Data Strategy for Non-Profits: Why?

Delta Analytics is a 501(c)3 non-profit based out of San Francisco serving social sector organizations around the world with pro-bono data consulting services since 2014.

This article kicks off a series of resources by Delta Analytics on how social sector organizations that are getting started or reevaluating their data efforts can more effectively integrate data with their organization and mission.

Data has become an indispensable resource used by non-profits spanning across sector and size to identify opportunities, inform decision makers on how to allocate scarce resources, and to measure and communicate impact. For organizations just starting to delve into or organizing their data, this can appear to be a daunting challenge. “How?” is a common starting point. How do we collect the data? How will we analyze it? How will we visualize it? While these process questions are important to understand and deserve detailed answers of their own, the first question that every non-profit should answer before diving into the data is…

Bill Gates on Why Measurement Matters

Why Invest in Data

In today’s environment, motivating the need for data appears easy. Technological advances have made collecting and analyzing data more inexpensive and have been demonstrably effective in enabling better internal decision making and are valuable to a wide array of stakeholders. The growing need to leverage data is primarily supported by two related data-enabled opportunities that non-profits face:

1. Providing greater transparency and accountability to funders. The availability of data has driven donors and grantmakers to be more conscious on the measurement of the impact that their dollars have. Non-profits which can better demonstrate their impact receive more financial support.
2. Growing impact of programs and services. Data is utilized internally to improve services and expand impact which results in being able to generate greater impact.

Due to the value of these opportunities, it can be tempting to jump right into using data as soon as possible. This approach, while likely to yield some results, is problematic because it bypasses the planning required to integrate something as complex as data into an organization, and make smart decisions.

The starting point for answering your organization’s “Why?” is to develop a data strategy. A data strategy motivates why your organization should invest in data and an outline of the data efforts to be prioritized. While this process requires more time spent up front, it can prevent many potential headaches and misplaced investments. Assessing the following will help lay a foundation for a data strategy:

1. Mission and Theory of Change
2. Stakeholders
3. Data Gap Analysis

The steps outlined throughout this article are meant to be a general guide for organizations that are getting started in collecting or better understanding their data. In more mature non-profit data organizations, these responsibilities are primarily owned by Monitoring and Evaluation functions.

Mission and Theory of Change

The Theory of Change framework is a valuable tool to define the goals and necessary conditions for those goals to be achieved. Each part of a Theory of Change presents opportunities to drive greater accountability for end goals, as well as evaluation of the methods by which those goals will be achieved.

Chances are your organization already has the outline of a Theory of Change even if it’s not written down as a Theory of Change. Social sector organizations usually have their end goal stated or implied through their mission. Their programs and initiatives are used as levers towards achieving the mission. All that is left to do is to create a concrete outline which states the impact that will be generated, the conditions needed to generate the impact, and the programs in place to create those conditions. Each piece of the Theory of Change can then be stated in terms of a quantifiable measure of success which will serve as the starting point for developing a data strategy.

Since most of this article will be dealing with strategic and abstract concepts, Technoserve will be used as an example on how to think about a data strategy in the context of a specific non-profit. Technoserve works to address market failures in developing areas by working with individuals, businesses, and policymakers to create environments which can support sustainable economies and allow communities to prosper. They have been able to achieve this by integrating data into the heart of their decision making.

Technoserve’s Theory of Change

Technoserve’s Theory of Change is an example which was developed and framed with measurement in mind. Stated outcomes are framed as being “measured” and establish a starting point for diving deeper into how each component can be quantified.

Stakeholders

After outlining a Theory of Change, the second most important strategic exercise is to understand your stakeholders by answering the following strategic questions

1. Who are your stakeholders?
2. What questions do stakeholders have that can be answered through data?
3. How will the data affect stakeholder decision making?

Non-profit stakeholders include anyone who contributes to or is a beneficiary of the work that the non-profit does. In general, they can be divided into three groups:

1. Donors and Volunteers.
2. Management and Employees.
3. Beneficiaries.

Specific sub-groups or examples of individuals belonging to each of the groups should be identified. This exercise will lay the foundation for motivating a data strategy and better understanding the big picture landscape of a non-profit.

Technoserve has stakeholders which fit into each of those categories and can be provided with data which address their needs.

• Donors, grantees, volunteers, and other providers of resources are provided with a data-driven Impact Report which provides a holistic view of how Technoserve utilizes their resources to achieve its mission. The report itself combines anecdotal stories along with data to present a story of Technoserve’s work and impact. This addresses external questions from funders and volunteers on how effectively their resources are being used and can influence decisions around donating time and money.
• Management and employees are provided with more granular views on how individual programs and initiatives are performing on metrics related to their Theory of Change. This provides visibility into how resources are allocated internally and empowers internal decision makers to evaluate how to get the most impact out of the limited resources they have.
• Technoserve’s beneficiaries range from individuals who are able to raise their incomes to local governments which can better operate in communities with greater economic opportunity. In each of those cases, data around how projects in different sectors are performing can be used to garner buy in and allow Technoserve access to communities that they would otherwise not have.

Data Gap Analysis

Effective data strategies are built on an understanding the current gaps between existing data within the organization and the questions that stakeholders have which are not or unsatisfactorily answered. As outlined by Vermont Insights (with a few updates), a gap analysis should consist of:

1. Outline all data needs in the form of questions derived from your Theory of Change and stakeholder analysis.
2. Deep dive into the required data to answer the questions and an estimate of how much that data would cost to obtain. Don’t forget that the same data could answer multiple questions.
3. Identify data that has already been collected and any existing efforts to collect additional data.
4. Connect existing data and data efforts to questions and determine gaps between questions and data.
5. Propose strategies to bridge data gaps and sustain data assets. Evaluate both the benefits of answering the question and costs of acquiring the data.
6. Prioritize data gaps to close.
7. Communicate findings to relevant stakeholders.

Going through this process will provide a complete outline of all the data needs that your organization has and next steps on which data to invest in.

Getting Started with Data

It probably does not take Bill Gates to convince you that data is a worthwhile investment. Growing social sector organizations are likely to see data as a valuable opportunity to demonstrate accountability to internal and external stakeholders. This potential value should not give way to forgetting that data is too important and expensive a resource to develop ad-hoc within an organization. Data should be treated like any other strategic investment - developed to integrate with your mission, evaluated for its potential impact, and prioritized based on cost benefit analysis.

How does your organization currently identify and structure strategic opportunities in data? Leave a comment below — we would love to start a discussion.

Additional Resources

Building a Performance Measurement System - An in depth look at how to implement and leverage data for performance measurement.

NTEN Non-profit Technology Staffing and Investments Report - Benchmark your strategic investments in data and technology against other organizations.

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Thanks to Kate Diaz of Technoserve and Aila Malik of Venture Leadership Consulting for their feedback.