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A Data Revolution? Growing Nonprofits Embrace Data-Driven Decision Making

Whether you're being asked tough questions or you just want a fundraising edge, relying on data will get you the best results.

A Data Revolution? Growing Nonprofits Embrace Data-Driven Decision Making

Growing nonprofits are increasingly being asked by donors and stakeholders to demonstrate their effectiveness and quantify their impact. This trend reshapes how nonprofits operate, communicate value, and fulfill their missions. It’s bigger than just collecting numbers and watching trends—it’s about transforming raw data into insights that can drive change.

Benefits of Data-Driven Decision Making

Before diving into ways you can adopt a more data-driven strategy, let’s look at why you might want to consider it.

Enhanced Donor Engagement

Simply put, understanding your donors lets you customize your engagement and outreach. Data analytics can highlight preferences and patterns, allowing you to craft personalized communications that strengthen donor relationships and increase loyalty. In addition, analyzing donor data can bring potential major gift prospects to light, and understanding the triggers that turn every-now-and-then donors into monthly givers will enable more strategic outreach.

Improved Impact Measurement

Measuring the effectiveness of your programs and campaigns is critical for showing impact to stakeholders and enticing prospects to support your nonprofit. Setting goals and using data to measure your progress helps you refine processes on the fly; it also arms you with information about your efforts' impact. This, in turn, can increase engagement and donations and entice prospective donors to support your programs.

Optimized Fundraising Strategies

It won’t surprise you to hear that giving picks up dramatically at year-end, but do you know the slowest months for fundraising? (Hint: the late-summer heat slows everything down!) Beyond these seasonal swings, there are campaigns and strategies and months (even time of day) that your fundraising tends to be more successful. By analyzing donor data, you can see the valleys of donor fatigue and seasonal trends, as well as some surprises. Using data to identify trends allows you to optimize your campaigns and make them more effective.

Key Focus Areas for Nonprofits

There are a few focus areas that can set you up for success.

Donor Management

A nonprofit CRM is essential for managing donor relationships. It will allow you to track interactions, manage all donor information, and automate communication and campaigns. Sophisticated CRMs can track volunteer hours, in-kind donations, event registrations, and other metrics worth watching to gauge engagement.

Impact Measurements

Assessing the outcomes of your work is essential. You will often have to share these results with stakeholders or use them to qualify for funding through grants. At a more tactical level, using impact measurements on your website and in your communications with donors can be one of the most powerful tools to attract and increase donations.

Resource Allocation

Many nonprofits are watching every dollar, and using data to allocate human and financial resources can significantly impact fundraising. Ensure you’re investing time and money into the programs and campaigns that will provide the best outcomes. Carefully allocating resources and investing them where they’ll have the most impact is an essential area of focus for nonprofits.

Five Steps to Implement Data-Driven Decision Making

Becoming an organization heavily reliant on data won’t happen overnight. It might require upgrading your fundraising software to get the most comprehensive, actionable data possible. It might require convincing your board to shop for new systems or become data-driven themselves. You might need to train your staff in data literacy, so it’s understood by all staff (and across departments).

Here are five steps you can take once you’ve decided to focus more heavily on data:

  1. Set clear, measurable objectives. Decide what you want to achieve—better donor retention? More funds raised? Conversion of one-time donors to sustainers? By establishing what you want to accomplish, you’ll ensure your team remains focused on the data to help you reach your goals.
  2. Invest in the right tools. This can mean a nonprofit CRM, fundraising software, analytics tools, and integrated tools that are part of your unique tech stack. Check to make sure you have the right tools and that they will scale with your organization as you grow,
  3. Train your team. Empowering your team to collect and interpret data is critical for fostering a data-driven culture. You might need to ask your technology vendor for additional training or online modules, or you can ensure a few people are thoroughly trained and have them instruct others in the organization.
  4. Figure out what data you want, then collect and analyze it. Good software will practically tell you the shoe size of your donors! Think about the data you can gather and which will give you the most actionable insights. Remember that you’ll want to watch for trends and patterns, so once you decide what to track, stick with it.
  5. Act on what you’ve learned! Use data to refine your strategies and inform your fundraising and outreach plans. Use insights to personalize campaigns and watch engagement rise. Importantly, continue to monitor data and be prepared to tweak your plans and approach if it seems something could be working better.

Overcoming Common Challenges

Many of our clients are heavily reliant on data to drive their fundraising and impact, which is one of the reasons they were drawn to fundraising software offering rich and comprehensive data. But for nonprofits just starting to turn toward data reliance, a few common challenges can be more easily overcome if you anticipate them.

Incomplete Data and Siloed Systems

It’s common for growing nonprofits to have cobbled together a few different systems to have all the features they need. While an advanced tech stack integrating functionality can be an ideal solution, core fundraising tools must be native to the platform. In this way, you avoid siloed systems and the incomplete data that can come from syncs and uploads. When your data is unified in one system, you avoid significant risks.

Resistant Team Members

Whether it’s your board or your staff, change can be hard as the “old” way of doing things is often comfortable. And a focus on numbers isn’t everyone’s strong suit! The best way to mitigate resistance is a two-pronged approach: a lot of training and support, and clear and constant proof that this approach will benefit all your team does. Remind them that these tools won’t replace human efforts but will enhance them instead.

Resource Constraints

Let’s be honest. Many nonprofits focused on growth are, by necessity, focused on cutting costs wherever necessary. Implementing new software and taking the time to train staff can weigh down financial and human resources.

It is important to take the long view here. In almost every case, the cost of new software is quickly repaid with increased fundraising and efficiencies. A team trained to interpret and analyze data and implement insights is going to be more productive, less stressed, and more successful. Most often, software vendors will work with you on a budget, so it’s always worth having an honest conversation.

Analysis Paralysis

It’s easy to get bogged down in analysis when you have so much data at your fingertips and you’re eager to get as many insights as possible. Having a clear plan will help to avoid this. For example, you might want to construct your year-end campaign around audience data. You might choose to review giving history and RFM (here’s a free calculator to show you how to find an RFM score, or your CRM might do it for you) to identify ask amounts, engagement across channels to see how to make your appeal, and even A/B testing of messages to see which resonates. Identify the data that will inform your efforts and collect it so your scope and efforts remain focused.

What’s Next for Data-Driven Nonprofits?

The data revolution has begun, and it’s not stopping any time soon. With the emergence of tools like artificial intelligence and machine learning, you can count on increasingly deeper insights from data. This, in turn, can very well revolutionize how your nonprofit works.

This trend represents a fundamental shift in how growing and enterprise nonprofits operate. Those who successfully navigate the transition to being data-focused will be well-positioned to quickly adopt new technologies, secure funding more easily, and dramatically increase their impact. It’s clear that technology, advancing swiftly, is here to stay and will define our future. If you’re not already on board, it’s time!

If you want to learn about the unique technology CharityEngine offers, get in touch with us. We’re more than happy to share success stories of our own data-driven clients and show you what your nonprofit can do when it’s powered by CharityEngine!

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