Editor's Note: We are so pleased that we get to share this post from Bob Penna and Deb Finn. They are both brilliant, but on top of that, they have that knack for getting down to what really matters. As you'll see in this post, they tackle three big challenges nonprofits face as they turn their attention to data. And for anyone looking to get smarter about data, check out our upcoming course: Using Data to Transform Your Organization. This five-week course will help you get your data program off the ground, including developing metrics, finding and analyzing data, presenting data to funders and constituents, and using data to make decisions.
By Robert M. Penna, Ph.D. and Deborah Elizabeth Finn
When it comes to data, it seems as though nonprofits are in what Charles Dickens might call “the best of times... the worst of times.”
On the one hand, new powerful tools and applications offer the opportunity to analyze and quantify aspects of nonprofit effectiveness that in the past were only open to speculation and guesswork. On the other hand, the entire enterprise can seem overwhelming, especially for the small and medium-sized organizations that make up the majority of the sector.
Particularly for under-resourced organizations, it is important to keep three things in mind as you consider when, where, and how deeply to plunge into the swiftly flowing waters of data and technology:
- Performance measurement is one facet of performance management.
- Data by itself tells us essentially nothing.
- There are limits to what you can know.
Let’s break each one down below.
Measurement vs. Management
There is a great emphasis these days upon performance measurement by nonprofits. However, we need to remember that performance measurement is but one facet of a broader discipline of performance management, and it is the management that must come first.
Performance management is having clear, meaningful, quantifiable, and sustainable targets or outcomes established for our programs and organizations at the outset and “managing” our resources toward their achievement. Performance measurement is ascertaining the degree to which we hit those targets. This measurement takes two forms: How much was done? (usually an activity count), and How well did we do? (a measure of quality, how close we came to hitting the ideal as described in the target or outcome statement).
Initiating programs and efforts without those clear, well-defined targets and then using measurement to identify points of critical mass that we subsequently label “outcomes” is a dead-end path that generally leads to frustration. The most powerful counting tools in the world cannot by themselves lead to success. They are a tool for ascertaining the degree of our success, and should be recognized as such
What the Data Tells Us
It is not unusual for us to hear people use phrases such as, “The data tells us….” This is misleading because, by itself, the “data” essentially tells us nothing. As an example, if we gave you a set of numbers, 7.5, 150, 0, 491.67, 273.15, and 32, they would probably mean little to most people. All are quite valid data points, but they do not take on any meaning until we add the fact that they represent the freezig point of water on the Rømer, Delisle, Celsius, Rankine, Kelvin and Fahrenheit scales, respectively. Data is only useful when it is appropriately analyzed and put into context, at which point it becomes information. Taking this a step further, information similarly becomes knowledge when it is put into personal context, when it becomes meaningful to the user by connecting to what she already knows and the task she has at hand.
Data is fundamental, but acquiring it is merely the first step in a long cycle of mission success and continuous improvement.
Can We Know it All?
This is perhaps the biggest challenge facing nonprofits.
There was a time, not all that long ago, when what we could know about our programs was limited by the tools at our disposal. We did not have the incredibly powerful tracking software running on computers and mobile devices with the number-crunching power available today. We are at a point where we can not only capture a host of variables about those we serve, but can also manipulate that data in ways that were only available to professional statisticians a few short decades ago. Today, we can come close to knowing everything there is to know about our organizations and the impact they are having on the situations they exist to address.
But the key question we need to ask is whether we really need to know it all.
Before an organization makes the decision to capture any data set, there are a number of questions it should ask regarding the utility and use of that data:
- Why are we collecting this? Is it useful to our staff, our board, our stakeholders? What does it tell us that we don’t already know?
- What, specifically, will be gathered, analyzed, and reported?
- Who will collect it, analyze it, report it, be responsible for it?
These questions are part of a data checklist that every nonprofit can use in a pragmatic spirit when formulating a data policy.
The new world of data and technology opening before us offers the possibility of nonprofit performance undreamt of just twenty years ago. The DataBasic suite of free online tools for nonprofits is an excellent example of resources that are currently being developed to teach beginners how to get started. There is no doubt that as the analytical tools of today are improved upon in the next few years, even greater insights and management possibilities will become available. But all of us, particularly those of us working in smaller and medium-sized organizations, need to be thoughtful in what we set out to capture and how we use it. These are powerful tools—and with any powerful tool, a bit of caution is advised.
 Diagram is licensed by Deborah Elizabeth Finn under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.