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In today’s technologically advanced world, data is the rule. But just having highly relevant information won’t help if your board, management, and staff don’t know what to do with it.
So how can your organization harness the power of data? You can use it in daily decision making and strategic planning. You can also use data to provide your stakeholders — including donors and volunteers — with up-to-date information about your fundraising, programming, and outreach.
Related Reading: All Eyes on Performance: How to Make Data Analytics Work for You
What is that?
Data analytics is the science of collecting and analyzing sets of data to develop useful information, connections, and patterns that can lead to more informed decision-making. It produces metrics—for example, results against effort, program effectiveness, and membership renewal—that can reflect past and current performance. Using this information can predict and guide future performance. The data analysis process integrates statistics, computer programming and operational research.
Data can come from internal and external sources. Internal sources include your organization’s databases containing detailed donor, recipient, or member information. External data may be obtained from government databases, social media and other organizations.
What are the advantages?
Data analytics has several potential benefits for nonprofit organizations. Data analytics can help an organization:
- Validate trends;
- Discover the root causes of problems; and
- Take a holistic view of performance.
Done right, data analysis allows management to focus on your organization’s main goals and improve performance in a cost-effective way.
For example, data analysis can serve a dual fundraising purpose. First, it can provide a means of illustrating achievements for potential donors who request evidence of program effectiveness. Second, analyzing certain data can make it easier to target those most likely to contribute.
Initiatives to streamline operations or reduce costs can stir up emotions, but analyzing data facilitates fact-based discussions and planning. The ability to predict outcomes can support sensitive programming decisions by considering data from various perspectives, such as: at-risk populations; funding restrictions; past financial and operating performance; offers available from other organisations; and donor priorities.
What should be considered before buying?
Excited about data analysis? If yes, it is important
not putting the cart before the horse by buying expensive data analysis software and then trying to decide how to use the insights it produces.
While new technology can be a good idea, your organization’s information needs should dictate the software you need. Thousands of potential performance metrics can be produced, so take the time to determine which financial and operational metrics you want to track, now and in the future. Which of your organization’s programs are the most important? Which indicators are most important to stakeholders and can really guide decisions? How can you actually use the information?
You should also ensure that the software you choose complies with all applicable privacy and security regulations, as well as your organization’s ethical standards. Security considerations are particularly important whether you opt for a cloud-resident solution or installed software.
Additionally, you need to consider how well the technology solutions you are considering can integrate with your other applications and data. If the software can’t access or process vital data, it’s probably a bad investment.
Membership of the organization
Now might be a good time to start a comprehensive program or to review your current data and measurement usage. But remember that the quality of a data analysis program depends on the people who use it. If your management and staff don’t understand how to use it, it’s a waste of time and effort. Take the time to educate everyone on data analysis capabilities and follow up to ensure they are used effectively.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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