Why Your Nonprofit Should Conduct a Data Audit Sooner Rather Than Later (part 1)

Amanda Luzzader

How can nonprofits ensure they need all data they are collecting and that they’re collecting all the data they need?

The entire world now runs on data. Just about every financial and social interaction we’re involved with these days is accompanied by a long trail of account numbers, electronic cookies, online histories, and personal data.

And so it’s no surprise that nonprofit organizations are likewise saturated in data. Donor information, volunteer databases, data about programs and services, survey data, qualitative data about clientele–most nonprofits sit atop a massive heap of data of all kinds.

But how much of this data is actually being used?

A nonprofit organization that collects data without using it is a lot like a supermarket with employees who never stock the shelves or help customers. It’s a waste of time and money, and it doesn’t help anyone. A nonprofit that doesn’t collect data that it actually needs is similar–it’s like a supermarket that doesn’t even bother hiring any employees. So, how can nonprofits ensure they need all data they are collecting and that they’re collecting all the data they need?

The answer is the data audit.

In this three-part series of articles, we’ll explore the relatively new phenomenon of the data audit. In this first part, we’ll discuss the nature, evolution, and benefits of the process. In the second part, we’ll list some steps and tips for using data audits in your organization. Lastly, in the third part, we’ll talk about what to do next.

Data Audit Definition

A data audit is a comprehensive examination and inventory of an organization’s data, data-collection procedures, data formats, and data repository. Critically, the data audit should thoroughly answer three questions: (1) is the data being used?, (2) how is the data being used?, and (3) what other data is needed?

The data audit is not unlike a financial audit, during which the books are opened to assess a company’s financial health, organization, security, legal compliance, etc. All organizations should know the health, organization, and security of their data.

However, the data audit is unlike a financial audit because, unlike money, data has many different uses, formats, and importance. For example, during a data audit, it may be discovered that certain information held by an organization has been accumulated for no good reason and may be disposed of. (This is usually not a finding of financial audits.) Auditing data involves evaluating data with metrics such as “is this data useful?” and “is this data secure?”

The History of Data Auditing

The history of organizational data audits reaches back into the hazy electronic mist of the 1950s when mainframe computers began to enter the world of big business. Massive firms like GE and IBM were among the first to get computers involved in storing and analyzing data electronically, but the data audit as we know it today is a more recent development and can be charted along with the rise of “feedback culture,” in which organizations not only recognize the need for systematic data collection, data curation, and data auditing, they embrace it. Within feedback culture, data is collected, analyzed, and utilized more or less continuously, which calls for frequent data audits.

Why Aren’t Data Audits a Standard Practice?

If you’re among those who have never participated in (or maybe never even heard of) the data audit, you’re not alone. While data audits are becoming more common, they are still what you might call an emerging artform. Nonprofits have been especially slow in adopting the practice despite the fact that it could benefit them greatly. Nonprofits may have trouble justifying data audits for all the usual reasons:

No awareness that the practice is needed. Most nonprofits are much better at collecting data than knowing what to do with it–many organizations may not be aware that there’s anything amiss with their data trove or their data-collection procedures.

No personnel to spearhead or conduct the audit. In order to even initiate a data audit, a nonprofit will probably need someone on staff who is interested in doing so, and nonprofits are notoriously short on technically oriented workers.

No money to pay for the practice. To properly audit a nonprofit’s data, unless a highly skilled volunteer is available, someone’s probably going to need to be paid.

This series continues in the next article, in which we’ll outline some of the benefits of getting a grip on your organization’s data and how to start the ball rolling.

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