Tuesday, April 2, 2013

Why Nonprofit Data Matters

Big nonprofits all started as smaller nonprofits relative to where they are at present.  The trick is to continue to move forward, and doing that requires improving both structure and funding. I often hear grassroots organizations complain that they would love to be "big fancy nonprofits" but they can't grow because they receive no support from foundations or major donors. The question becomes how can you access increased funding?

There is a general feeling among small nonprofits that their efforts and accomplishments are overlooked by larger and wealthier grant makers. There is no doubt that the largest grant makers often tend to partner with large nonprofits, both in terms of actual monetary support and in the scope of the RFP requirements released for proposals.

More effective use of funding and greater accountability are two areas where large nonprofit organizations are perceived to be better investments for foundations and corporate funding sources than grassroots organizations.  They all provide impeccable accountability for the funds, maximum utilization of grant funds for large impact programs, and good opportunities for recognition of the donors. In part their funding success is due to the results donors receive when they perform due diligence, i.e. qualifying prospective grantees as funding candidates.

In 2013, more than a dozen organizations have joined forces to  provide better reporting tools to enable foundations, nonprofits  and other funding sources to share data and perform better due diligence. A overview of this trend relative to social impact nonprofits is presented in Philanthropy and the Social Economy - 2013: The Annual Industry Forecast by Lucy Bernholz[1].   Although the report is geared to large organizations, the principles and information apply to all nonprofits.

Some small organizations don't seem to quite grasp the importance of supplying clean, verifiable data to prospective donors and particularly to online verification sites.  Perhaps it is a by-product of a sense of possessiveness, or simply a lack of understanding regarding the importance of data collection and its subsequent dissemination. If providing this information makes you feel uncomfortable or exposed, you need to understand that it has a genuine purpose, and is required by every grant source as well as the federal government.

In legal matters there is a saying that if it isn't documented, it may as well not exist. Hearsay evidence is not admissible in court proceedings, and it's not very effective in fundraising either. This applies both to proving  your organizational integrity by making your public records easily available to donors and verification sites such as GuideStar, and documenting your local impact.
You may only be at the point of applying to local community foundations for support, but you need to begin your growth cycle by capturing all the data relative to your program. There is almost no such thing as too much raw data. This doesn't initially have to be an expensive piece of software, or a custom designed metric. A simple spreadsheet and simple surveys can be a good starting point. Even a Facebook "donate now" button has data.  How much did you need, did you meet your goal, and what did you do with the money? Give donors confidence by providing that data.

If you need help in documenting your data contact Cloudlancer Writing Services or email me at granthelp@ida.net.

[1] Available as a free download from Grantcraft. Registration is required. http://www.grantcraft.org/index.cfm?fuseaction=Page.ViewPage&pageId=3744

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