For non-profit organizations (NPOs), financial crime (FinCrime) risk assessments are not just a compliance exercise—they are essential for protecting their missions and maintaining trust. However, without accurate, reliable, and well-governed data, NPOs risk blind spots in their assessments, leaving them vulnerable to financial crimes, reputational damage, and regulatory penalties.
In this blog, we explore why data quality and data governance are vital for NPOs to conduct effective FinCrime risk assessments—and how they can build a data framework that works.
The role of data in FinCrime risk assessments
FinCrime risk assessments involve identifying, measuring, and mitigating risks such as money laundering, fraud, or connections to sanctioned parties. These assessments rely on data to answer questions like:
Who are the donors?
Where are the funds coming from and going?
Are there links to high-risk jurisdictions or sanctioned entities?
The challenge lies in the complexity of FinCrime risks. Donor profiles, transaction histories, relationships with counterparties, and geopolitical factors all need to be evaluated holistically. Without high-quality data, NPOs cannot accurately assess these risks or take informed action.
Why high-quality data matters
Effective FinCrime risk assessments require data that meets key criteria:
Accuracy – Inaccurate data leads to flawed assessments. For example, a donor flagged as low-risk due to missing information could turn out to be connected to a sanctioned party. Ensuring data is precise and up to date is critical for identifying red flags.
Completeness – Incomplete data can create blind spots. If an NPO lacks information about a donor’s source of funds, jurisdiction, or related parties, they may underestimate the risk. Comprehensive data allows organizations to evaluate the full picture.
Timeliness – Real-time or regularly updated data is essential to assess risks effectively and respond swiftly, especially when dealing with high-risk jurisdictions, changing geopolitical situations, and evolving regulatory requirements.
Consistency – Data collected across departments must align to avoid conflicting conclusions. For example, donor information held by the fundraising team should match what the compliance team uses for due diligence. A lack of consistency can lead to errors or duplicated efforts.
Uniqueness – Duplicate records could result in a donor being incorrectly flagged as low-risk in one system and high-risk in another. Ensuring each data entry is unique helps NPOs maintain clarity, avoid redundant checks, and ensure accurate identification of individuals or entities.
Integrity – Data must remain trustworthy, unaltered, and protected from unauthorized changes. Compromised data can lead to poor decisions, exposing NPOs to legal, financial, or reputational harm. Safeguarding integrity requires regular audits, strong cybersecurity, and clear data management policies.
Relevance – Data must be aligned with, or relevant to, the purpose for which it was collected and for which it is being analyzed. Put simply, will the data be able to answer the question?
Relevance: using the right data for risk assessments
Not all data is equally valuable. For FinCrime risk assessments, NPOs need to focus on relevant data that provides meaningful insights. Key areas to consider include:
Donor profiles: Information about donors’ identities, backgrounds, and sources of funds.
Transaction data: Details on how funds are received, routed, and used.
Counterparty relationships: Connections between donors, beneficiaries, and other entities involved.
Geopolitical context: Understanding risks associated with jurisdictions involved in transactions.
Relevance also means adapting data requirements as risks evolve. For example, as regulations change or new threats emerge, NPOs must update their data collection and analysis processes to stay ahead. They must also ensure the data on hand remains relevant.
4 ways NPOs can build a strong data framework
To ensure their data supports effective FinCrime risk assessments, NPOs should focus on these best practices:
Invest in technology – Use tools that automate data collection, validation, and analysis. This reduces errors and ensures consistency across the organization.
Implement data governance framework – Establish clear data ownership and stewardship, guidelines for how data is collected, stored, maintained, and secured. Ensure these standards are aligned with regulatory requirements and organizational goals.
Train staff – Educate teams on the importance of data quality and how to follow governance protocols. Everyone in the organization, from fundraisers to compliance officers, plays a role in maintaining data integrity.
Monitor and improve – Regularly assess the quality of your data and make improvements as needed. Use Key Risk Indicators (KRIs) and Key Performance Indicators (KPIs) to track progress.
The bigger picture: data as a strategic asset
High-quality data is more than just a compliance tool—it’s a strategic asset for NPOs. By leveraging accurate, relevant, and well-governed data, organizations can build trust with donors and stakeholders, strengthen their defenses against financial crimes, and maintain compliance while focusing on their mission.
In an increasingly complex world, data quality is the foundation for effective risk management. For NPOs committed to safeguarding their operations and reputations, investing in better data is not optional—it’s essential.
Take the next step
Is your NPO’s data ready to meet the challenges of FinCrime risk? Take the first step by assessing your data quality and governance framework. The better your data, the stronger your organization’s ability to manage risk and protect its mission. Use our latest whitepaper, “Financial Crime Risk Management for Non-Profits: Understanding Risk Appetite, Assessment, and Prevention,” as your guide.