The Top 5 Hidden Costs of Bad Data

As data becomes more accessible, nonprofit organizations are changing how they attract new donors, enhance contributions, and steward their community of supporters. However, data will only be valuable if it is of high quality. Inaccurate, incomplete, or stale data can make it difficult for nonprofits to accomplish their mission. At best, these problems may be insignificant, but at worst, organizations could lose a lot of money and make the wrong choices.  

This article discusses the true costs of flawed data and what you can do about it. Let's dive in. 

What is "Bad" Data Anyway? 

Merriam-Webster defines data as "factual information (such as measurements or statistics) used as a basis for reasoning, discussion, or calculation." This definition emphasizes the importance of having accurate information and utilizing it appropriately. 

Nonprofits commonly use a wide variety of information to engage their supporters, such as contact details, demographics, donor preferences, giving history, and event attendance. With nonprofits engaging supporters in more ways than ever, data has become essential to growing the supporter base, increasing funds raised, and driving mission impact. 

There are many reasons why data is inadequate or "bad," making it difficult for nonprofits to use effectively, including: 

Incorrect Data  

Let's consider the immediate impacts of an incorrect email. A donor makes an online gift to an organization but mistypes his email address, leaving out the period between his first and last name (joedonor@email.com vs. joe.donor@email.com). As a result, the thank you email the organization sends never reaches the donor; though this may not be a huge issue immediately, it does create a poor supporter experience. It could also lead to database issues. For instance, let's say that Joe has donated to this organization before, using his correct email address and his first name Joseph. With the mismatch in name and email, a brand-new contact record is created in the organization's database, thus creating a duplicate record. 

It's easy to see how duplicate records can wreak havoc on an organization's efforts. Imagine that tens of thousands of duplicate records are in a database on an ongoing basis. With this overwhelming amount of incorrect data, organizations cannot send the right message to the right person at the right time, resulting in a drastic decrease in supporter retention and donations. More importantly, supporters' trust in the organization can erode over time. 

Incomplete Data 

Organizations use various technologies to power their fundraising and supporter engagement efforts, including email marketing, event management, online giving, peer-to-peer fundraising, SMS messaging, and volunteer management. Through these specialized applications, nonprofits can engage with individuals in the manner they've come to expect from other consumer experiences. However, applications that aren't connected can create data silos, preventing a complete view of supporters and their interactions. 

For example, an organization uses Salesforce as its CRM in addition to separate systems for email, events, online giving, and volunteer management. If only email and online giving data are "talking to" Salesforce, the organization is potentially missing half the picture of their donors' activities. Why is this a problem? 

Suppose the development team only has access to email and online giving data but not any data regarding other activities. In that case, creating personalized experiences in outreach and communication is difficult since they have only a partial picture of each supporter's engagement with the organization. Integration software built especially for nonprofits ensures you have the historical data needed to create personalized experiences and can appropriately acknowledge each supporter for their help in driving mission impact.  

Stale Data  

Bad data can also mean outdated information. Like incomplete data, stale data results from a lack of integration across a nonprofit's technology ecosystem.  

While an organization may recognize the value of capturing all supporter data, manual processes and resource limitations could delay recording important details. For many organizations, data entry is an extremely time-consuming process involving updating fields or manual file imports from various applications into their system of record. These processes can take days or weeks to complete, resulting in organizations making decisions based on stale, out-of-date information.  

So, What Are the Hidden Costs of "Bad" Data? 

Some of the impacts of bad data might not be as apparent as the more direct financial impacts, but they can still be equally detrimental. These include unrealized potential from other technologies, declining job satisfaction/employee retention, and reduced donor engagement.  
Let's look closely at how bad data can impact nonprofit organizations. 

1. Flawed Decision-Making 

Nonprofit leaders rely on accurate, up-to-date information to make important decisions on engaging supporters and running the organization's day-to-day operations. If any financial data posted to the general ledger is inaccurate, finance leaders can't effectively determine how to allocate resources or present a comprehensive performance overview to key stakeholders. Alternatively, if supporter data is incorrect, development teams risk sending messages that don't resonate with the audience at the wrong time. Regardless of what team you sit in, bad data can hinder your ability to make strategic decisions and slow down your organization's progress toward driving mission impact.  

2. Wasted Resources 

Bad data also results in wasted resources, such as financial costs, time, and productivity. NTEN reports that it costs an organization "$1 to verify a record upon entry, $10 to dedupe and clean data after input, and $100 per bad record if nothing is done." Wasted staff time not only comes from manual processes for recording, reviewing, and fixing data but also because disconnected systems hinder team members' ability to find the information they need quickly. These costs can be significant for organizations that strive to steward donor dollars. 

3. Unrealized Potential of Other Technology 

Organizations that invest in specialized technology do so for the rich functionality they offer. Unfortunately, some bells and whistles are only effective with integrated data. For example, an email marketing software's ability to segment and personalize communication is meaningless without the data to base the customization. Additionally, an organization can't take full advantage of its CRM's reporting capabilities if only some supporter data is available in the system.  

4. Declining Job Satisfaction 

Many people who work for nonprofits do so because they want to make a positive change in the world or support a cause they are passionate about.  

When team members feel like they are making an impact, they are more likely to be satisfied with (and retained at) their job. On the other hand, if they believe their work is not meaningful, they are more likely to look for other opportunities.  

Salesforce.org's Nonprofit Trends Report revealed that retaining staff is the second top concern for nonprofits, with 28% seeing it as a "major issue". The report also noted that retaining staff would be a focus area for organizations moving forward, with 46% saying it would be a higher priority in the year ahead. 

So, what does this have to do with bad data? Preventing the headaches associated with bad data can increase job satisfaction across an organization. For example, a data professional who spends a significant amount of time manually entering data or fixing errors would be able to focus on more fulfilling, strategic initiatives that drive mission impact. Or a fundraising professional could build relationships with supporters more effectively by easily accessing clean, complete, and current information about them. When making campaign plans and setting fundraising goals, leaders would have confidence and trust in the data they use to make those decisions.  

Looking further downstream, retaining employees prevents an organization from acquiring additional costs, such as the financial impact of recruiting and training a replacement, lost institutional knowledge, and low morale for remaining team members.  

5. Decrease in Donor Engagement 

Salesforce.org's Nonprofit Trends Report recently highlighted that 60% of nonprofits believe their donors expect a better experience than their current technology provides. This technology experience is not just the ease of making an online donation or registering for an event – it is enabling the personalized experience supporters expect.  

Imagine the insights an organization can obtain when data is consolidated and used to drive a better experience. For example, organizations can analyze how a donor likes to give. If a supporter has only ever donated online despite receiving mailings and SMS messages, continuing to text or send them hard copies could be irritating – or even seen as wasteful.  
Let's return to a previous scenario: Joe made an online gift but mistyped his email address. The immediate impacts were that (1) a duplicate record was created, and (2) the donor didn't receive acknowledgment for his gift.  

Fast-forward a few months, and the organization begins a campaign for donors who haven't given in over six months to encourage giving to the organization again. Although Joe has made several donations in recent years, the most recent one is separate from his accurate record in the organization's database. He is included in the campaign and feels like his donations weren't appreciated. 

Nonprofit integration software for Salesforce makes it easy and effortless to consolidate data from multiple sources, so organizations can always have a complete picture of donors and drive donor engagement.

Final Thoughts 

Bad data in all its forms – incorrect, incomplete, and out-of-date – costs nonprofits more than you might realize. From the more easily recognized financial and productivity effects to impacts on supporter engagement and employee satisfaction and even to unrealized potential of other technology. While investing in comprehensive data integration may seem like something your organization can't afford, what you really can't afford is bad data!  

When your data is current, clean, and complete, you will naturally engage and retain donors more effectively, raise more funds, and have more resources for mission delivery. 

Looking to seamlessly integrate data from multiple sources into your CRM so that you can get a complete picture of your supporters? Visit Omatics Software on AppExchange to get started today.

About the author: Chanler Cox currently serves as the Director of Sales, Salesforce, and Enterprise Business Segment at Omatic. Cox is passionate about helping nonprofit organizations integrate technology to better engage and steward supporters. Prior to joining Omatic, he spent nearly a decade at Blackbaud in roles of increasing responsibility ranging from Finance to Business Development/Sales. Cox currently resides in beautiful Charleston, SC. with his wife Lily.