I worked as the chief financial officer at two distinctly different nonprofits before my career brought me to the database and technology side of the nonprofit sector. While one was a smaller membership organization and the other was a large healthcare foundation, there was an understandably common thread: in both organizations, a big part of my job was to concern myself with and effectively steward the bottom line. I was perpetually focused on monitoring fundraising / investment / program revenues, ensuring that program and operating expenses stayed within budgets, and, perhaps, running just a slight surplus against budget when we closed the year.
So, I love when I have the opportunity to chat with other nonprofit CFOs and finance directors about how Omatic tools and technology can impact their bottom line on the surplus side. Depending on the organization, this can surface as reduced expenses, or as increased expenses but with a more-than-commensurate increase in revenues. And in many cases organizations see both a reduction in expenses and an increase in revenues – the proverbial double-whammy.
I distinctly remember a conversation from years back with a finance director who was bemoaning that it took about a day each week to import the previous week’s telemarketing pledges into her main CRM database so that pledge payment letters could be sent. We discussed Omatic solutions and she said something to the effect of ‘we already do importing. I just don’t see how another importing tool will help us’. I smiled and then started talking about the difference between importing and integration.
Importing vs. Integration
It’s not surprising that busy nonprofit professionals can be puzzled by the differences between ‘importing’ and ‘integration’. The terms are often used interchangeably, including in the commercial sector. Tax-exempt organizations often take their technology cues from the for-profit sector, as well as from the myriad articles and essays available on the topic, which are typically not written with nonprofit business needs in mind.
So, let’s set things right. These definitions just start scratching the surface and could certainly be expanded, but here, at least, is a straightforward baseline.
- Importing is the process of taking raw data from a source (eg, an Excel or a .csv data file) and transmitting that information to a destination data repository such as a database system, eg, Bloomerang, Raiser’s Edge NXT, or Salesforce NPSP. Importing tools transmit the data ‘as-is’, in raw form, without alteration or validation.
- Integration is a more comprehensive process of combining data; consolidating information from one or more sources with the destination database to make the data ready for subsequent business process applications, effective reporting, and cogent analysis. Integration includes multiple, typically streamlined, data processing steps, including source data ingestion, transformation, standardization, deduplication, compliance with data governance policies, and safe delivery to the destination. Data integration, by definition, will ensure better data quality and increased data value.
In fact, importing is often the first step of an overall integration process that ensures an organization’s data are always current, clean, and complete. High data quality – vs. just more quantity of data from various sources – is the key to the ways that data integration processes can actually help a nonprofit’s bottom line.
The 3 Ways
If we agree to remain centered on the bottom line and understand that data integration focuses on data quality as much as on expedience, we can make a cogent case for how data integration can make a demonstrable difference. The three main areas of focus are time saved, increased donor retention and acquisition, and donation growth.
Using data integration tools to save time is probably the first thing that comes to mind. Automating data entry certainly saves time over manual data entry processes, and this time saved can be used for many other organizational priorities.
However, sophisticated data integration tools save time in several other ways. Tools such as Omatic Cloud prevent the need to manipulate data in Excel to prepare it for import. So, more time can be saved in data preparation. Very often, however, the most time that can be saved is time spent on error correction after manual data entry or after using rudimentary import tools. This includes duplicate records created, data that are entered improperly spelled or improperly cased, and data that don’t follow your existing data standards. Organizations spend hours cleaning up and correcting such information so that the main CRM database stays clean.
Time saved can translate to saving money on overtime, temporary workers, and employee turnover. Having consistent integration processes in place builds a level of positive redundancy that protects against employee turnover and related expenses. Overall, this approach both saves real money and provides the ability to redeploy resources to other work, also potentially saving money on labor – or redeploying resources to revenue-generating activities.
Time wasted is, of course, the converse. Time spent on manual processes, manipulating excel files to prepare them for import, and database remediation work following manual entry or data loading is time lost, time that could be used for other data-related work, or even diverted to other mission-critical initiatives. Or it could be time that doesn’t have to be spent at all – not working evenings, weekends, or paying overtime.
Increased Retention and Acquisition
Less obvious than time savings are the more strategic ways that data integration can help directly improve donor retention and acquisition. And with donor retention rates currently averaging about 20% for new donors, 60% for repeat donors, and 45% overall, there’s plenty of opportunity for improvement – even if you can beat the averages by only a few percentage points.
Data integration supports increased donor retention and acquisition by automating and seamlessly combining all the data that an organization has from its various data silos into its main CRM database. One recent study shows that 75% of nonprofits today use four or more systems that collect, manage, and store data, and that 23% use as many as eight! Do they talk to each other? Exchange valuable data on the same supporters?
Integration makes sure that happens effortlessly and expediently.
With the freshest and most unified view of current and prospective donors, supporters can be more effectively segmented, making solicitation and stewardship messaging timelier and more personalized. (And even the time-savings discussed above supports this. For example, if gift entry is automated and more expedient, and donor information is error-free, gift acknowledgment letters go out more promptly, poising donors to be more receptive to follow-up stewardship and solicitation messaging.)
The diagram below shows just one simple example: When data remain in silos, a fundraiser may only see a $50 donation from David in the main CRM. But when email marketing and volunteer data are integrated, the fundraiser can see the series of activities that prompted the gift. By stewarding the donor based on that consolidated information, the organization is building a stronger, more personalized relationship with David and increasing the likelihood that he will renew his gift and remain involved as a volunteer.
The same concept and model can be used to improve donor acquisition rates. For example, when email marketing, event participation, and volunteer data about nondonors are integrated with, and readily available in, the main CRM database, that information can be used to better segment and personalize acquisition messaging, further building relationships and improving acquisition rates.
It goes without saying that increased donor acquisition and retention rates directly and positively affect topline revenue. If fundraising and operational expenses can be held steady, or even if there’s a lift to support the increased revenue, it will all come out in an improved bottom line.
Increased attrition, of course, is the converse. When data about the same donors and other supporters remain siloed and segregated in various systems sprawled across an organization, two risks rear their ugly heads:
- Blind spots. Different departments or teams create ‘single-threaded’ messaging based only on a limited subset of data. In this type of environment, nobody is looking at donors holistically, and interactions with them will be fragmented. Colloquially speaking, the left hand will not know what the right hand is doing – and your supporters will know it. They will feel as though you don’t really know them.
- Different systems that collect, maintain, and store data can have inconsistent information about the same donors – names spelled differently, inconsistent titles, various email addresses, and other information that is not current.
If you add to this uncoordinated communications among separate teams that are working to engage the same people, you have a recipe for weakening or even damaging relationships with donors, rather than building them. Donors will fall off your rolls and find other organizations to support – ones that they perceive will hold them in higher esteem.
Related to increased donor retention is donation growth. A quick internet search will reveal a number of studies on donor retention, and conventional wisdom is that retained donors will – on average – increase the amount of their giving over the previous year. So, by extension, if data integration can help improve donor retention, the natural long-term outcome will be an increase in average gift size.
You can test this concept today using your own data. Take your most recent two years of giving; look at the number of retained donors from year one to year two, and then look at the total giving for the two groups of the same individual donors – those in year one who were retained in year two. For further confirmation, you can measure donation growth from retained donors three, even five, years back.
And, looking forward, as you improve donor retention, especially among new donors, you will likely see the total donation amounts from those retained donors increase from year to year.
This continues to make the case for how data integration supports your bottom line. By combining data from various sources into your main CRM database, it will be easier to build and deliver the most effective and personalized stewardship information to donors, so that you continue to build relationships as well as help prepare them to increase their giving – even if only modestly. (And modest increases are still increases.)
Lower average gift amounts are, of course, the converse. A recent donor loyalty study stated that approximately 71% of donors feel more engaged with a nonprofit when they receive content that’s personalized. When data remain siloed and fragmented, effective personalization becomes more difficult, since the breadth of information about the same people is sprawled across the organization. The outcome is generic, rather than personalized, messaging which leads to donor attrition; and for those donors retained, can result in stagnant or reduced giving.
Bottom Line ⇒ Mission Impact
Of course, it all comes down to the bottom line – and optimizing both revenues and expenses to maximize resources available for mission delivery.
In fact, a recent study found that charities that don’t embrace some common financial norms end up spending about 53% more money to advance their missions than other charities, over a 10-year period. One example of these norms includes ‘scrimping on expenses like information technology’.
In today’s world of nonprofit tech, we know that 75% of fundraising organizations use four or more different systems that collect, maintain, and store data about donors and other supporters. If your organization is one of those, you’re already investing both time and money into operating those platforms in addition to your main CRM database. And your teams need those tools to be successful in engaging supporters and raising money from donors.
So, it makes financial sense for data integration to be a priority, so you can leverage and utilize all the data your organization collects and maintains, in order to meet bottom-line goals. This should include:
- Accelerating the consolidation of data from various sources to reduce data processing time, improve data quality, and redeploy time spent on data management to other mission-focused priorities.
- Employing the most and best-quality data for strategic purposes to improve donor acquisition, donor retention, and donation growth.
These strategies will generate more resources – time and money – that help your bottom line and, more importantly, provide your organization with more resources for mission impact, now and as you plan for subsequent fiscal years.
Stu Manewith, CFRE joined Omatic Software six years ago and serves as the company’s Director of Thought Leadership and Advocacy. In that role, he is Omatic’s nonprofit sector domain specialist and subject-matter expert and is responsible for actively promoting and demonstrating Omatic’s position as the nonprofit industry’s leading partner in the areas of data health and integration. Prior to Omatic, Stu spent 13 years at Blackbaud, working with Raiser’s Edge, Financial Edge, and Blackbaud CRM client organizations as a consultant, solution architect, and practice manager. Previously, Stu spent the first half of his career as a nonprofit executive, fundraiser, and finance director, working in both the healthcare and arts/cultural arenas of the nonprofit sector. He holds business degrees from Washington University and the University of Wisconsin, and he earned his CFRE credential in 1999.