19 Feb 4 Questions about Big Data
Interview by Molly Lyons at Arabella Advisors
Arabella Advisors, an organization that helps philanthropists and investors achieve greater good with their re-sources, interviewed Sacha Litman, founder and managing director at Measuring Success, about the role that big data plays in philanthropy
1. What does Big Data mean for philanthropy?
Big data is transforming every industry out there. It’s simply a matter of time before it thoroughly sweeps the non-profit sector as well. The reason most people get involved in nonprofits, whether as donors or professionals, is be-cause of the emotional attachment they have to an issue. When we think emotionally, we involve the amygdala, the primitive part of the brain that reacts to anecdotes. As a result, most decisions made by nonprofit boards and man-agers are based on anecdote. When you look at the data, 80 percent of all anecdotal and emotional arguments that we make are disproven. This suggests that 80 percent of staff energy and time is spent tackling issues that perhaps are not issues at all, or at least not important enough ones. Thus, the biggest challenge in our sector is getting the most bang for our buck. We have limited time, energy, and resources, so we must ask the question—where do we invest to have the most impact on our missions?
2. What should we be doing differently with data to address this challenge?
The first major shift that we need to see is away from data merely as an evaluation tool, which is an extrinsic meas-ure, to data as an intrinsic value, something the nonprofit sees as a capacity-building opportunity and chance to in-form more effective decisions. The phrase we use is “going from anecdotal to data-driven decision making.” For in-stance, a foundation might want to judge whether or not a grantee was successful with a grant, and so it asks for evidence. Now of course, the nonprofit is going to bring in an evaluator to marshal evidence to say, yes it was suc-cessful or no it wasn’t successful, and maybe provide some suggestions for improvement. This analysis is external to the organization, though. The shift that we are talking about is for the nonprofits themselves to have in-house meas-urement systems that they use day-in and day-out, so that at every management meeting leaders refer to the data and say, ”Here’s how we’re doing on our key indicators, here’s our performance, let’s hone in and actually make im-provements this week, and by the end of this week I want us to be here instead.” It’s about internally setting meas-urable goals and making data-driven decisions.
To help make this shift, foundations need to invest in capacity-building tools that will allow nonprofits to use data for themselves. Foundations need to work in concert with nonprofits to agree on a set of measures. Foundations also need to seek consistency with other foundations in their sectors, to ensure they are asking for similar metrics. The last thing you want to do is ask a nonprofit to generate and track a different set of measures for every single funder.
3. So how do products like GrapeVine fit into this?
There’s a big shift in philanthropy toward shared and collective measurement. In most sectors, there is a leaky pipe-line problem whereby foundations invest a lot of money into individual nonprofits, say in a space like inner-city edu-cation, and yet the overall needle they are trying to move is matriculation to college. There is very little that a single organization, for example at the early-childhood level, can do to prove or take credit for what happens to kids twelve years later upon high school graduation. Children experience the impact of numerous organizations before graduation, so ultimately the true outcome that we need to measure is sector-wide. Not one organization can do it by themselves. There has been a lot of talk about collective impact or shared measurement, but there aren’t really systems out there to allow that to work. GrapeVine is a platform that we have designed to be the first shared meas-urement or collective measurement system for the nonprofit sector.
4. What can funders of different sizes learn from your experience?
Funders need to learn what metrics are most important in their space and encourage the nonprofits they work with to build enough capacity to use data effectively. They also need to invest in culture change. Simply imposing a set of metrics on grantees is not going to be enough. Funders must invest in a non-profit’s capacity-building efforts in or-der to change that organization’s mindset and modality from anecdotal to data-driven decision making.
Molly Lyons is an editor at Arabella Advisors.