5 Benefits of Business Intelligence for Nonprofits

August 17, 2020

When you hear about business intelligence in the headlines, it is most often relating to large companies such as Facebook or Google, with access to social networks and which track online behavior of millions of people. Or perhaps you think of government agencies which amass large databases and share information for military or law enforcement.

These applications of business intelligence may seem remote from your organization, but the same importance of gathering and processing data applies equally to nonprofit organizations. Small and large nonprofits, including research, human services, educational and faith-based organizations, as well as foundations, membership organizations, trade associations, and nongovernmental organizations succeed or fail based on their mastery of planning and tracking their activities.

Nonprofits exist to fulfill their missions, and most missions are expressed in terms of metrics or key performance indicators. If your goal is to eradicate disease, you may track vaccinations, treatments, and preventative measures as well as the incidence of disease in your target population. Faith-based organizations monitor the number of people they reach and their engagement through different ministries. You may be tracking environmental, economic, or other measures for your organization.

For nonprofits that depend on grants and contributions, the need for accurate data is even more acute. Data allows you to know your donors better and determine the best ways to reach them. Recipients of grants are contractually obligated to track their spending and report back to the grantor on their activities following prescribed rules and formulas.

Business Intelligence dashboard - Serenic Navigator

Business intelligence refers to two aspects of how your organization uses data. The first is to capture data accurately and consistently. This means establishing a data model which will produce accurate reports and maintaining your data through periodically cleansing the database to remove duplicates and apply updates. For example, your data repository should allow you to maintain the addresses of contacts in one place so that when someone moves you avoid having different departments in the organization sending communications to difference addresses. If a donor specifies how they prefer to be contacted, you need to store that information so that the contact method can be enforced consistently across the organization.

Since performance metrics help you track the success of your nonprofit organizational goals, they belong in a system that allows consolidated reporting. This could mean that a central database integrates with multiple departmental databases to extract the performance metrics, and the central database is used for reporting. Alternatively, you could establish a central database which is accessed by multiple departments to track the metrics. Metrics often use dimensions such as time and location to describe the data more fully. For example, a global relief organization may use dimensions of region and demographic segment (age group, sex, education level) for each metric. This allows finer evaluation of data and consolidation across larger groups. If you do not structure the database in this specific way in the beginning, it can be a significant effort to re-create the data in the future.

The second aspect of business intelligence is to extract data from your repository and process the data in ways that enhance its value. Reporting and visualization help people make sense from large volumes of data. Brainstorming on the reporting you would like to see can inform the data model as well, because you cannot report on data you are not tracking.

Here are five top benefits of business intelligence for a nonprofit:

  1. Delivers a single source of truth. You cannot have reliable business intelligence if you have multiple data sources which are inconsistent. For example, tracking metrics in a collection of spreadsheets invites inconsistency and makes reporting difficult. The single source of the truth is called a system of record. It does not mean that you will only have one system in your entire organization, but rather that for each type of data there is an authoritative source. For example, your enterprise resource planning (ERP) or accounting system is the system of record for income and payments. Other systems which feed data to the ERP or consume financial data rely on integrations to the ERP. A membership system may be the repository for names and addresses of individual contacts.
  2. Reinforces the organizational mission. Dashboards provide a frequent reminder of performance and can change the behavior of users through constant feedback. Some say that “people respect what you inspect” so the dashboards shine a light on the true health of the organization. This means that you must choose your metrics carefully to channel effort in the best direction.
  3. Improves productivity. How much effort is being used to produce reports manually, or respond to inquiries from grantors, donors, the press, or others? Some nonprofit organizations have reported lengthy monthly processes to consolidate financial data and move numbers from one system to another. What is the cost of this activity?
  4. Increases confidence in data. If you are unsure of the quality of your data, you cannot be as confident as you would like in your initiatives. Business decisions rely on data and assumptions which can be improved as you master your organization’s data.
  5. Opens opportunities to apply artificial intelligence. Artificial intelligence such as machine learning may seem futuristic, but it has arrived in many commercial applications. Your customer relationship management (CRM) can tell you which major donors have become dormant and identify patterns in behavior to help you increase your chances of winning grants.

Business intelligence software is easier to use than ever, especially reporting and visualization tools. Many ERP solutions, such as Serenic Navigator, include Analytics/Business Intelligence with the solution. What is needed from your nonprofit is the determination, commitment, and vision to apply modern software tools in service of your mission.

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