Establishing a Data Driven Culture in your Organization

Changing or establishing a culture at an organization can be a herculean task. More often than not, the culture of your organization was established well before you came on board. For many professional fundraisers, especially at smaller nonprofits, the idea of a shift in focus or priority can be daunting and the ability to make that change may be out of your control. So, when nonprofit leaders think about establishing a culture within your organization where data is respected, embraced and acted upon, it can seem like a daunting task.

Establishing Culture
The culture at your nonprofit includes:
– your mission and vision;
– how you value your team of people;
– your shared values.

Often times however, organizations confuse “mission” with “culture”. The mission is the work your organization does while culture is the way we behave within an organization and culture can be hard, if not impossible, to quantify. When professional fundraisers work to imbue a quantitative measure into a qualitative culture, a struggle may result.

Establishing or enhancing a data-driven culture must start with the philanthropy operation within your organization. This team must be the first to use data to make its own decisions and then seek buy in from other areas of the organization. According to a June 2017 article in the Harvard Business Review, “Culture change can’t be achieved through a top-down mandate. It lives in the collective hearts and habits of people and their shared perception of “how things are down around here.”  Someone with authority can demand compliance, but they can’t dictate opt.”

What does a Data Driven Culture look like?
A true data driven culture may be easy to describe but can be hard to recognize. Data driven cultures require:
–       Efficient gathering of accurate data;
–       Appropriate storage of data;
–       Ability to easily retrieve data;
–       Capacity to analyze data.

Most importantly, it requires that your organization use that data to make decisions that drive results forward. Results sometimes can be difficult to accept, but you must be willing to embrace them if you’re going to create change to increase impact at your organizations.

In early 2018 the Society for Human Resource Management released an article “Understanding and Developing Organizational Culture”. While the article speaks to an organizations’ overall culture, many of the advantages highlighted relate to the reasons to establish a data driven culture at your organization. “A strong culture can bring benefits such as enhanced trust and cooperation, fewer disagreements and more efficient decision-making.”

Data driven cultures do just that. When nonprofit leaders share factual information with other departments within your organization it builds trust between your department and others. Too often at nonprofit organizations, the rationale behind annual fundraising goals is simply the difference between program income and expenses. Data driven cultures allow professional fundraisers to honestly predict income and make positive strategic decisions.

Why are data driven cultures important?
Nonprofit leaders should work diligently to ascertain important data metrics and analyze the results. Two of the most powerful tools to utilize is the Fundraising Effectiveness Project or the Fundraising Report Card.  Both of these tools provide the user with both beginner and advanced metrics and allows for transparency and trust.

In my experience, I have found organizations that are driven, although not constrained, by data are the most creative and high functioning nonprofits. Having information at your disposal that can accurately tell you about your organization’s performance is empowering. These organizations are able to use their time more effectively – not worrying about “where they are” or “how they’re doing”. They know – because they’ve used the data at their disposal to find out. Certainly, a data-driven culture has an effect on the fundraising side of the nonprofit.

But if used correctly, it can also have a positive effect on Marketing, Communications, Finance and even Operations but above all else allows leadership to make smart, informed decisions at our organizations. In my experience, after the development office, the Finance Office benefits the most from a culture when data is respected and embraced.

For example, organizations that know their donor retention rate (the percentage of donors who gave in 2017 and 2018), know their average gift (total dollars raised divided by the number of gifts) and their growth in giving rate within that population can predict revenue. (Check out our free online calculator to determine your donor retention rate!) It’s certainly not an exact science, but your Finance team will appreciate some background for the budget numbers you’re providing. Conversely, you as a professional fundraiser can approach next year’s budget with an accurate prediction of revenue from fundraising.

Having the data is nowhere near enough – you have to create an action plan to drive towards increased efficiency and effectiveness. Understanding your data and having a plan to make positive change is one of the first steps to creating a culture that embraces data.

In a 2012 study in the Harvard Business “The Evolution of Decision Making: How Leading Organizations Are Adopting a Data-Driven Culture”, more than half the respondents said agreed or were indifferent about the statement “My manager relies more on judgement\gut feel than data to make decisions”. For how many of us is this statement true at our organizations?  While I would never advise to fully discount members of our organizations who are well aware of organizational history, in order for your organization to thrive, you must make decisions based on the information you have and that you know to be true – data.

In that same report, more than three-quarters of respondents said using analytics:
–       increased productivity;
–       reduced costs;
–       allowed faster decision making.

Seventy-percent of respondents said the outcome was “Improved financial performance”. Why as nonprofit organizations are we not embracing the data that we have to make decisions that will lead to positive outcomes?   Data driven nonprofits allow our organizations to focus as many resources as possible to our missions.

Getting Started
Establishing a data driven culture should start slowly.  Nonprofit leaders should embrace three to five simple metrics and imbue them into your work.  I recommend nonprofits should begin by looking at:

–       Overall average gift;
–       Donor retention;
–       Donor conversion rates for appeals.

Those three simple Key Performance Indicators (KPIs) are strong examples of basic metrics to establish goals around.  Make decisions using those first metrics and increase your efforts and you begin to see results and have “buy-in” from staff.  Keep adding additional KPIs as your program and your culture matures

Finally, I encourage you to personally strive towards being an “Analytical Leader” within your organization’s Data Driven Culture. As noted in the 2012 Harvard Business Review report, Analytical Leaders have “refined their decision-making processes as part of a data-driven culture and achieved superior financial results.” With a great deal of competition for donor dollars every day, establishing or growing a culture where data is captured, stored, analyzed and utilized will pay dividends.

What’s old is new again, or is it?

I recently had a meeting with a client and they shared with me how excited they were about a new fundraising tool they learned about. The conversation quickly lead to a question that I love to be asked, “What’s the next, best, really cool trend that’s coming in fundraising?”.  My response, “Nothing is as cool as sitting down with a donor and asking them for money”.  Of course, this quickly took the wind out of their sails, which was not my intention, but I wanted to make a point.

There is plenty of products in the marketplace that will help you raise money, some are better than others.  But the most effective and efficient way to raise support for your organization is to directly ask people to support your work.  Since before there was ever a profession known as fundraising, people were meeting with each other and asking for things.  I know it sounds much simpler than it is, but I encourage you to always be focused on directly asking people for money.

Major donor fundraising is one of the cheapest ways to raise dollars.  According to a 2005 Ketchum Canada study, average costs were $0.12 per dollar raised to a high of $1.50 per dollar raised. Major gifts, partnerships, capital campaigns, planned giving and sponsorships were in the lower cost range, while acquisition mailings, special events, and telemarketing were in the higher cost range, with direct mail to existing donors and earned revenue in the medium cost range (Spears and Morrison, Philanthropic Trends, 2005)

Stick to what our profession has always done – meet with people, get to know their passions and ask them to support a great cause!