In order to thrive, not-for-profit organisations have always needed to establish strong relationships with supporters, create innovative ways to engage and appeal to the public, and successfully seek donations. However, with donor and funder expectations of not-for-profits radically changing as the world becomes increasingly digitised, the need for a comprehensive data management strategy is necessary.
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Successful data management can simplify and reduce manual administrative tasks, build opportunities for closer ties with existing supporters through more personalised interactions, develop new pathways to communities, and support the development of targeted marketing that boosts awareness, financial contributions and other forms of support. In fact, organisations with successful integration of data management report having 34% lower operational costs and are 33% faster in getting funding campaigns to market1 .
In this blog, we discuss the changing not-for-profit data management landscape and the exciting trends in data management that are arising in response.
Trends in Financial Support
When advocating for the not-for-profit sector during the COVID-19 pandemic, the Community Council for Australia noted that providing case studies, or ‘soft data’ to government decision makers was far less persuasive than the ‘hard data’ gathered and analysed by the Australian Charities and Not-For-Profit Commission2 .
|Their experience reflects an upward global trend within government expectations for outcome specific information in successful grant applications, demonstrable outcomes from funding commitments, and for the sector to progressively look at alternative models of funding.|
This results in a growing requirement for not-for-profit organisations to become more responsive, agile and sophisticated in their collection, storage and use of data.
Once implemented, not-for-profit organisations are able to readily and accurately gather, analyse and report on funding asks and funding outcomes when reporting into governments3 . Therefore, a data management system that efficiently supports the collection and presentation of data that quantifies activities and outcomes is becoming a necessity for not-for-profit organisations looking to build a successful and long-lasting relationship with government funding bodies.
Over the past 20 years, foundations have gone from being practically non-existent in the not-for-profit space to being one of the largest drivers of donations in Australia, and more than anything else, they want to be seen as agents of change. However, foundations are also one of the sectors of donors most likely to be driven by an emotional and personal connection to a specific outcome, and most likely to offer multi-generational funding4 . With the largest intergenerational wealth transfer about to start, with more than $3 trillion being transferred by the Boomer generation over the next two decades5 , it is important for not-for-profit organisations to start stewarding partnerships with foundations as soon as possible.
Foundations often need to feel that their contribution is scalable and realistic – leading to a requirement for a not-for-profit organisation to manage expectations and outcomes. It’s no longer sufficient to demonstrate activity, not-for-profit organisations must be able to show a degree of impact and relevance that responds to a foundation’s requirements.
However, long term momentum is hard to maintain if it is purely reliant on emotions. Nimble not-for-profit organisations need to not only service their initial interaction with a foundation, but also help nurture the foundation’s understanding of their potential reach across the longer term. A well-managed approach to collecting and analysing data across all client touchpoints can assist to drive more strategic, longer-term relationships with foundations.
At least 70% of Australia’s not-for-profit organisations get some of their income from donations and bequests6 and, given that they currently represent over half of the world’s population, the largest generation of potential supporters are now from the digital natives in Gen Z and Gen Y7,8 , and the childhood digital adopters of Gen X.
These generations are not only the largest population group, they also represent the largest rise of financial support to not-for-profit organisations in Australia throughout 2020.
|35% of Gen Zs and 28% of Gen Ys have increased their not-for-profit support, compared to 16% of Gen Xs, 12% of Baby Boomers and 7% of Builders9 .|
With the oldest Gen Zs turning 25 in 2020 and with Gen X, Gen Ys and Gen Zs now the largest cohorts of the Australian workforce, it is important for not-for-profit organisations to learn how to engage successfully with these groups.
With Gen X introduced to the digital age when still young and with Gen Y and Gen Z being born into it, they have markedly different expectations from previous generations. Unsatisfied with the old set-and-forget style of giving, they are less likely to offer ongoing support. They are also more likely to expect transparent, personalised and highly engaged experiences from the not-for-profit organisations that they do regularly support. Immediacy of impact is highly important to this group. Therefore, successful not-for-profit organisations should be looking to treat every donor like they used to only treat major donors. In other words, the mainstream is becoming increasingly individualised10 .
This changing landscape of potential donors requires not-for-profit organisations to keep detailed, accessible and relevant data on donors and potential donors11 . Thereby, ensuring that any spend on engagement is specific, relevant and meaningful to any potential donor. A data management system that is integrated, readily searchable and flexible to needs is rapidly becoming a critical part of the public fundraising landscape.
With public expectations of corporations expanding over the last few years from profits to the triple bottom line of people, profit and planet, the opportunities to partner to help companies fulfil their corporate social responsibilities are growing. Indeed, 2020 saw a marked increase in corporate giving, with a 17% increase of funding from 2019, equating to $1.1bn12 .
Corporate brands are strongly enhanced by associating themselves with not-for-profits with good reputations, for example Coles’ partnership with Second Bite, and Rio Tinto’s partnership with the Royal Flying Doctor Service. This brings brand benefits in the public’s eye but also with prospective and current Gen Y and Gen Z employees who are increasingly unwilling to work for corporations that offer only a salary, instead inspired and far more willing to work for those who offer a higher sense of purpose13 .
However, corporate funders expect a high level of outcomes-based campaigning and transparency of spend. A solid foundation of data management readily meets the growing corporate demand for this style of analytics and reporting. Rather than focusing on time-intensive administrative tasks, an investment in data management allows not-for-profit organisations to engage more readily in cross-department collaborations, advanced segmentation for potential corporate partnership, and driving the not-for-profit’s primary mission14 .
Transparency and Emergence of Data Standards
Amongst all these changes to the fundraising landscape, the call for greater and more granular transparency between not-for-profit organisations, donors and the public is the common trend. There is also a growing call for improved levels of transparency between not-for-profit organisations within a sector, to ensure the greatest possible outcome for any spend of people, resources and funds, particularly during a crisis.
This would be a substantial challenge for not-for-profit organisations at any time, but it is also coming during a time of exponential growth of data. Over the last two years, an incredible 90% of all of the world’s data has been produced. At the same time, the not-for-profit industry has seen a huge increase in demand for services while also experiencing the rapid shift in fundraising expectations that we have outlined above. All of this can be pretty daunting for not-for-profit organisations who are looking to improve their data management, while also having to continually be experts in doing more with less.
|Launched in 2008, the International Aid Transparency Initiative (IATI) has been engaging with this data deluge and shift in expectations within the international aid not-for-profit community.|
Their collaboration between governments, aid agencies, individuals and donors has created an open-source international data standard15 . This standard has helped to improve the planning, coordination and accountability of aid across the world, ensuring that aid is getting to where it is needed most. In 2020, over 800 aid organisations were publishing their data onto IATI, which has been successfully used by governments, civil society organisations and by donors to improve outcomes, transparency and reporting.
One example of IATI at work is Oxfam Novib, who decided that they could not hold others accountable for their decisions and impact on poverty without being transparent in their own practices. Since publishing onto IATI since 2014, Oxfam Novib report a “surge in data quality improvement”. This has allowed the management team to make more informed decisions when allocating budget and resources, provided real-time access to staff in the field, and helped to monitor campaign implementations and outcomes16 .
Luckily, IATI is just one example of how successfully managing data across a not-for-profit sector can make real change in the lives of people. Other data standards are being developed across all not-for-profit sectors across the world. Groups such as NetHope, and some of their non-for-profit member organisations, started a project called Frontline Humanitarian Logistics (FHL) Data Standard. This addresses standards for resource planning capability within the humanitarian community. This standard is available to all not-for-profit organisations within the humanitarian community and promises to save substantial amounts of both time and costs within the sector17 .
These growing open-source data standards are becoming increasingly available to help not-for-profits perform the critical job of gathering and organising their data into a common and consistent format18 . Used in conjunction with a comprehensive data management strategy19 , these not-for-profit communities are able to analyse and use their data in increasingly specific and targeted ways.
Common Data Model Standardising Data Structures
Microsoft’s Common Data Model for Non profits, built on the Dynamics 365 Common Data Model, is the first common data standard. It has been built in partnership with and specifically for the not-for-profit sector, and is now openly available on GitHub20 . The goal of the Common Data Model, a collaboration between Microsoft Tech for Social Impact and Nethope members21 , is to remove some of the stress out of the implementation, maintenance, and integration of data between key systems in not-for-profit organisations. The standard covers the management of systems including programs and cases, donors, logistics, grants, volunteers, fundraising, monitoring and evaluation, supply chains and finance.
The model supports technology organisations to define a common data framework, which can then be used by not-for-profit organisations to connect these individual critical systems into a single, cohesive structure. As the model is designed to be flexible, it can evolve alongside the needs of the not-for-profit industry – for example, allowing for the flexibility of changing reporting standards, such as IATI’s data standards22 . This in turn frees up not-for-profit organisations from some of the stressors associated with implementation, maintenance and integration of key systems.
Once implemented, the Common Data Model delivers a data management structure that increases the visibility of data, reaches data outcomes more efficiently and provides employees with a more integrated data experience.
David Crosbie, CEO Community Council of Australia said of the charity and not-for-profit sector in 2020 “From a technology perspective, we have seen five years of digital transformation happen in just five months. The charities that succeeded in the pivot to digital solutions have most likely not only furthered their reach but managed to maintain their income streams. Those organisations that still use manual … systems will have struggled significantly”23 .
With the substantive shift in the expectations of transparency of outcomes from funders and donors at all levels, the freedoms and opportunities afforded by successful data management are increasingly necessary to develop outcomes-based campaign strategies, evidence-based funding streams, and digitally attracting and retaining new donors and supporters to the mission.
To understand more about this topic, and to hear about an Australian not-for-profit that has been a leader in their own data management strategy, BizData will be hosting a discussion with Andrew Stagg, CIO of Save the Children as he speaks on establishing a data strategy. The events will be held online at 11:30am on May 5. To join the conversation, join us here.
6.Social Ventures Australia and the Centre for Social Impact (2020) Will Australian charities be COVID-19 casualties or partners in recovery? A financial health check. Social Ventures Australia. PDF report can be found at https://tinyurl.com/2ywybwv9
9.Australian Communities 2020 report. PDF report can be found athttps://tinyurl.com/38hdc95b