10+ Donor Management Best Practices for Modern Nonprofits

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Dana Guterman

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August 5, 2024

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5 minutes

Nonprofit Trends

Donor Engagement

This article is part of a series

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What Is Donor Management Software? Why a Nonprofit Needs It.

10+ Donor Management Best Practices for Modern Nonprofits

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10+ Ways to Build Lasting Donor Relationships (Donor Relations Plan)

Donor Analytics for Nonprofits: Your Ultimate Guide

Nonprofits are always talking about "donor management", and lots of us have a better-than-vague idea of what that means, but if you've been working with only a pretty good idea of donor management, its benefits, processes, and best practices, we've got a complete, bookmark-able, refer-back-to-it-frequently donor guide that's written just for you.

What is donor management?

Donor management is all the processes that contribute to managing information related to your supporters. In fact, you can think of it as donor relationship management—but the “relationship” is silent. It's all about tracking and nurturing all of your donor relationships through organization and engagement.

“But what, exactly, does a donor management process include?” you may ask. And that's an excellent follow-up question! Donor management includes tracking all that vital donor info such as contact information, family relationships, affiliations (volunteer status or board membership), employment information, and, of course, donation history. Additionally, it includes noting donor interactions and communications—and then using all that delightful donor data to inform your fundraising efforts.

Why is donor management important?

When a nonprofit starts out, it's usually small. At this point, you need to be able to find a donor's address to send a personalized thank-you note whenever you get a gift. If you have a nice Excel spreadsheet with all your donor information in one place, you're ready to shower every supporter with gratitude.

But as revenue grows, so does organizational complexity. Your donor base diversifies, staff members come and go, and supporters change employers and addresses. Now, donor management becomes a more involved process. There's event attendance to note and familial relationships to remember, and there are new donors and lapsed donors and potential donors, oh my! With so many moving parts, donor management becomes even more important to ensure effective communication, efficient fundraising appeals, and seamless growth.

Key features and benefits of using a donor CRM

Whether your nonprofit is wee, ginormous, or somewhere in between, one thing's for sure: donor management is essential. Let's quickly break down the benefits of having some sort of donor management system in place.

Communicate effectively

If you're successfully tracking your every donor, from first-time donor, to one-time donors to key donors, then you're set up to nurture those relationships through A+ communications strategies. With all that info, you can personalize your communication with donors, making it way more likely that your superlative marketing prose will be opened, read, and acted upon.

Boost donor retention

When you successfully manage your donors, you know when someone hasn't given in over a year, or when a new donor reaches out to connect. If you're aware of lapsed donors, new donors, major donors' birthdays, and everything in between, your donor retention rate will skyrocket (or at least increase gradually! We're all about keeping things real here.).

Centralize your everything

Donor management means putting everything in one place for easy access. Once you've centralized your donor information, you can save so much time. In fact, you'll get things done at the speed of light—or at least at the speed of a really caffeinated nonprofit professional who no longer has to dig through 62 documents every time they send a campaign update.

Increase recurring and major gifts

When you know your donors better, you connect with them better, building trust and loyalty on both sides. Happy donors who are truly connected to your mission will give more—and give more often.

Fundraise strategically

With all that info in one place, donor management puts some oomph (and by “oomph” we mean “data”) behind your fundraising goals. You'll start to spot patterns and trends among those many numbers, allowing you to think strategically about the future.

Fundraising consultant Jarrett Ransom, otherwise known as the Nonprofit Nerd, starts with the donor management process with each of her clients, as she noted on the Nonstop Nonprofit podcast:

Funraise knows the importance of donor management—and makes it easy and intuitive. See how here!

The donor management process elements in 7 steps

The donor management process can feel overwhelming, but by breaking it down into actionable steps, you can develop an efficient strategy. Take a step back, set goals, get your team involved, and make a plan. Then, consider getting nonprofit donor management software for nonprofits to take your fundraising efforts to the next level.

As we mentioned, there's nothing wrong with keeping those donor records in an Excel spreadsheet (or, for that matter, in a good old-fashioned filing cabinet)—at least to a point. Any donor management is better than no donor management, as we always say! But the day will come when you need a more advanced donor management system that really works for you. That's where a donor customer relationship management (CRM) comes in.

“Really?” you might ask; “Do I need a CRM?” Friend, we really think you do. A nonprofit is, after all, a business, and you need the right tools if you're going to be successful. Check out all the steps in the donor management process below, and you'll see how nonprofit donor management software could make your life much, much easier—and your nonprofit much, much more profitable.

1. Connect with your stakeholders

First things first: your development team needs to be involved in the donor management process, and you should probably bring some marketing folks into the fold as well. Ensure everyone's in the same room, be it virtual or physical. If it's physical, bring donuts and coffee, because you want everyone on board to create a process that's easy, intuitive, efficient, and effective—so you might be here for a while.

2. Set donor goals

What are your goals when it comes to donor management? Who are your target donor groups? Where do you want to put your resources? Perhaps you're focused on getting a certain number of new donors, or maybe it's about increasing recurring gifts, or attracting those Gen Z donors. Whatever you decide, be specific about your goals and tie them to key metrics. And one PS here: understanding your performance in relation to said goals is much easier with a CRM. It'll create handy reports and dashboards to illuminate what's working, what's not, and other key insights. Get the data DL on Funraise's CRM here. (Acronyms FTW!)

3. Segment donors

The more you know about your donors, the better you can build donor relationships with them. To meet those goals you just set, you'll need to tailor your communications—and that means custom donor segmentation based on donation history, demographics, and communication preferences. You can certainly do some of this in Excel through filtering, but a CRM will make custom donor segmentation a snap—and provide communication tools to automate your outreach to boot.

Need proof? We've got your ultimate guide to donor management, including pulling helpful lists of supporters.

4. Create tailored communication plans

Now, it's time to get into a steady communication flow with each donor, ensuring no one is left behind—or forgotten. (Lilo and Stitch! Anyone? Anyone?) Use that segmentation to create a personalized communication strategy with regular updates and asks. Invite local folks to local fundraising events, set coffee dates with major donors, and organize family volunteer days. A CRM like Funraise can even automate a lot of that outreach for you. Now that's some excellent donor management-ing!

5. Track absolutely everything

Once you start taking action to meet your donor management goals, you need to track everything. Every campaign update, every casual check-in, every text message. And don't forget to note who did what when and how, because you don't want two different team members reaching out to the same donor three days apart. Again, a nonprofit CRM system can really help here, allowing everyone with access to update your donor data in seconds.

6. Maintain every relationship

At this point, it's all about continued donor engagement, friend. Stay involved with all your donors unless they specifically ask you to stop. If someone doesn't have the funds to donate, ask them to volunteer. If you get a new donor, invite them to tour your facilities. If someone moves, send a congratulatory note. Consistency, transparency, and authenticity are key.

7. Find nonprofit donor management software that works for you

You did it! And it will all be worth it when you have thousands of devoted donors, sold-out fundraising events, and world peace. But seriously: in order to meet your organizational goals and position your nonprofit for growth, you need some help—and that's where our robot overlords come in. A CRM can help you organize your data, make sense of it, streamline your workflows, automate processes, tailor your email communications, and so much more. And if the mere thought of asking about pricing is giving you cold feet, fear not. You don't even have to commit right away; just schedule a demo to get started.

What are the essential donor management best practices?

Once you've gotten into the swing of things, donor management becomes a way of life. To stay on top of the shifting nonprofit landscape and changing donor needs, you need to maintain meaningful relationships with each and every supporter, ensuring they stick around. These donor management best practices will help you build a devoted following.

Stay mission-focused
Communicate consistently
Get offline
Don't just ask for money
Host events
Make it personal
Make giving easy
Be transparent
Ask for feedback
Say thank you

1. Stay mission-focused

Ultimately, all of your donor management efforts—the long hours, the late nights—are about supporting your nonprofit organization's mission. It's easy to get caught up in numbers and trends and donation amounts, but your mission drives your work, and it drives your donor engagement, too. Remind your donors of your mission in all your interactions and communications to inspire them and spark their generosity.

2. Communicate consistently

We've said it before but it bears repeating: be consistent if you want to retain donors. Balance regular updates with scheduled newsletters with monthly donation asks with biweekly success stories. It's a hectic world; we all like to know what to expect when possible.

3. Get offline

Emails are excellent, and texts are terrific, but sometimes, donor stewardship means picking up the phone or scheduling a coffee date. Especially with prospective donors and major donor strategy, it pays to get offline and connect on a more personal level. It's also the best way to build an authentic, lasting relationship.

4. Don't just ask for money

Even the most magnanimous donor tires of being asked for money, so be sure to vary your donor communications and your social media posts. It's fine to post peer fundraising campaign updates on Facebook and direct your donor base to your donation page, but ensure that some of your outreach is just about sharing your successes, thanking your supporters, and engaging your community.

5. Host events

Events are a great fundraising tool and a fun way to build your donor community. Meeting up face-to-face (even if those faces are on a Zoom call) allows for organic conversations and an emotional connection. From informative webinars to goat yoga in the park, creating lasting memories with your supporters definitely ups that donor retention rate.

6. Make it personal

Here's where donor segmentation really proves its worth. Even if you're sending out beautifully written donor communications on the regular, your supporters will peace out if the content isn't relevant to them. Don't just send generic email marketing campaigns. Instead, acknowledge past gifts when asking for donations, mention volunteer status if they've volunteered their time, and invite them to events that they'd actually enjoy.

7. Make giving easy

You'd think this would be a given, but a lot of nonprofit donation pages make it hard to give—and that makes donors flee. Too many clicks and they'll throw up their hands and head to the hills (or to another nonprofit's donation page). With intuitive online donation forms that emphasize recurring giving, collecting donations (and retaining donors) will be a breeze.

8. Be transparent

Donors want to know what you're doing with their money—and they also like to peek behind the curtain to see what's happening across the organization! Transparency goes a long way in nurturing stronger donor relationships. Some ways to be transparent: send an annual impact report to every donor, write up a debrief after a campaign or event wraps up, and own your mistakes. (We all make them!)

9. Ask for feedback

If you want to know what you're doing right donor management-wise, turn to the source. Send your donors surveys after events to find out what worked and what didn't, and check in regularly to see if you can improve your communication and processes.

10. Say thank you

This is a huge one in donor management land! Show your gratitude. Whether it's thank-you letters, a donor appreciation event, or success stories that showcase positive impact, make sure your appreciation is known far and wide.

How to efficiently use data & donor relationship management software?

It's happened to all of us: you just made a generous donation to Save the Baby Alpacas, and then five days later, you get a letter asking you to please send $50 for baby alpaca formula. These types of missteps have caused many budding donor relations to wilt on the vine.

An error in judgment like this is usually the result of poor donor management—or, more specifically, poor donor data that led to poor donor relationship management. Something wasn't segmented properly or the donation data didn't update in real-time. As a result, you got a donation ask that you shouldn't have. But with a clean donor database and proper donor management, everyone on your fundraising team knows who gave when, where, why, and how. Well, maybe not exactly why, but if you really nurture those relationships, you can know that, too!

Still feel like, “Ugh, data's the worst! I'm all about the long-term relationships, man.”? Friend, we have to tell you: they're inextricably intertwined. Check out all the benefits you can reap with good data.

Easily segment your donors

Yeah, we're obsessed with donor segmentation! But that's only because it's so effective. With a donor management platform, you can create detailed donor profiles for every donor, allowing you to take that tidy data and group them into relevant categories with a few clicks. Then, it's all targeted communications and increased donor engagement from here on out!

Understand donor connections

With a donor database, you can track where someone works, who else is in their household, where they went to school, and more. Then, you can leverage those meaningful connections to attract new donors, encourage peer-to-peer fundraising, inquire about matching gifts, and more.

Track giving histories

Your donors' gift history is integral donor management strategy intel. With historical info on your nonprofit donor database by broken out by month or year and by individual donor or household, you can see who gave when, follow up on lapsed donors, and plan for the future. Plus, a nonprofit CRM like Funraise includes ready-made templates to generate reports that tell you exactly what's going on with your donation data.

See donor retention rates

Your data tells you exactly when a donor last gave, so you can easily reach out and reconnect when someone drops off.

Upgrade your gifts

Just as you can see when someone's stopped giving, you can see when someone has become more involved with your cause as of late. These folks are prime candidates for increased giving or becoming recurring donors, so it may be time for a more personalized outreach strategy.

The importance of a donor relations manager

As you can see, donor management is a big job—and if you have the resources, you'll want to make it a full-time one at your nonprofit. A donor relations manager is responsible for implementing your fundraising strategy through cultivating strong donor relationships and developing stewardship plans.

And while it's fine to have various development team members pitching in on your donor management efforts, having a designated contact for your donors will ensure they feel heard, seen, and appreciated. Specifically, here's how a donor relations manager can brighten any nonprofit office.

Keep the donor pipeline strong

It's not just about keeping your current donors happy; it's also about identifying prospective donors, reaching out, and cultivating strong relationship.

Answer any question

We all hate waiting on hold for 120 minutes when we have a simple question about our credit card bill. Now, you have someone who will always pick up the phone, making every donor feel supported.

Personalize your fundraising strategy

Your donor relation manager knows what donors want. So, they can create tailored, effortlessly effective fundraising strategies for new and major donors.

And if you read our 2024 trends article, you know our take on taking personalization to the next level: hyperpersonalization. Let's review.

Think about it: this is exactly what your donor data is for. Literally... why else are you collecting this information?!

Try segmenting your data in a way you haven't before. Or go deeper than you have before, until you have a segment with only a handful of donors. Then think big and ask yourself how you can surprise and delight these special donors. You may surprise and delight yourself.

Plan great events

Another perk of seeing the bigger donor picture? Organizing fundraising and donor appreciation events that your donors actually want to attend—which means they'll pay off big time.

CRM donor management makes life so much easier

TL;DR: Donor management is a must-have for the modern nonprofit. And if donor management makes life so much easier, then CRM donor management makes life soooo much easier. (That's a lot easier, if it wasn't clear from all those extra ‘o's.) From all the data you can dream of (what, you don't dream about data?) to custom donor segmentation, interaction tracking, social media screening, and nonprofit donor management software integrations, Funraise does it all—with a big smile.

What are some other essential donor management tools?

A CRM should be your number one donor management investment, but there are several other tools that will make life easier and breezier. These integrations work to make an effective donor management system that raises more funds and simplifies your processes.

Wealth screenings

Wealth screening helps you figure out how much a donor can give, so it's a pretty handy tool to have in your back pocket (or even your front pocket! But that's not the most fashionable look). With a wealth screening solution, you can fundraise with confidence, knowing exactly how much each donor has to give.

Company matching

If you're looking to double your online fundraising (it sounds hyperbolic, but we swear, it's not!), company matching is our number one strategy. You want a tool that makes the process as effortless as possible for your donors. Here at Funraise, we partner with Double the Donation to automate the matching process. Donors search, click, and we take it from there.

Accounting

Is it just us, or is nonprofit accounting kinda complicated? Something about managing individual donations, corporate donations, grants, and pledges, plus doing all the regular accounting and bookkeeping tasks. Nonprofit software with accounting features or integrations helps handle all your payment-related to-do's, so you can focus on what matters most: your mission. Oh, and supporting your donors, of course. :) While QuickBooks is the big name here, there are a number of great options.

Communication tools

The better your communication, the better service you can offer your donors, so we advise you to make full use of the various communication tools out there. These include various social media channels as well as email marketing platforms. The more, the merrier!

Print-on-demand

For some nonprofits, having the ability to sell branded products is a powerful donor stewardship tool. Knowing which donors bought or received swag, what colors and sizes they chose can help you choose future promotional items that'll fly off the shelves. Connect an ecommerce platform like Shopify to provide a professional, seamless purchasing experience.

Handwritten letters

Getting a handwritten letter always leaves us feeling warm and fuzzy, but writing those same letters ourselves just leaves us with cramped fingers and no time to do anything else. Luckily, there are solutions for that: search for specialty companies that hand-write thank-you cards, gift appeals, or invites for your donors.

Volunteer management tools

Volunteers are also donors—they just donate time instead of money. (And time is money, so really, they're one and the same!) These relationships deserve the same amount of care as traditional donor ones, so if you can offer donors thriving volunteer opportunities, consider investing in volunteer management software.

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Donor Management FAQ

We don't know about you, but we're super pumped to get out there and manage some donors! Here's a quick reminder on everything donor management-related.

What is donor management software?

Donor management software, otherwise known as CRM software, is your prime donor management tool. It centralizes your donor data, allows for custom donor segments, automates processes, tracks interactions with donors, and much (much!) more. Funraise has all the donor CRM features and analytics tools that any nonprofit could need.

What is the donor management process?

Donor management, AKA donor relationship management or donation management strategy, is all the processes that contribute to managing information related to your supporters. That includes collecting the data, acting on the data, and stewarding the donors as well as lesser-known steps like segmenting donors, analyzing options, and following up.

How do you manage major donors?

Major donors contribute substantial financial resources and have the potential to become long-term partners. Manage major donors by first identifying them, then cultivating your prospective major donors, and finally, facilitating a personal connection with your current major donors with the intent to retain them as supporters until you've achieved your mission.

How do you organize donor management?

Donor management is super duper important to a nonprofit organization's financial well-being, as it helps you track donor data and nurture stronger relationships with donors. And accurate donor data is your key to successful donor management, allowing you to streamline communications, identify trends in giving, and plan for the future.