For Community Development Financial Institutions , data integrity is particularly essential to influence policy, improve operations on the ground and communicate their impact story. However, they face a challenge with financial and impact data from communities they work with. The main aim for these institutions is to achieve the intended outcome. Disconnection between financial data and impact data can result in false outcomes. How do we avoid the disconnection between these two types of data? Let us help explain that further in this article.
There are around 950 Community Development Financial Institutions in the United States.
Much of their efforts go toward financing for affordable housing, small business lending, and free services for small businesses. They have a stated mission to create economic opportunity for small businesses or individuals, and they place those goals ahead of shareholder profits.
There are two primary types of data that CDFIs work with: Financial data and Impact data.
The challenge is that both data sets are stored in different places. They are manually collected by the organization and are aggregated in different practices. There is no standard procedure for how to aggregate unstructured data. Currently, most of these financial institutions use Excel for data management to collect and aggregate data from different sources. Using Excel can result in error-prone data that may result in a incomplete or misrepresented impact story altogether. Excel is time consuming since it must be reviewed multiple times resulting in an unorganised document. Policy makers, funders or stakeholders require a standard clean document that is straightforward. Furthermore, Excel formulas need to be applied in order to create charts, but again, this manual action is error-prone.
For CDFIs, reporting is a major tool for communicating to stakeholders, particularly policy makers and funders. When data is managed manually, there is an increased likelihood for human error. This hurts the integrity of the data and thus, the integrity of the visualized insights that are later communicated. Effective communication of data includes how the data is presented. When manually creating visualized charts in tools like Excel, there is limited ability for structured and dynamic visualized reporting.
The Impact Cloud™ platform helps CDFIs manage their data for impact management.
With Impact Cloud™ SoPact aims to transform social sector efficiency through data-driven impact measurement. Comprehensive data management enables social sector organizations like CDFIs to scale their impact efforts in ways that benefit the communities they serve.
By better managing their data, financial institutions are able to better understand realities facing communities served, improve the outcomes of their interventions and communicate these findings to policy makers, funders, supporters, and beneficiaries. The reason these financial institutions must use the Impact Cloud™ platform is for better data aggregation and to derive valuable insights. With Impact Cloud,™ CDFIs have all their data collected in the same platform, which allows for correlations between the financial aids (loans, etc.) with the actual impact achieved (such as jobs generated by small businesses, revenue growth, etc.).
After correlating these two elements, Impact Cloud™ is able to build data-driven reports to show financial and social returns over time for funders and policy makers. But it is also possible to build data-supported stories from the field that resonate better with donors, volunteers, and the general public.
Community Development Financial Institutions work in directing financing for the development of more equitable communities that requires an understanding of the data on the ground. By leveraging technology to manage the data, we can better tell the story of the realities facing marginalized communities for policy makers and other stakeholders to better understand the overall outcomes.