Data Quality ROI: How to Convince Leadership It Matters

There is a lot to be said for getting out of the office and into the community to meet and talk with donors directly. But how we manage the data that helps us do that has a huge impact on how those conversations go. It’s not always easy to justify that investment of time and focus on data, but the quality of that contact information for our donors can often make or break our results—not to mention making our job as fundraisers a little easier and less stressful. Understanding data quality ROI and how to sell it to leadership can go a long way in fundraising efforts.

The Data Dilemma

Managing data—taking care of it, making sure it’s clean and usable, ensuring accuracy, and reviewing reports—isn’t always a priority. It’s often a balancing act between doing that work versus whatever else may have a higher perceived return on investment (ROI) in the moment. 

However, neglecting data health can have far-reaching consequences. 

Poor data quality can result in:

• Inaccurate Reporting: Without clean, accurate data, reports and analyses can be misleading, leading to poor decision-making.
• Donor Fatigue and Attrition: Sending incorrect or duplicate communications can frustrate donors, leading to decreased engagement and higher attrition rates.
• Inefficient Fundraising Efforts: Fundraisers may spend valuable time and resources targeting the wrong prospects or chasing outdated information.
• Compliance Risks: Inaccurate data can lead to non-compliance with regulatory requirements, potentially resulting in legal and financial penalties.
• Lack of Trust: When we cannot contact donors or have the wrong information for them, they’re less likely to trust us.

Data Quality ROI

Investing in data quality is not just a cost—it is a strategic investment with measurable returns. Data quality ROI is an important area to focus on.

Here are key areas where high-quality data can deliver significant ROI:

• Enhanced Donor Relationships: Clean data ensures that communications are personalized and relevant, fostering stronger connections with donors. This can lead to increased donor retention and lifetime value.
• Improved Campaign Performance: Accurate data allows for precise targeting and segmentation, leading to more effective fundraising and marketing campaigns.
• Operational Efficiency: Streamlined data management processes reduce the time and effort required to maintain and use data, allowing staff to focus on high-impact activities.
• Informed Decision-Making: Reliable data provides a solid foundation for strategic planning and resource allocation, leading to better outcomes and greater mission impact.

Not investing in improving data quality can have pretty serious long-term effects, too. To make it easy, let’s assume that a nonprofit organization with 25,000 donor records loses 1% of those records per year due to poor data quality.* 

Let’s also assume that they don’t correct those errors, find lost information, or de-duplicate records.

Losing 1% per year means 250 records. Those records then get added to the next year’s loss, and the data quality issues compound.

*Most organizations lose anywhere from 4% to 7% in data quality just from natural attrition every year. This doesn’t include deceased records or increases in “do not contact” coding and any other issues that affect the ability to reach donors. So, in reality, the compounded effect of data quality, over time, can be quite damaging and is much more encompassing than contact information.

Making the Data Quality ROI Case to Leadership

Convincing leadership of the value of data and the importance of investing in data quality can be tough, so take a strategic approach:

• Highlight the Risks of Poor Data Quality: Use concrete examples to illustrate how data issues have negatively impacted the organization. This could include missed fundraising targets, donor complaints, or inefficiencies. Use the chart above to estimate your own compounding data loss.
• Demonstrate Data Quality ROI: Present data and case studies that show the tangible benefits of investing in data quality. Highlight your own contact rates and estimate the impact it’s having on your fundraising success.
• Align with Organizational Goals: Connect data quality to the organization’s mission and strategic objectives. Explain how high-quality data supports key initiatives, enhances donor trust, and drives mission success.
• Leverage External Validation: Reference authoritative sources and industry experts to reinforce your arguments. There is a lot of readily available information that highlights the importance of data management and its impact on organizations.
• Propose a Pilot Project: Suggest starting with a small-scale data quality initiative to demonstrate its value. This can provide a proof of concept and build momentum for larger investments.
• Know your numbers: Simple data cleaning and improvement approaches can be inexpensive and not tremendously time-consuming. Get estimates on how much it would cost to have an NCOA (National Change of Address) run for your entire database, as well as other appends like phone and email, and compare that to the loss of fundraising results you’re experiencing because of data quality issues. 

Related: CRM Analytics: Nonprofit Data Reports to Fuel Your Fundraising

Practical Advice for Fundraisers

To effectively advocate for data quality, fundraisers should consider the following practical tips:

• Educate Yourself and Your Team: Gain a thorough understanding of data management best practices and the specific data challenges faced by your organization. This knowledge will help you articulate the need for investment more convincingly.
• Collaborate with IT and Data Professionals: Work closely with colleagues who specialize in data management to develop a comprehensive plan for improving data quality. Their expertise can help you identify the most critical areas for investment and the best tools and processes to use.
• Use Data to Tell a Story: Craft a narrative that connects data quality to the organization’s mission and impact. Use data-driven stories to illustrate how clean, accurate data can lead to better outcomes for the communities you serve.
• Track and Report Progress: Once you secure investment in data quality, track the results and report back to leadership. Highlight successes and lessons learned to reinforce the value of ongoing investment in data management.

Maintaining data health and quality is not a luxury; it is a necessity for nonprofit organizations that aim to achieve their missions effectively and efficiently. By framing data as a critical organizational asset and demonstrating the tangible data quality ROI, fundraisers can make a compelling case to leadership for the necessary investment in quality data management. With high-quality data, nonprofits can enhance donor relationships, improve campaign performance, and make informed decisions that drive greater mission impact. 

As the nonprofit sector continues to navigate complex challenges, investing in data quality will be a key factor in sustaining and growing the impact of fundraising and marketing efforts.

Learn more about data quality and get more expert advice from T. Clay Buck.