Every industry has its own share of hot buzzwords, and the nonprofit sector is no different. Lately, everywhere you look, you see articles, blog posts, tweets, and smoke signals about being โdata-driven.โ Everyone wants to be a data-driven organization. Just put data in the driverโs seat, and next stop, success.
Itโs true that using data to help drive strategic decision-making is critically important. But not every organization knows how to be a data-driven organization.
Now, the specifics of successfully incorporating data analysis may differ from one organization to another; mission-critical data points for a regional nonprofit theater company will differ from those of a small cat shelter or soup kitchen. However, there are some universal struggles that every nonprofit faces when trying to get on board the data train.
To that end, hereโs a little back and forth between yours truly and GenericNonprofit.org facing the inherent challenges in adopting a data-driven strategy.
GenericNonprofit.org: So weโre supposed to be data-driven. All the big guys are doing it. But weโre a small nonprofit, so where do I start?
Me: Well, for starters, you already have data. You are tracking information from your givers, right? What system do you use to track gifts?
GenericNonprofit.org: Well, we put everything into an Excel spreadsheet.
Me: Please tell me youโre kidding.
GenericNonprofit.org: Donโt worry! Itโs really well organized. For each event we have we create a new spreadsheet with different tabs for different types of gifts.
Me: *sobs quietly*
GenericNonprofit.org: Wait, thatโs not good? I thought it was really well organized.
Me: Wellโฆ.. not really, no. How do you send out receipts?
GenericNonprofit.org: *blank stare*
Me: Or year-end statements for tax purposes?
GenericNonprofit.org: Oh, our accountant does that. It only takes her about a week or two to pull it all together.
Me: See, thatโs a week or two that you could be doing other things. A week or two youโre paying someone for something that should take a day. And what about tracking your top givers? How can you even identify them with data all over the place?
GenericNonprofit.org: Wellโฆ I have post-its on my monitor for some of the people I think are our top donors.
Me: Stop! Thatโs it! Step 1, you need a good CRM.
GenericNonprofit.org: But weโre a small nonprofit and those are pricey!
Me: See, hereโs the thing: thereโs a cost everything. Those two weeks youโre paying an accountant to send out tax receipts could pay for a sizeable portion of your CRM. Thereโs an opportunity cost youโre missing out on by NOT knowing who your top givers really are. If you have a good CRM, the value far outweighs the cost. With the right tools, you can track your interactions with ALL of your givers, know whoโs giving how much over how many years, track which of your fundraising efforts is the most efficient and productive – not to mention which marketing efforts are LOSING you money.
GenericNonprofit.org: That would be amazing. So by just tracking our gifts we can see all that?
Me: Well…yes and no.
GenericNonprofit.org: I knew there was a catch.
Me: No catch! But tracking data goes beyond โSean Carter gave us $100 on March 1st.โ
GenericNonprofit.org: Right. We also need to know if it was by check or credit card.
Me: For starters.
GenericNonprofit.org: This is starting to sound like a lot.
Me: It doesnโt have to be. Again, itโs just a matter of using the right CRM.
GenericNonprofit.org: OK. So what else do we need to track?
Me: Think of the entire lifecycle of a gift. Where did it come from? Did someone give because you sent them a mailer? Because they attended an event? Because they were asked by a donor development rep?
GenericNonprofit.org: So mark gifts by what event someone gave to. OK.
Me: More than that, though…do you like M&Mโs?
GenericNonprofit.org: Who doesnโt?
Me: Great. Keep that in mind for tracking giving. Youโll want to track the M&Mโs for incoming gifts, meaning the Message and the Method. What messaging moved someone to give, and what method, or channel, did they use to give? Because both matter. You might send out a great fundraising email asking people to give online, but if your givers prefer to give via check by mail, it wonโt make a difference. Track both and youโll start to know what moves your givers and how they prefer to give to you.
GenericNonprofit.org: Knowing where our gifts come from would be really helpful.
Me: And youโll want to know where they go.
GenericNonprofit.org: Like…to the bank?
Me: Well, what are you funding? Sure, lots of people might give to your general operating fund. But you probably get restricted gifts too. And youโll want to track that carefully. So, you want to know where gifts are coming from, and once they do come in, make sure to track where they go. Then you can track your progress to hitting certain funding goals and be sure to accomplish your mission.
GenericNonprofit.org: OK, so…I get a CRM and I put in all the gifts we get, track where they come from and what we do with them. And Iโll be data-driven?
Me: Well itโs a good start.
GenericNonprofit.org: Thereโs more?
Me: Always. You canโt really be a data-driven organization until you start collecting the right data and tracking it effectively. Once you do, you can start reporting on and analyzing your data to identify trends and then make strategic decisions based on that.
GenericNonprofit.org: Iโm getting tired. So THEN weโll be data-driven?
Me: Once data starts driving your decision makingโฆ yes, youโll be data-driven.
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