Data-Driven Decision-Making: A Review of RSM’s Webinar

On May 25, the CPA firm RSM hosted an online CPE program on data-driven decision-making for nonprofits entitled “Utilize Your Data to Drive Better Decision-Making.” Past AICPA Chair Ernie Almonte recommended the program in his LinkedIn feed, and I reposted the link. This blog post summarizes the highlights for people who weren’t able to attend.

How easy is it for you to access and analyze data about your nonprofit? Can you tell whether volunteers are also donors, and how best to reach them? What parts of your marketing promotions work best? Can you effectively track impact so that you can quantify and communicate it to granters, donors and the public?

Presenters Mary Beth Jameson, Bob Kanzler and Steve Mermelstein, all of whom work within RSM’s Technology and Management Consulting Services Group, suggest that if these questions about data-driven decision-making cause a dull pain in your temple, decentralized technology may be the issue.

Many organizations use several independent systems and manually compile data using spreadsheets. To resolve your headache, use a centralized relational database (CRM) to pull together data. This enables automation that will improve accuracy and speed and reduce management costs.

Of course, this is great advice for bigger organizations with technology budgets that can accommodate a major system overhaul. Who wouldn’t like to have one seamless system?!

Fortunately, their advice didn’t stop there.

“You can work with what you’ve got!”

The presenters acknowledged that cost is a major barrier to effective data-driven decision-making for most non-profits. If changing technology systems isn’t feasible, the team suggests looking at simpler solutions.

They recommend starting with a simple self-evaluation. Begin by asking your organization’s board, donors and other stakeholders on the outcomes you should measure in order to achieve your objectives. These objectives should tie to the organization’s overall strategies.

For example, imagine that your organization hosts an annual science fair. Two of your strategic objectives is to attract more volunteers and retain them from year to year. In order to monitor progress, two of your data needs might be to understand the absolute number of volunteers, and the percent who return to service the following year.

Both your strategic goals and the data points you gather should be measurable. Continuing the previous example, your goal may be to retain 75% of your volunteers year-over-year. Clearly, you also need to have equally measurable data to assess your success.

You should also consider factors that impact the outcome. For example, you might want to assess satisfaction after this year’s science fair to see if there is a correlation between satisfaction and retention. If there is, this would give the organization a means of addressing or improving retention issues.

Of course, it’s easy to develop a long list of data request. After all, data analysis is fun!! However, many data analysis projects fail because the organization tries to take on too many metrics at the same time. Trying to do too much can deliver more data problems and administrative burden than value. To prevent this problem, keep the list tight.

“Start small and continue to monitor it.”

Once you have your list, you are ready to begin developing systems to track results. Of course, collecting data is just the beginning. You also need to monitor and use the results.

The presenters recommend using visual aids to present information internally and externally. Internally, consider dashboards. (Here are some resources that might help you develop a strong financial dashboard or general performance dashboard.) The speakers included several examples of data-based dashboards in their presentation. If you are interested in getting copies of them, I suggest reaching out to the speakers directly. They may be willing to share their slide deck with you. I have included their contact information below.

Infographics can be helpful in presenting information to external audiences. (Check out these examples on Classy’s blog post called 10 Nonprofit Infographics that Inspire and Inform, by Allison Gauss.)

Is the data disappointing? Be sure to take action! If you get to the end of the year, and you have disappointing results but don’t know why you have them, you need to dig down into the causes. Adjust your data gathering for the next year.

My two cents on internal versus external data

The speakers focused their presentation almost exclusively on internally-collected data for decision-making. This wasn’t a surprise, of course. That was the course’s published objective.

However, relying on internal data alone for decision-making can cause you to miss important information about your target audiences and/or impact. I recommend carefully considering when external sources should be incorporated into your data presentations and analysis.

Third-party measurements of trends in the area you are trying to impact can be very valuable for donor development or board assessment of effectiveness. For example, if you are a trying to address truancy issues among low income students, the school system’s annual measurement of truancy by population group within the system would be a critical source of external data.

Market research studies can be helpful in understanding why the internal data is trending in a certain direction. Returning to the science event example above, an annual satisfaction survey conducted by the nonprofit might help provide clues as to why the organization is not meeting its retention goals. When the risk associated with poor data is higher, a third-party market researcher should be engaged to ensure the data is reliable.

Using external data to complement internal data for decision-making gives your nonprofit a more complete picture of the reality in which you are operating.

For more information …

If you want to learn more about data-driven decision-making from the three RSM speakers, you can reach them here:

While I can’t address the systems questions like RSM can, if you have questions about external data gathering, such as market research, dashboard development, or how to develop and analyze the right metrics for your organization, I’m happy to help. Just reach out via email.

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