In recent years, the rise of ‘big data’ has spurred a revolution in analytics, with online retailers using reams of consumer data to better target their products.  Its broader potential outside the retail world was demonstrated in November last year by Team Obama, who used statistics on an unprecedented scale to tailor their appeals and predict voting patterns.  And now, according to those in the know at GrantCraft and the Chronicle of Philanthropy, 2013 is the year of data in the charity sector.

This isn’t a sudden development—momentum has been steadily gathering over the last year. The UK government’s announcement to set up a Justice Data Lab is a notable highlight for NPC. But to date, much of this interest has focused on charities and grantees, rather than funders.

Arguably, it is just as valuable for funders to understand whether their grants strategy is making a difference, and which interventions work best. Funders often collect data on the impact their grantees have on beneficiaries,  but it’s equally important for them to analyse the impact  their support has on the grantees. Funders increasingly want  to understand whether their approach is working or whether their strategy needs to change.  NPC hopes to drive progress in this area, and is particularly interested in researching the barriers that funders face in trying to understand this impact.

If we wanted to take this further, we could learn from high-profile examples outside the voluntary sector and embed data analysis throughout organisational processes. Consider funding strategies, for example. Access to big data on beneficiaries can help funders to better understand an issue, while data on other funders can offer a deeper insight into the funding landscape around it (not only traditional grant-making, but other forms of funding too, eg social investment and ‘enterprise philanthropy’). If monitored on an ongoing basis, this would  allow funders to keep up with shifts in the sector, and even anticipate trends and future needs. Combine this with data about the impact of funding on the grantees themselves, and  funders would be better placed to refine and improve their strategy, ensuring that money is directed where it is needed most and in the most effective form.

While most charities and funders lack the resources for an Obama-style team of dedicated data crunchers, we should recognise the potential of big data, as well as its challenges, and start thinking about how we could make it work for us. Ambitious? Perhaps. But exciting? Definitely.