There a phrase that non-profit leaders are increasingly fearing they will have to say: “we can’t measure that.” One of the biggest, and rarely discussed, gaps between the non profit and for profit world comes in the ability to measure what is and isn’t working and then do something about it.
Until recently, this gap didn’t impact non-profits deeply (at least in terms of fundraising): donors and boards were more interested in the stories and sometimes fuzzy facts that leaders and staff doled out in reports and grants. But that’s all changing.
As Nell Edington recently wrote in her 2012 predictions, as non-profits are getting “smarter”, donors and boards are asking for more and asking better questions.
Much of this change came from questions that donors are asking the organizations.
A great example of this is, somewhat surprisingly, from the government. The Investing In Innovation (i3) program not only rewarded grant proposals from organizations with independent research to back their work, but required that winning proposals include an independent evaluation of the work that would be carried out with the grant money. This is huge step forward.
The government isn’t the only one driving this change. Social sector investors, boards, and foundations are all asking for more. Led to some degree by the work of the Gates Foundation, the whole “giving” side of the social sector is trying to get more return for what they’re increasingly seeing as investments in change.
But if we rely on timely and expensive (and, admittedly not always conclusive) independent research to evaluate our work, the sector will be left behind. The most innovative and effective non profits will be the ones who can harness their own assets and data to constantly improve.
In house analytics
To date, most non-profits don’t invest nearly as much as they need to in infrastructure, let alone business intelligence.
Before we get much deeper, I’ll concretely define “business intelligence” since it’s not something I’ve written about explicitly on this blog. According to wikipedia, “Business intelligence (BI) mainly refers to computer-based techniques used in identifying, extracting and analyzing business data, such as sales revenue by products and/or departments, or by associated costs and incomes.“
For non profits, BI is basically the same: analytics to tell you what is working well across your program and functional units. The means from marketing, to fundraising, to program management: data must be the fuel that leaders use to drive the organization.
An example: Fundraising Analytics
Non-profits often get smarter about donor data sooner than program data. There’s a thriving industry behind fundraising analytics that stretches from prospect research (just like it sounds) to analysis, reporting, and CRM. SalesForce even has a “starter pack” for non-profits and offers non-profits a free 10-user license. If your organization uses Raiser’s Edge, etapestry, or any similar donor-database/CRM this probably sounds familiar.
Yet, when you start looking around at what non-profits are doing with their donor data, the trends are easy to spot: inconsistent data, unusable dashboards and reports, and no clear path of how to use the data to inform strategy. (Note: Beth Kanter wrote an interesting post back in April covering a wide mix of nonprofit dashboards. I’m not convinced that “dashboarding” is how nonprofits should prioritize their data reporting needs, but feel free to make the case otherwise in the comments section.)
This needs to change, not only to satisfy boards and donors, but to maximize the efforts and time spent fundraising which can soak up a lot of an organization’s resources, especially at the early stages when it’s an all hands on deck operation.
[want to learn more? if you're interested in reading more about other examples of non-profit business intelligence, check out this white paper from the folks who make Raiser's Edge]
It doesn’t have to be this way
I’m convinced that the most successful and fastest growing non-profits in 2012 will be those who prioritize and are able to use data efficiently and effectively to drive program, fundraising, and marketing. Let’s look a little more deeply at each category:
Beyond defining the theory of change, each area of the program or delivery needs to identify its key performance indicators that help chart its progress and goals. Think about how boat captains of past generations used the constellations to chart their progress – these are your KPIs that you must prioritize measuring, understand what influences them, and identify the most important levers for improving… constantly.
Fundraising analytics can be some of the sexiest because you have a lot of great data to work with. Compare industry benchmarks with historical data, an understanding of your prospect and donor pipeline, to create custom appeals, ascertain the right gift asks, and drive innovative strategies to fill gaps in giving levels and different donor bases (e.g. foundation, individual, etc.). This all happens through a pairing of automated reporting with much deeper analysis. Follow Kaushik’s golden rule of analysis and invest 9:1 ratio in your people over systems. Your people, if they’re good, will be able to make up the systems (or make up for the system’s) weaknesses.
Marketing analytics, and especially digital marketing analytics is no different in the non-profit world as it is in the for profit one. Instead of a purchase, you’re still measuring leads, donations, or whatever your X is. Get to know Google Analytics well (it’s free – for now) and make sure you measure other forms of outreach on social media, email, and even print. Same principles, different medium.