Data Analytics for Nonprofits: Using Data for Nonprofits

Businesses in almost every industry rely on data analytics to make strategic decisions about how to manage their products, operations and customers and how to best utilize their resources. The benefits offered by data analytics, however, aren’t exclusive to for-profit companies. Today, nonprofit organizations also stand to gain from the valuable insights data analytics can help deliver. 

Like for-profit businesses, nonprofit organizations require funding and seek ways to improve efficiency. Data analytics can help on both fronts, in addition to helping nonprofits identify patterns of giving, which aids in predicting donor behavior for planning purposes. Many nonprofit organizations are already well poised to start using data to their advantage. According to the Salesforce Nonprofit Trends Report, 53 percent of nonprofit organizations easily collect program data, the very data they need to uncover useful insights on everything from locating donors to strategically planning their budgets. The trick is harnessing this collected data to make it useful, leveraging the power of data analytics for nonprofits through professionals who speak the language of data with fluency.

Overview of Data Analytics

Organizations often collect an array of data, which may include sale transactions, email addresses, donation records and volunteer spreadsheets. This data offers little value, however, if it’s not turned into something meaningful. The process of turning data into useful information, which organizations can act on to further their objectives, is called data analytics. Data analytics involves collecting and analyzing data to discover trends, answer questions and optimize performance. Four types of data analytics can help organizations work smarter:

• Descriptive. Descriptive analytics offers a picture of what’s happened over a specific time period. It helps organizations to see any changes that have occurred and compare the details of a single time period with comparable time periods. 
• Diagnostic. Diagnostic analytics provides insight into why something happened, analyzing diverse data to draw connections among variables. It can help organizations answer questions like, “Did the donor outreach campaign affect giving?” and “How did the holiday season affect donations?” 

• Predictive. Predictive analytics can be used to anticipate future outcomes based on trends found in past data. This can help organizations to adjust their budgets accordingly or allocate resources differently to take advantage of predicted opportunities. 

• Prescriptive. Prescriptive analytics suggests what course of action to take in the future based on the forecasted outcomes. It enables organizations to simulate possible outcomes that can improve their understanding of the potential risks and benefits for each course of action.  

Benefits of Data Analytics for Nonprofits

A total of 78 percent of nonprofits with advanced analytics capabilities reported that they perform their missions with much greater efficiency, according to an IBM executive report on analytics. In fact, data analytics offers specific benefits to the nonprofit industry, including:

• Membership recruitment and retention. Data analytics can help to improve membership recruitment efforts by providing insight into membership characteristics and preferences. This can include identifying the most effective lead-generating sources — as in what campaigns or activity sparked the most interest in the organization. Organizations can use data analytics to identify the best time periods for membership renewals and the most common drop-off sources in the new-member recruitment process. Additionally, data analytics can help to uncover opportunities for cross-selling, or finding ways to encourage donors to give at different times of the year and support different organizational causes.

• Fundraising and outreach. Optimizing fundraising efforts can have a major impact on a nonprofit’s success. Analytics can help to identify fundraising prospects, provide insight into the most effective fundraising methods and most favorable target markets. Using data, organizations can ensure that their campaigns target those most likely to donate generating efficiencies and helping determine where to best allocate resources. For example, an organization may not meet their goals if they don’t invest enough resources into fundraising. Conversely, investing too many resources in fundraising that don’t pay off can jeopardize revenue.

• Accountability and reporting. Ensuring that a nonprofit is successfully accomplishing its mission is an important part of its long-term success. Analytics can provide insight into this by examining diverse datasets to provide a big-picture view of day-to-day operations. For instance, it may help a nonprofit understand the impact of staffing choices and asset management. In addition, analytics can be an extremely powerful tool for generating reports. By gaining insight into trends, a nonprofit leadership team can more effectively plan for the future.

• Budgeting and forecasting. Analytics can help nonprofits track budgets and expenditures, plan resource allocation, and forecast future revenue. To make decisions about the future, nonprofits examine information that comes from different sources. Data analytics streamlines the process of organizing this information, making it easier to analyze. By modeling complex scenarios, data analytics can help nonprofits monitor financial health in real time and make course corrections faster, ensuring less resources are wasted.

How to Incorporate Data Analytics

Nonprofits looking to implement data analytics into how they do business can consider the following tips to help them in the process:

• Find the right analytics tool for your organization.
• Invest in analytics technology as a valuable business resource.
• Identify areas of opportunity and start collecting data.
• Develop a formal process for collecting, tracking and analyzing data.
• Commit to making meaningful changes based on data.
• Hire skilled analytics experts to improve analytics capabilities.

Learn More About Data Analytics for Nonprofits

Data analytics for nonprofits matters, offering a vital resource to organizations working to accomplish their missions. As the need for professionals skilled in data analytics intensifies, so does the need for degree programs designed to empower professionals with data analytics expertise.  The University of San Diego School of Business offers a 10-month Master of Science in Business Analytics degree that trains graduates to empower businesses and nonprofit organizations alike by using data to achieve organizational goals. 

Sources

Alteryx, Accelerate the Mission of Your Nonprofit

BizTech, “5 Ways Nonprofits Benefit from Using Data Analytics”

BizTech, “Why Nonprofits Need to Implement Data Analytics Solutions”

IBM, Leap Before You Lag 

Investopedia, Data Analytics

Investopedia, Descriptive Analytics

Investopedia, Predictive Analytics

Investopedia, Prescriptive Analytics

Medium, “Nonprofits Using Advanced Analytics See Better Results”

WebFX, 4 Lead Generation Strategies for Nonprofits

Winspire, “BizWorld Lesson #5: Manage Your Donors More Like Customers”