More Nonprofits Using Data to Boost Performance

Nonprofit organizations increasingly are investing in data as a way to improve the effectiveness of their work and secure donor support, TIME magazine reports.

While data collection and analysis isn't a new idea for the sector, it has grown from a tool used largely for demonstrating financial transparency and accountability to a means of building a knowledge base about target populations and adapting programs to better serve constiuents. For example, Nurse-Family Partnerships, a nonprofit that works to transform the lives of vulnerable first-time moms and their babies, pairs low-income mothers with nurses who make biweekly home visits and track some two thousand variables, from the baby's growth rate to emergency room visits. A spike in the latter may be a sign that more counseling related to infant safety is needed, while a cluster of underweight babies in a neighborhood or community may signal the need for more information about the importance of breastfeeding. Nurses are encouraged to use the data they gather to adapt the program to individual clients as needed.

Indeed, with charitable giving in the United States still below pre-recession levels and nonprofits competing harder than ever for grant funding, some say data is beginning to trump intuition when it comes to funding choices. "There's a shift that's occurring across the sector and will continue to occur mostly because there's just less to go around," said Nancy Roob, president and CEO of the Edna McConnell Clark Foundation. "We want to make sure that the limited dollars that there are really focus on what's working." Along with many other grantmakers, the foundation supports grantees' use of specific data points to measure their impact. One of those grantees, Youth Villages, which works to ensure that every child has a functioning family and a safe, permanent home, measures success not by the number of at-risk children in the foster care and juvenile detention systems served, but by the percentage of those youth who are successfully living at home twelve months after being discharged. Data is used both to measure success and to highlight areas where program design could be improved.

Moreover, while overhead ratios have long been the most significant consideration for many donors, a growing number of experts say such an approach is ineffective over the long term. This month, Charity Navigator, the country's largest charity-ratings organization, will begin monitoring how nonprofits report the outcomes of their work, with the eventual goal of making such reporting the cornerstone of its ratings system. And with the launch of initiatives such as Markets for Good, which aims "to discover how the social sector can better use and share information to improve outcomes and change lives," foundations are getting into the act as well. "As more information becomes available about a nonprofit's impact, that kind of information may be even more relevant to the way donors make decisions about how they make their gifts," said Darin McKeever, a deputy director at the Bill & Melinda Gates Foundation, a key supporter of the initiative.

So while charities and nonprofits will continue to appeal to donors' passions and kind-heartedness, nonprofits that are heavily invested in data and performance measurement are also hoping to appeal to their understanding of evidence-based programs. "Investing in a program of this nature is not just investing in the cost of putting a nurse in a car and sending her out to visit a mom...it's an infrastructure that ensures that that nurse will be successful in the short and long term in delivering the program," said Nurse-Family Partnership CEO Sandy Dunlap. "Increasingly [donors] understand that it's a science."

Victor Luckerson. "How Nonprofits Can Use Data to Solve the World?s Problems." TIME 12/10/2012.