As part of our continuing coverage of data integration, we asked Dahna and Jennifer to guest blog on the topic. For an explanation of one possible solution to this issue, read our report How Open APIs Can Change How Nonprofits Manage Data.

By Dahna Goldstein from PhilanTech and Jennifer Bagnell Stuart from Innovation Network

"Can we talk?" If your donor database is asking your accounting software, the answer is probably "no." And this lack of communication between systems is causing increasing problems for nonprofit organizations.

Today’s typical nonprofit uses a variety of information management systems for collecting and storing data ranging from client and constituent contacts to program tracking and evaluation. While standards for data exchange and inter-software communication are developing in the nonprofit sector, the vast majority of nonprofit organizations face steep barriers to realizing the benefits and leveraging the power of technology.

A nonprofit’s greatest asset is its people. Human resources become even more valuable over time as they gain knowledge and increase their understanding of the organization’s mission, programs, and operational strengths and weaknesses. Indeed, the effective use of information and knowledge is critical to the survival and success of today’s nonprofit organization.

Yet a typical nonprofit also uses a variety of systems and tools for managing, storing, and analyzing information. Frequently, those systems have been acquired over time on a piecemeal or as-needed basis. While any given system may have been state-of-the-art when it was first acquired, rapid advances in technology and the tools available for the sector have left many organizations with legacy tools that form the foundation of their information management systems and processes. And when emerging tools are added – or when funders, boards, or senior management request reports on information from donors to program outcomes – nonprofit staff increasingly find themselves falling victim to the problems that arise from systems that are not integrated, from an inability to extract the needed information from a given tool, to re-keying information several times in different systems, to data not being updated in the organization’s core system.

Uncertainty about how to resolve these data integration issues plagues the nonprofits most affected by the lack of IT systems and infrastructure. All too often in nonprofit organizations, valuable human resources are unable to utilize their full potential toward advancing the organization’s mission through productive and creative sharing and application of relevant information. This, in turn, compromises organizational efficiency and effectiveness. Frustrated and under-resourced staff contributes to high turnover rates, perpetuating the knowledge breaks and gaps in the sector.

One plausible solution to the people and information equation is getting relevant information to the right people at the right time, which implies some degree of data and systems integration.

Data and systems integration can happen in several ways, ranging from one-way data merges into an organization’s key information management system and data warehousing, to APIs and sector-wide data standards.
As with any change, internal or external factors influence and compel activities that support data and systems integration. What are those factors?

1. Compelling business driver. Nonprofits have enough demands on their time and resources to not undertake change lightly. There must be some compelling business driver that urges towards an organizational investment in a data integration solution. With increased pressures to spend fewer dollars on administration and more dollars on supporting the public good, one could argue that the efficiency gain promised by information integration is a compelling business driver. Nonprofits must take the lead in using IT to measure performance at the program, organization and sector-wide levels.

2. Opportunity moment. In addition to a business driver, the internal and external environments must be ripe for change. The demand for nonprofit services continues to grow as government funds decline, the number of nonprofits continues to grow and social needs outpace available services. At the same time, federal legislation such as Sarbanes-Oxley and the actions by the Senate Finance Committee, focus attention on sector performance and accountability, providing an opportunity moment. Combine that with emerging technological solutions, and the time is right to tackle the data integration challenge.

3. Intra-sector coordination. For a sector-wide solution (e.g., data standards), there is a need for coordination, both to avoid duplication of efforts, and to bring a unified approach to a sector-wide issue. There is no shortage of mechanisms to support collaboration among foundations, technology vendors and nonprofit grantees. Affinity groups, such the Nonprofit Technology Network, in addition to other infrastructure organizations such as the NPower Network, CompuMentor, and Independent Sector, provide multiple forums and formats for everybody to come together, exchange ideas, mobilize and collaborate.

Where do we go from here? Let’s talk.

1. Share success stories and best practices for overcoming integration challenges in individual organizations. Have you found a way to easily share information between your accounting system and your CRM? Let others know how you did it.

2. Share research and information to support broader solutions. Recent conversations about APIs, and surveys and research conducted by NTEN and other organizations both inform us about the challenges and start to suggest some solutions.

3. Convene a group of funders, nonprofits and vendors to create a data standard for the sector.