The nonprofit sector is, apparently, booming. According to the New York Times, ‘The overall economy has been expanding slowly, but at least one sector is vibrant: nonprofits, which have been growing at a breakneck pace.’ And while the nonprofit sector has always had heart, charities have in the past perhaps lacked a decisive, unbiased brain to guide them. Increasingly, however, the more than 10 million people working in the sector are being led in their decision making by data.
Data analytics is helping charities in two major ways - outreach to attract donations and attention for a cause, as well as identifying how best to use the money.
The nature of outreach has changed dramatically in recent years for many nonprofits, with the digital age and the rise of social media meaning that it now takes place primarily online. This opens up a wealth of new opportunities, and looking at the data can help decision makers in nonprofits identify how best to exploit these. Nonprofits can analyze the unstructured data from their Twitter and Facebook feeds to determine how best to approach a fundraising campaign, determine user sentiment, and pinpoint how it could be made more effective. This is done using natural language processing (NLP), a technology that derives understanding from unstructured data such as written text, to determine the ways users are currently posting about issues related to your cause to help create a campaign they will respond to and target them based on demographics. Sentiment analysis can then ensure that the campaign is having an impact, looking at metrics such as likes and shares, as well as using NLP again to see how people are responding in their tweets and updates. Social media is often described as an outrage machine, which can be negative but it can also be harnessed by charities to help them attract supporters.
Data can also be used to increase personalization - vital not only in attracting first time donors, but also in retaining them. Data can be used to reward behaviors and encourage repeat givers, as well as hopefully incite larger donations. Automated thank you notes are no longer enough, and a scale of donor gifts can help keep people’s attention on you.