Data Drives Everything

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In addition to facilitation and process the recurring themes of this blog also include discussions of performance, measurement and agency capacity, with a focus on the government and nonprofit sector. Recently I was in a conversation with a colleague where we were discussing the keys to sustainable nonprofit growth. As we talked about the importance of visionary leadership, a mix of reliable and autonomous revenues, community partnerships and a mission-driven culture, my friend interrupted me and said, “but of all those things, which one is at the top of the pyramid?” My answer was that you can read the current nonprofit management bestsellers and they won’t agree about what is at the top but you can be sure that the base of the pyramid is outcome data. In the long term, nothing else matters. Consider this statement written over a decade ago.

“The current funding and political environment makes it more important than ever for nonprofit organizations to demonstrate the effectiveness of their work. Government leaders and the public express skepticism that social interventions have any discernible impact on the problems in our society; public and private funding sources are being eliminated or reduced, and the competition for funds means that nonprofit organizations must offer evidence of their effectiveness. To do so, nonprofit organizations must choose among various evaluation approaches and methods to assess their effectiveness, demonstrate their value to the community, provide useful and usable information, and meet the demands of funders and the public.” Program Evaluation Practice in the Nonprofit Sector

With the growing fusion between for-profit business practices and philanthropy data will become more important that every. Increasingly funding agencies, will misguided at times, talk in terms of “return on investment” and accountability. In this context, advantage will go to those nonprofit agencies that are infusing data collection into their strategy and program practice. So what does an effective data collection agenda looks like for an agency? I would like to suggest the following categories of data that are critical to your nonprofit agency:

Data to Support the Mission: There is the truism that says, “If you have to measure carefully and determine if you are making a difference then you are probably not working on things that are important enough.” The most important data to collect demonstrates the big and obvious impact of your program and services. This impact needs to be first and foremost on everyone’s mind. This is not the statistic where you have to say, “give me two days and I will get back to you.” This data tells everyone irrefutably why you exist. “We place over 150 families with children in stable housing over the last year and 30% of those families would have been homeless without our services.” If you surveyed your staff and board would they know why you exist?

Data to Support Current Program Needs: There is a need to be clear what program level data you are collecting and for whom. On the most basic level this data is your reporting data for grants and donors. If you funded to provide services to 1,200 clients annually your agency needs to be able to systematically and transparently document services in a way that gives your funding agency confidence that you are providing services according to your contract. Ideally this data should be multi-dimensional to tell the story of how you are meeting specific needs in addition to meeting the basic contract requirements.

Data to Support Future Program Needs: Beyond the present data needs you should also be collecting data to anticipate and define needs for your future. What trends are you listening to now that will inform where your agency needs to be tomorrow?

Data to Support Cost Efficiency: While we increasingly hear funding agencies and donors asking nonprofit organizations for cost effectiveness data, few nonprofits have the resources to present a tenable models demonstrating return of investment. However, nonprofit agencies need to be able to develop models supporting cost efficiency. Efficiency implies a standard where program costs are outweighed by societal benefits. In other words, if your agency did not provide services to the community what would the cost to society and is that cost greater than the cost your agency’s programs and services?

Data to Support Program Quality: The final data that strengthens the case for a nonprofit agency is data that pertains to the quality of programs and services. Standards and measures of quality become meaningful to differentiate your services in the marketplace of ideas.

The task of data collection is challenging and the barriers to data collection are real. Nonprofit agencies often lack skills, time, and resources to collect data. Often these barriers are magnified by legacy data systems cobbled together over the years that impede the aggregation and interpretation of data. However, from a strategic point of view nonprofits need to break down these barriers and improve performance around data collection, evaluation and effectively using data. There are no shortcuts, agencies that are seeking to build capacity for future sustainability and growth ignore data collection at their own peril.

Assessment, planning, facilitated dialogue, and creating concrete workplans are the tools to help agencies improve performance and build capacity. Building data collection and management systems can be built or improved but it takes intentional effort and for those agencies willing to undertake the challenge will find themselves positioned to expand and grow their programs and services.

Here is a link to an evaluation workshop handout.