Have We Put Too Much Faith In Numbers?

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There’s a lot of talk around measuring what matters in nonprofits. Used responsibly, data can open a world of opportunity for any purpose-driven organization.

As we explored in a recent virtual roundtable, there is also evidence of how data is doing exactly the opposite, either intentionally by malicious actors or through unintended consequences of well-intended actions.

For some, metrics amounts to little more than a myth, but the data imperative is here to stay, and for good reason. As nonprofits become more data-driven, it’s crucial that they understand the power of data, as both an asset and a liability.

That’s why we designed a toolkit that helps nonprofits use digital data ethically, safely, and effectively. Digitalimpact.io is part of a community of practitioners building and sharing tools to use digital data well.

On the positive side, nonprofits can move from simply collecting data to leveraging it in ways that advance their missions. Identifying major donors, measuring social reach and performance of activities, and streamlining services are a few examples.

Social return on investment (SROI), a relatively new framework used to prove an organization’s impact by measuring extra-financial value, relies largely on the use of metrics.

But at what point do we put too much faith in numbers? On the negative side, relying on data alone to measure performance or steer one’s mission can lead to lost identity and resources.

History professor Jerry Muller says, “Contrary to commonsense belief, attempts to measure productivity through performance metrics discourage initiative, innovation and risk-taking.” Metric fixation, as Muller calls it, also encourages professionals to use metrics in ways that go against the overall objectives of their organizations.

Muller goes so far as to say metric fixation stifles the entrepreneurial element of human nature. For a sector bogged down with loss and risk aversion, relying on data without considering how it’s collected or who it serves can’t amount to anything good.

“When performance is judged by a few measures, and the stakes are high…people focus on satisfying those measures – often at the expense of other, more important organisational goals that are not measured,” says Muller.

Short-termism (putting short-term gains above long-term security) and gaming the system are both symptoms of metric fixation, the transactional costs of which include a massive loss of employee time and company resources, not to mention a host of missed opportunities in favor of a more formulaic approach (see people analytics).

Despite the challenges, there are ways to move the data imperative forward for the social sector. Responsible data communities are on the rise and data culture projects have taken root across the globe; both can bring nonprofits closer to turning their data into the actionable insights that will help move the needle.

How can nonprofits find the expertise they need — by hire or through example — to become data-driven in a way that drives social impact?

For nonprofits and foundations learning to manage digital data in line with their missions and capacities, the Digital Impact Toolkit can help.

If you’re looking for trusted information for your organization, subscribe to Digital Impact to receive updates and follow us on Twitter, as we’ll be sharing more on metrics and responsible data in the coming months — and, as always, thanks for reading.

Chris Delatorre is the editor of Digital Impact. Learn more about Chris on his website and connect with him on Twitter @urbanmolecule.

Image by Raphael Koh via Unsplash (CC BY 2.0)

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