Why Is Data Management Important for Nonprofits?

Not sure how to create a data strategy for nonprofits? Confused about what data management even is? Don’t worry, we’ve got you covered. In this short guide we’ll explore everything you need to know about data management for nonprofits, including what it is and why it’s vitally important. Let’s dive in!

What Is Data Management?

Data management refers to the practice of collecting, storing, and using information. While this seems like a simple concept, there are many questions that need to be answered when you start creating a data management strategy. These include: 

• What data should be collected? How will you collect it?
• Where will your data be stored (on-location or in the cloud)?  
• How can you ensure that data is secure? 
• Will you be able to access the data you need easily? 
• Do you have the tools to analyze your data? 

We’ll answer many of these questions later in this blog, but it’s important to consider them now. Let’s take a look at some examples of data management to better understand this practice.

Examples of Data Management

To illustrate the importance of data management, imagine a small nonprofit organization with an annual budget of $500,000 and only three employees – the executive director, the donor relationship manager, and the marketing manager.

• Poor Data Management

A patron calls in to make a donation. The executive director, Susan, takes the call. She wasn’t in the office during the training for their new CRM, so she simply writes the patron’s name, billing address, phone number, email, and credit card information (including the security code and expiration date) down on one of their old paper donation forms. Susan sets the form in her “out” bin on her desk so that the donor relationship manager can process the donation once they return from lunch. During this time, Susan is in and out of her office, and a new volunteer comes in. This person notices the paper form with a credit card number and snaps a picture on their phone while Susan is talking with the volunteer coordinator. Just like that, a patron’s information has been compromised. 

• Good Data Management

A patron calls in to make a donation. The executive director, Susan, takes the call. She wasn’t in the office during the training for their new CRM, so she pulls up the nonprofit’s online donation page. She asks the patron all the questions, entering their name, billing address, phone number, email, and credit card information (including the security code and expiration date) into the online system. The donation is processed, and the patron receives the automated invoice for their taxes and thank you email. After hanging up, Susan sends a quick email to CIM to schedule a training session so she can process donations with her own login to the CRM. Susan is in and out of her office for the next hour, and a new volunteer comes in. There’s nothing for the volunteer to see on Susan’s desk because all patron information is safely inside of the nonprofit’s CRM. 

Why Is Data Management Important for Nonprofits?

To understand why data management is necessary, we first need to ask the real question: why is data important for nonprofits? There are two major reasons why nonprofits need data (and good data management practices): 

1. To Make Data-based Decisions

Too often decisions are made and strategic planning is done based on gut instinct or “what we’ve always done.” While these can be helpful, the truth is that these tactics aren’t based in reality—relying on tradition or one person’s opinions can result in decisions and plans that don’t make a meaningful, positive impact. 

For example, let’s go back to Susan and her nonprofit. For over 20 years, the nonprofit has relied on an annual gala to raise money for their operating support. However, with the ability to collect data about their patrons, Susan notices that the gala has brought in less money over the past three years and that most of the donations come from cell phones. Rather than spending money on a large, old-school gala, Susan could try several text-based fundraising campaigns to see if this is a more cost-effective and efficient fundraising method. 

2. To Be Able to Measure Impact

Nonprofits do so much good, but it can be hard to quantify this. Collecting data allows nonprofits to see the fruits of their labor and gives them metrics to use in fundraising and marketing campaigns. For example, Susan has three major grants that she writes annually. In order to secure this funding, she must answer questions about the demographics the nonprofit serves. Once awarded the grant, Susan must write a grant report that details the impact of this money. With data about every activity in their CRM, Susan will be able to write these grants and reports quickly and accurately.

Having data is vital for nonprofits, and since they must collect, manage, store, and use data, the management of data is inevitable. Investing time and thought into nonprofit data management best practices is essential in order to leverage your data and properly protect your patrons. Ultimately, the benefits of data management boil down to one thing for nonprofits—enabling you to better carry out your mission.

How Do You Implement and Use a Nonprofit Data Management System?

With Computers in Ministry (CIM), of course! We help you create a strategic technology roadmap that includes the data and technology you need. We work with all sorts of nonprofits, from churches to higher education and more to help them revamp and refresh their tech stack. In addition, we can help with nonprofit tech training, and provide nonprofit technology helpdesk support. To learn more about how we can help with your data management and technology needs, contact us today.