Thursday, April 12, 2012
Putting data in context
(logo from NFF Financial Scan)
The Nonprofit Finance Fund has a new tool out, called Financial SCAN, that is quite exciting. It takes the deep financial analysis for which NFF is noted as a framework for gathering and making sense of nonprofit organizations' 990 data. In partnership with Guidestar, Financial SCAN pulls information from nonprofit profiles and presents it in a templated form built from NFF expertise.
A user gets the best of aggregated web data - you can search for any nonprofit - and the expertise of financial experts who've been working with nonprofits for decades. I hope this will be the end of "one size fits all" measures, such as the overhead ratio, that were easy to generate from aggregated data but almost meaningless in real life. Financial SCAN takes a broad slice of data and puts it in context so you can understand it.
Here's the video introduction to Financial SCAN:
I've already thought of several uses for Financial SCAN. Obviously, nonprofits can use it to understand their own information more completely - it's an inexpensive way to get NFF's wisdom about their own finances, something a lot of organizations can use. It will be useful to foundations and donors in their due diligence process, especially if they use the reports as a jumping off point for discussion with potential grantees. You can order up comparables - so you can compare arts organizations, you can look at an organization's finances over time, and you can cluster by geography so place-based grantmakers (I'm looking at you, community foundations) can get useful snapshots of key partner organizations.
Financial SCAN can be used as a one-off, as a regular part of due diligence, as a capacity building tool, for regional or issue-based planning (Mash these data with a CEP/Monitor Institute Strategy Landscape tool to get a vital sense of the health of a sector), and to help understand organizational change over time. Nonprofit executives, donors, donor advisers, public agencies, public funders, and program officers can all benefit.
The data powering Financial Scan is organizational and financial information. The NFF screens help users understand what data means what, what financial signs to look for, and how to assess the "health" of the organization from a series of independent "vital signs." Full analysis and understanding still requires knowledge of the people involved, local context, constituent feedback, performance and outcome measures.
In our data rich world, putting data in context and making sense from it is where the fun is. It's taken us almost ten years to build a robust supply of information about nonprofits and make it available online. Keeping that data supply updated, "clean," and comparable is an ongoing task. But now that it's here it's great to see the practical iteration and innovation on top of it that makes it actually useful. This is the phase that's given us WASHFunders, strategy landscapes and now Financial SCAN. There will surely be more to come.
Posted by Lucy Bernholz