5 Benefits of Better Nonprofit Data Management

Data is one of the most important resources at your nonprofit’s disposal, meaning managing it properly should be a top priority.

According to an Every Action/Nonprofit Hub study, 87 percent of nonprofit professionals indicated that data was moderately to extremely important to their operations and decision-making. However, only 6 percent of respondents said they felt they were using their data effectively.

Your nonprofit will benefit in a number of ways from an effective data governance system and clean and organized data. In this guide, we’ll review five top benefits of better data management, including:

1. Better engage with donors
2. Make data-driven fundraising decisions
3. Improve financial management
4. Increase employee productivity
5. Comply with regulations

According to AccuData’s data hygiene guide, “Good data hygiene practices lead to increased efficiency in lead generation, lead tracking, proper personalization, and even the handling of customer service concerns.” Let’s explore these benefits a little more closely!

1. Better engage with donors

Your donor relationships are foundational to your nonprofit’s success. By keeping your donor database organized, you can leverage accurate, updated information to strengthen donor relationships.

Keeping track of donor-centric metrics allows your organization to:

• Understand your target audience on a deeper level. By tracking and organizing donor information like demographics and giving patterns, you can create fundraising and marketing campaigns that resonate with your target audience.
• Personalize donor interactions. Tracking donor information like past interactions and giving history will allow you to send personalized messages to each individual donor.
• Identify potential major donors. Donor engagement data will reveal donors who have the potential and likelihood to increase their donation amount in the future. This can give your nonprofit’s major giving efforts a significant boost.

Today’s nonprofit donors are savvy enough to note the difference between a generic message and a personalized one that speaks directly to their interests and preferences. When you keep your donor data updated by regularly auditing your database, you can form more genuine, long-lasting connections.

2. Make data-driven fundraising decisions

Effective data management can help your nonprofit increase the ROI of its fundraising and marketing efforts by allowing you to make data-backed decisions.

According to BWF’s digital fundraising guide, the most useful data points to track throughout your campaigns include donor demographics, donation page conversion, donor engagement, and donor retention. By evaluating these metrics, you can:

• Learn from the mistakes and successes of past campaigns. For example, let’s say you’re interested in revamping your annual giving campaign. Look at the successes and failures of last year’s efforts, like your Giving Tuesday and year-end giving season initiatives, to see where you succeeded and where you could use improvement.
• Identify your most effective fundraising channels. With organized fundraising data, you can see which campaign types drive the most donations. For example, you might notice higher engagement with digital marketing initiatives like crowdfunding and peer-to-peer fundraising rather than direct mail campaigns.
• Improve your marketing outreach. Using marketing engagement analytics, you can determine which channels lead to a higher ROI. For instance, you may see a high level of engagement on Facebook and your email platform, but less interaction on Instagram. You can refocus your efforts to emphasize Facebook and email outreach for your next campaign.

While you can’t guarantee the success of a fundraising campaign, leveraging data insights from past campaigns lets you iterate your fundraising process to better reach your goals each time.

3. Improve financial management

Just like a for-profit enterprise, your nonprofit needs to remain financially stable to stay in business. Without a strong monetary foundation, you won’t have the resources necessary to further your mission.

When it comes to financial data reporting, don’t just go through the motions and call it a day — take a deep dive into your financial insights to identify where your nonprofit can improve its processes and optimize your operations.

You can gather a variety of essential insights by keeping your financial statements organized. For example, you can more easily:

• Track assets and liabilities. Your assets are the resources that your nonprofit owns, while your liabilities are the expenses you owe to another organization. If your liabilities exceed your assets, you’ll lose money quickly. Keeping this data organized in a statement of financial position ensures that your team is aware of your organization’s current situation and lets you set financial goals to improve your situation as needed.
• Understand your revenue and expenses. Revenue is the funding your nonprofit pulls in from donations and other sources. Expenses are the ongoing operating costs your nonprofit must pay. Record these numbers in your statement of activities to understand if you’re using your revenue effectively and where you can potentially reduce costs.
• Create more accurate forecasts. With organized financial reporting, you can create more accurate financial projections that give you a better picture of how your organization is expected to perform over time. This allows you to develop more sustainable growth strategies to keep your finances stable over the long term.

Improving your financial situation requires a clear understanding of where you currently stand. Effective financial data management can give you a starting point to better manage your resources.

4. Increase employee productivity

Data tracking can improve your internal operations and help identify areas to increase employee efficiency. Specifically, thorough time-tracking provides a wealth of information about employee effectiveness.

Using time-tracking data, you can:

• Identify high-performing employees and understand what makes them so effective. Reward high-efficiency employees with special perks to incentivize them to continue performing at a high level.
• Allocate employee time more effectively to your highest-priority projects and tasks. Identify your most important efforts and redirect employee time when it’s needed most.
• Know when it’s time to hire new employees. Assess whether employees have enough room in their schedules to complete essential tasks.

When your employees are working efficiently and not overwhelmed, you can boost employee morale and retention. This allows your nonprofit to benefit from a stable work environment.

5. Comply with regulations

Your nonprofit must comply with a variety of rules and regulations to continue operating and furthering your cause. Accurate data reporting allows you to maintain transparency and meet these necessary requirements.

Keeping organized data allows you to be more prepared to satisfy regulatory requirements such as:

• Relevant employment laws. If your nonprofit employs people in the United States, these laws include the Fair Labor Standards Act, the Americans with Disabilities Act, and any state and local employment regulations. Keeping accurate employment records allows you to comply with these regulations.
• IRS requirements. To maintain your nonprofit’s tax-exempt status, you must comply with IRS regulations, such as your annual reporting requirement. Upholding clean tax information makes it easy to file your Form 990 each year and maintain your nonprofit status.
• Grant guidelines. If your nonprofit receives grants from foundations, the government, or other sources, you’re likely required to provide ongoing data to prove that you’re using grant funds effectively. For example, the Google Ad Grant includes requirements like reporting on conversions and maintaining a high click-through rate. With clean data reports, you can prove to your grant funders that they made a wise investment in your nonprofit.

Sending reports to various regulatory agencies or grant funders won’t be as stressful for your team when your data is properly maintained. Your nonprofit can easily take care of these necessary obligations and then return its focus to the important task of achieving its mission.

Proper data management helps every aspect of your nonprofit run more smoothly, from your internal operations to your external donor management activities. The time and energy you spend organizing and refreshing your data-tracking processes now will pay off far into the future when you set your organization up for success.