches can be effective and tie directly into the mission of your organization. Essentially, you frame the investment in data as a way to further your organization’s reach. Heavily grant-funded nonprofits already tend to do a good job with this (reporting back to grantmakers forces their hand), but the same approach can be effective across all organizations.

3) Competitive advantage. Although the concept of competition amongst nonprofits is not widely discussed outside of our sector, we all acknowledge that (even though all of our missions are meaningful) donor dollars flow to many different organizations. Strategically, in order for your organization to sustain itself and grow, leveraging data as a competitive advantage to your peers can work. This argument is most effective with board members and senior leadership that come from major corporations. Why? Because they’ll see investing the organization’s time and money in data as a way to differentiate themselves from other organizations with similar missions, and that to them is a strategic “win.”

Step two:

Implement a culture that supports data-driven decision making

It’s one thing to justify a need to invest in data, but it’s another to actually implement your “next steps.” A culture that supports data-driven decision making will succeed, whereas an organization that suppresses data will falter.

This means that decisions are not made “on a whim.” Instead, the organization supports evidence-based practice, where staff are enabled to test, monitor results and then take a next step.

We could spend weeks discussing different ways to implement evidence-based practice at your organization, but the key piece here is that your organization’s culture doesn’t stifle attempts to implement it. Once a need has been identified, i.e. “We need to use data more effectively because it will serve as a competitive advantage against similar organizations,” then you have to enable the solution to the need via a culture that supports, not belittles the process.

For ideas regarding evidence-based practice and data-driven decision making you might want to read a book called Sprint. The idea is that within a week you should be able to test an idea and get real feedback about it from end-users (donors, program recipients, etc.). This would be an implementation of evidence-based practice. Can you get your organization’s leadership and staff to support doing something like this? You need to in order to become a data-driven nonprofit.

Step three:

Making leadership view data as a strategic asset

The third and final step to become a data-driven nonprofit involves those at the top. How does the board chair or CEO feel about investing time and resources into becoming data-driven? They need to view it as a strategic asset. Data can help leaders form not only the 5 year plan, but the 10 and 20 year plans. When it comes to decision making, leadership needs to see that the best way to enable the organization to make the right decision now, tomorrow and well into the future is to have data starting today.

As a function of strategy, leadership should support the notion that data can help drive decisions that will most benefit the organization. If your organization strives to be a data-driven one, you’ll need the chair of the board and executive officers to not only talk the talk, but walk the walk.

Applying this at your shop

Okay, so becoming a data-driven nonprofit isn’t as easy as our title may make it seem, but it is attainable. Changing organizational culture is tricky, and depending on the size and scope of your institution, it may not even be possible without some outside help (a consultant or firm).

But, after you close out of this window and leave this page, there are still a few takeaways you can apply at your shop.

  • Don’t get caught up in the jargon. Identify a need for data and go from there. If you don’t have a pressing need for data as part of your decision making process, don’t force it.
  • You’re going to have to sell others on it. Not everyone will support allocating budget or changing process and procedure to be more “data-driven.” Anticipate this and be ready to justify your reasoning.
  • Everyone needs to be on board. From the top of the hierarchy down, data needs to be leveraged and employed day in and day out.

What are your thoughts? Let me know in the comments below.

Author: Zach Shefska

I oversee the Fundraising Report Card, a division of MarketSmart. The Report Card is a free tool that empowers fundraisers to make data-driven fundraising decisions. It’s pretty neat.

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