The Future of Data

Where is technology going in the next few years, and how will it impact my nonprofit and our constituents?

This is a hot topic in the nonprofit world (I’m quite curious myself!) and I’ve explored this topic in a few places over the past couple of years – Non-Technology Trends for the CIO, Non-Technology Trends for the CIO, 2014 Edition, and Technology Trends in the Donor Lifecycle among others.

Today, I want to focus on the future of data itself. As technologists, we naturally gravitate towards the new and exciting, and love exploring the “art of the possible” when it comes to innovation and furthering our favorite causes.

Data itself often takes second chair to new user interfaces, features, apps, or other innovations. But, in the end, IT is about delivering the right information to the right people at the right time, and that is predicated on the availability of consumable, timely, and actionable data.

Let’s look at the future of data by stepping back from technology for a moment and considering the larger factors and influences impacting the nonprofit space today, and what challenges and opportunities these may present.

Market Forces at Work

The fundraising landscape continues to change and evolve. Direct response marketing is flat or down for most organizations. Fewer people give through traditional channels, such as mail, especially to unfamiliar organizations. As a result, fundraising programs dependent on continuous new donor acquisition donors are hurting.

Historically successful Run-Walk-Ride events are feeling increased competition as more organizations are getting in the game and launching their own events and peer-to-peer fundraising activities. Many growth-engine events have flattened off or are facing declining returns.

Specialty events (such as adventure, color, and mud runs – many of which are for-profit entities) are becoming more popular, as are independent, supporter-led fundraisers. These “grassroots” efforts offer significant opportunities for top-line growth and acquisition of new constituents, but present challenges in terms of management and building long-term relationships with donors and participants.

Online giving is up, but not necessarily for everyone. Many organizations find that lift in online giving is offset by decreases in traditional channels. Meanwhile, organizations struggle to engage and cultivate these virtual relationships.

The pinch on high-volume fundraising has put pressure on major giving and corporate fundraising programs, meaning prospects have more organizations cultivating them. This results in a de facto competition, although few like to admit it.

What does all of this mean for nonprofit IT leaders?

The Need for Data-Driven Decisions

We all like to think of ourselves as data-driven, but in reality most programs remain “HiPPO-driven.” That is, decisions are made by the “Highest Paid Person in the Organization.”

Look for this trend to change. Event managers are looking to understand the return and impact of events, so unprofitable or marginal events can be consolidated, rebooted, or discontinued to focus efforts elsewhere.

Marketers and fundraisers will look to quantify value across multiple dimensions, such as a constituent’s lifetime value, value as a solicitor (e.g. amount of donations raised by a constituent), and value from volunteer service.

Management will look to focus on valuation of marketing efforts to shore up returns and control costs, cut acquisition campaigns, and drive recurring revenue streams. Many marketing and event programs have 40%+ annual turnover, meaning a small uptick in retention has a significant downstream effect.

How do we enable data-driven fundraising? Higher standards for data entry, management, and business processes. What goes into a system is what comes out in reports, and organizations that claim to have a “reporting problem” often have more systemic issues (such as data integrity, system fragmentation, or weak internal controls).

Reinvigorating Fundraising Results: Raising More from Fewer Donors

Many nonprofits I speak with are making an intentional move from acquisition-based fundraising to retention and upgrade-based fundraising (including reactivation of lapsed donors). Traditional direct mail acquisition is simply proving unsustainable over time.

Organizations are looking to build diversified and recurring revenue streams. Data modeling based on historic data (external or internal) can eliminate prospects with little potential to give (reducing waste), identify prospects that have the most potential to give (to allow for more focused or premium mailings), and suggest alternative channels for engagement (such as events or high-touch cultivation).

Similarly, high-volume fundraising channels such as events bring in a lot of new constituents, too many to effectively research individually. Analytic services can provide a more detailed understanding of the capacity, linkage, and preferences of donors, allowing organizations to focus follow up efforts on their best prospects.

Getting Things Done 

Many nonprofits struggle with legacy processes, outdated systems, work-arounds or just “the way things have always been done,” meaning that data has piled up over time (hard drive space is so cheap these days!) and data-related decisions made years ago still haunt the organization.

While less interesting than a custom model of constituents or the latest technology innovations, basic data hygiene services will play an increasingly important role as data sets grow over time. Updates related to National Change of Address (NCOA), deceased records, address standardization, valid email addresses, or overall data health can drive efficiencies across an entire organization, not to mention identify incremental cost savings.

Similarly, contemporary CRM systems have myriad tools to automate cleanup, such as algorithmic de-duplication, address standardization, data entry controls (such as exception management and multi-step approval for imports), or other scheduled business processes.

What about Big Data?

Forget about “Big Data.” What does your organization actually need and struggle with? What will make a real impact on your fundraising, service, and Mission?

I find “Smart Data” is a more resonant term for what nonprofits are looking for today: how can we transform and serve data in a more automated, expedient, and actionable fashion than what we’ve done in the past.

To that end, I find most nonprofits face challenges with the fundamental blocking and tackling of entering, managing, updating, and reporting on data. Opening a nonprofit’s database is often like opening that drawer in the kitchen that holds all of the gadgets and gizmos you never use. What is all of this stuff anyway? Look for opportunities to clean up, truncate, archive, and streamline – but make sure you address any root issues along the way, or you’ll be doing your “spring cleaning” again next year.

Bo Crader
Principal Consultant