Analytics could revolutionize charity

Posted by Justin Hesser on December 16, 2013

Amassing a fortune is difficult, to be sure. For the philanthropically minded, donating it in the most conscientious possible manner is a struggle all its own. 

It was Andrew Carnegie who noted that it was harder to give money away intelligently than make it in the first place. And that problem isn't any easier now than it was when he was alive: there are some two million nonprofits in the U.S. today, with diverse and passionately stated missions. The question, then, becomes two fold. How can foundations best decide which charities to support, and how can those charities best address their chosen issues?

Big data could help provide answers to both. 

By gathering and analyzing more information than possible before, organizations can quickly identify which part of their missions are working, and which need to be updated. It's easier for them to understand how effective they are at creating change, and introduces a variety of new metrics by which they can measure success. For the donor's part, this new transparency can clue them in to which charities are doing the best and most efficient work, and provide a greater clarity on where exactly their money is going to go. 

Additionally, there's a great potential for cooperation across non-profits. While one might not have the infrastructure necessary to collect large-scale data, a few could make decisions based on the same information. One organization's investment in custom web application development could have a rippling effect. For example, if one group was working to make education more accessible, and another was focused on delivering medical supplies, the overlap of those two issues would lend themselves to collaboration. Demographic data could be shared across platforms, and allow both to work more efficiently. 

As is the case in other industries, it's important for charities and donors to understand how to use the information they collect. The first step in that is analyzing where it comes from: if the sample base is skewed, it could provide inaccurate results. In addition, knowing how to analyze the data found is a crucial step in finding it useful: for small nonprofits, this could mean training new staff on how to interpret data, or hiring a consultant to help manage it. 

While it will still take shrewd planning and keen intuition to solve the problems of society, Big Data can be an important tool in those efforts.