Solving the Nonprofit Data Paradox

January 5, 2017 Steve MacLaughlin

When you have have something valuable, the more you have of it, the richer you become. This applies to gems, precious metals, and any number of valuable resources. The same is true for more intangible assets—having more time or talent increases the overall value of those treasures, too.

In the Age of Big Data, countless companies are turning their wealth of data into an extremely valuable asset. Unfortunately, the same is not true for many nonprofits and their data. In my bestselling book, Data Driven Nonprofits, I call this the Nonprofit Data Paradox: the more you have of something valuable, the less valuable it becomes.

In the book, I explore how nonprofits struggle with maximizing the value in their data. It should be a valuable asset that enriches nonprofits and helps them grow. Instead, many get overwhelmed by the flood of data, fail to maintain it, or choose to ignore it all together.

Data is fragmented across multiple systems and structures. Donors, members, alumni, activists, volunteers, and any other group the nonprofit engages with are kept apart in their data cages. The data piles up and up. Oceans of data in silos. Gathered up in the digital attic for storage. Hidden hoards instead of hopeful treasure. The more you have, the less valuable it becomes.

Let’s start by noting that the data nonprofits have about their supporters, volunteers, activists, members, and other constituent groups is arguably the most valuable asset they have. If data was listed on a nonprofit organization’s balance sheet, it would likely be worth more than just about anything else. The data is immensely valuable because it is the raw material of information and insights.

If you want to know the answers to important questions like “which supporters are the most loyal,” “which email campaigns have been the most successful,“or “what programs need to improve the most,” then you need to leverage your data. Relying on tribal knowledge or gut instinct alone will not help you drive results. The hidden treasure can be found everywhere in a nonprofit organization’s data.

Raw data can be turned into treasure using modern alchemy like predictive analytics. Target Analytics’ research across thousands of nonprofit organizations reveals that a lot of money is being left on the table. The average nonprofit is missing out on $3,781,461 in untapped giving potential. That is a combination of under-asking with both annual gifts and major gifts. The analysis revealed that an average upgrade capacity of $52 was possible for annual donors and a potential lift $1,197 existed for major donors. The modern day Merlin makes modeling magic more mainstream using data science.

The future of the nonprofit sector is one in which passionate professionals are armed with data insights to maximize their performance in critical areas. In the future, there are more donor-centric organizations because they made the choice to leverage data to build relationships at scale. Nonprofits are more accountable and transparent in the future thanks to the use of data and metrics. This is an exciting time to work in the nonprofit sector and the opportunities in front of organizations are immensely valuable.

This article was originally featured on Huffington Post.


ABOUT THE AUTHOR

Steve MacLaughlin is a Director of Analytics at Blackbaud, the leading provider of technology and services to the nonprofit sector. Steve has spent 20+ years driving innovation with a broad range of companies, government institutions, and nonprofit organizations.

MacLaughlin has been featured as a fundraising and nonprofit expert in many mainstream publications, including The New York Times, The Washington Post, The Los Angeles Times, The Boston Globe, The Chronicle of Philanthropy, USA Today, The NonProfit Times, Bloomberg, and has appeared on NPR.

He is a frequent speaker at events including the Association of Fundraising Professionals (AFP), Association for Healthcare Philanthropy (AHP), American Marketing Association (AMA), Council for Advancement and Support of Education (CASE), Direct Marketing Fundraisers Association (DMFA), Giving Institute Summer Symposium, National Association of Independent School (NAIS), Nonprofit Technology Network (NTEN), Institute of Fundraising National Convention, Civil Society Conference, Resource Alliance’s Fundraising Online, and a keynote speaker at such events as the Crescendo Practical Planned Giving Conference.

Steve serves on the Nonprofit Technology Network (NTEN) Board of Directors and supports its focus on both the growth and professionalism of the nonprofit technology field as well as building knowledge and information sharing capacity throughout the sector.

He is a frequent blogger, published author of a chapter in the book People to People Fundraising: Social Networking and Web 2.0 for Charities, and is a co-editor of the book Internet Management for Nonprofits: Strategies, Tools & Trade Secrets. His latest book, Data Driven Nonprofits, will be published in September 2016.

Steve earned both his undergraduate degree and a Master of Science degree in Interactive Media from Indiana University.

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