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

A person sits at a desk facing the camera. The shot is of mid-chest and hands as they're typing on a laptop. They're wearing smooth, shiny bracelets and a purple sweater.

Dana Guterman

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August 4, 2024

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10 minutes

Nonprofit Trends

Donor Engagement

This article is part of a series

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Donor Analytics for Nonprofits: Your Ultimate Guide

Are you wondering what in the heck donor management software is? Or why a nonprofit organization would need software to manage donors? How exactly does a donor management system manage your donors? Welp, here's a big, clear, detailed answer to the question “What is donor management software?” and how to choose donor management software.

What is donor management software?

As a nonprofit organization, you rely on your donor community to champion your cause. Those donor relationships need to be tracked with donor management software. Donor management software is a CRM (customer relationship management) tool that takes your donor data—giving history, demographics, interactions, and more—and collects it in one place.

What does donor management mean?

It's right there in the name: donor management means managing all the information related to your beloved (and prospective) supporters. Nonprofits have a lot to keep track of when it comes to donor relationship management. Donor management allows you to stay on top of each interaction and every donation.

What does a donor management system do?

A donor management system tracks everything you could possibly need to know about your donors and prospects so that anyone with an account can manage fundraising efforts and drive a successful fundraising strategy—complete with positive fundraising revenue. It's like a digital filing cabinet, compiling all that donor data in one place.

In plain language, a donor management system is all about storing and accessing comprehensive donor data so you've got a high-level view of your entire donor database.

Additionally, a good donor database software can segment your data using segmentation tools, monitor fundraising metrics, prioritize prospective donors, track employment and personal relationships, and more. Whew, we think our donor management system has earned a spa vacation!

And what is donation software?

We're so glad you asked! While donation software and donor management software sound quite similar and do often go hand-in-hand, they're separate products. Donation software allows you to collect donations online. In fact, it actually feeds healthy donor database software so that you can make data-driven decisions.

So, what's the difference between donation software and donor management software?

Donation software allows nonprofits to accept, track, and process online donations. The software can include donation forms, donation pages, or donation buttons. Donor management software, on the other hand, is a customer relationship management platform that compiles all those donations—plus a ton of other information about your donor base—in one place. Basically, it's a super-fancy donor database.

Here it is in action: If someone makes a donation on your website, your donation software will accept and process that payment through a donation form for nonprofits. Then, your donor database software will update that generous donor's giving history with the latest donation information.

And while you might see a lot of sites conflating the two terms, don't be fooled: plenty of online fundraising platforms out there offer only one or the other. Here at Funraise, however, we offer both! Now that we've cleared that up …

Why use a donor management system?

With an effective donor management system in place, you'll be able to foster stronger relationships, leading to greater donor retention and more recurring and major gifts. So yeah, cultivating a healthy donor database is a pretty big deal, if we do say so ourselves.

If you're still tapping your fingers on your desk, wondering, “Do I need a CRM?”, here are a few more donor management best practices:

It keeps everything tidy. Maybe you love your filing cabinet or spreadsheet, but admit it: things can get a bit messy. Now, you can easily see what information is missing or inaccurate, create to-do lists, and much more.
It's secure. Security is a huge issue these days, and a lot of your donors might feel a little nervous (and rightly so!) if all their private information is just sitting in an Excel spreadsheet.
It's efficient. A donor management system lets you Get Things Done fast. You can automate tasks, monitor response times, and download reports with a few clicks.
It grows with you. As your nonprofit grows, your donor management system will scale accordingly—with no extra effort required on your part.
It helps you think strategically about online fundraising campaigns. A donor management system lets you segment your data so that you can easily spot trends and think strategically about the future.

What should I look for in nonprofit donor management software?

If you're ready to dive into the wonderful world of donor management software, here are the powerful features to keep an eye out for:

Individual donor profiles and households
Fundraising dashboards and reporting tools
Software integrations
Fundraising online tools
Matching gift capabilities
Donor communications and donor engagement tools
Donor accounts

Creating and managing donor profiles

Any nonprofit donor management software worth its salt will provide in-depth detailed records for every one of your donors. The more donor data in each donor record, the better. Specifically, a donor profile should include:

Contact information
Donation records
Subscriptions
Household and employment information
Interactions
Other affiliations, such as board membership or volunteer status

Dashboards and reports

What good is all that delish data if you can't make sense of what it means? Your donor management software should make it easy to organize your data by breaking it down into digestible, actionable nuggets through automated reports and crystal-clear dashboards without creating duplicate records. Your online fundraising software should include ready-made reports and dashboard templates to get you started as well as the ability to create custom reports to meet your unique needs.

Furthermore, you should be able to export those reports as polished, shareable PDFs with a few quick clicks. A nice bonus is when you can easily automate reports, including donation records, ensuring your team or board is always up-to-date on all the latest goings-on.

Software integrations

No one wants to start from square one when it comes to their donor management, so a great donor management software should easily integrate with your favorite tech programs, platforms, and apps. You should be able to share information with existing donor databases, send data to your fav email marketing platform, and sync across various social media channels.

Also, be sure that you can collect and process payments across different forms (we're looking at you, Bitcoin) and platforms (PayPal, Stripe, Apple Pay, etc.). The more options, the less likely someone flees your site because you won't accept their gold doubloons.

Fundraising solutions

Your donor management software needs to work for you, and that means including ALL the online fundraising tools. After all, a healthy donor database that includes all the robust features you need in one place makes everything as easy and intuitive as possible. Must-have donor management tools include:

Donation forms and buttons
Donation pages
Campaign and fundraising websites
Page templates
Peer to peer fundraising software
Pledge management
Crowdfunding
Fundraising event management, registration, and ticketing
Text-to-give
Recurring giving/monthly giving programs
Social fundraising software
Email communications

Matching gift capabilities

So, so many companies have deep pockets and a deep desire to support their employees' philanthropy. But so few donors know about these programs! While this is a powerful tool, we want to call it out because it requires little to zero effort and pays off big time. So, look for a donor management platform that supports corporate donation matching through an integrated company match search and automated matching process.

Donor communications

If long-lasting relationships with donors are built on great communication, then it stands to reason that you want nonprofit-specific tools that prioritize your donor engagement efforts. Look for the ability to send automated tax documents and donation receipts, personalized email marketing outreach, text messages—and even direct mail. And every single one of those interactions should be logged into the appropriate donor profile.

Andrew Olsen, SVP of DickersonBakker, puts it this way in a conversation on the Nonstop Nonprofit podcast:

"It all comes down to how do we build authentic relationships with other human beings and invite them into to be part of a solution versus just saying, stay over here away from me until I need your money and then let me ring the cash register and get a few bucks and go about my way." –Andrew Olsen, DickersonBakker

Think about it, when you have a healthy donor database that tracks relationships between supporters (like families, employment, etc.), your communications can stay coherent, consistent, and directed at the best person for each campaign.

Donor accounts

Your donor management software system shows you everything you want to know about your donors, but does it show your donors what they want to know, too? Another key feature of your donor software should be a donor portal, so your donors can track their donation history, view tax receipts, and more. In fact, with Funraise, there's an app for that.

And inside your centralized platform, you can do some magical matching between donors and the information that's generated through their activity. For example, attaching important documentation to donor records and adding notes, tags, and soft credits to supporters.

Funraise has the entire range of features we've mentioned—and then some. Click here to learn more.

Tips on choosing the right nonprofit donor management software

Ready to take the donor CRM for nonprofits plunge but unsure which software's right for you? Don't worry—we're here with some top-tier tips for choosing the best nonprofit donation software for your organization.

1. Talk to your team.

As we've mentioned a few hundred times, we love us some good communication, so be sure to loop in your team before you choose a donor management software. After all, they'll be using it every single day for the rest of their lives! (We're assuming you're such an awesome employer that everyone will work for you forever.) Talk to them about their pain points and what additional features they're looking for, then evaluate your options accordingly.

2. Think integrations.

If you're deeply devoted to other software, look for donor management software solutions that integrate with it. If you're marketing folks swear by Mailchimp and your development team is raking in the donations through livestreaming on Twitch, get thee a software that seamlessly integrates with them—everyone will be happier.

3. Ensure it scales.

You want a donor management platform that grows with you. So, while it might be tempting to buy the cheapest option for your 10-person team, consider how that software will work when you're a team of 100. Likewise, if you're thinking about buying the biggest, mightiest software on the market just in case, take a step back. That software can have a steep (and time-consuming!) learning curve and be reaallyyy pricey, and you'll be paying for donation management platform features you'll never use.

4. Do a trial.

Most donation management platforms have a free version so that you can take things for a test run before committing to platform fees. Take advantage of this to ensure you love whichever product you choose! If there isn't a free version, or if you still want to know more, set up a demo with a company representative. And, going back to that first tip, we suggest letting your team members play around with your top contenders as well to see what platform fees look like.

5. Keep it tight.

One last thing to consider when it comes to choosing a donor management software: platform security. You'll be storing all that precious data, and you owe it to your donors to ensure the prince of Genovia doesn't get their credit card information. If an online fundraising platform takes security seriously, they should have detailed information about it on their website, and their reps should be happy to tell you more.

Funraise is a great option for just about everyone! Learn more here.

The importance of donor management software for nonprofits

Well, here we are, folks. We've explored the world of donor management software from pole to pole, across virtual forests and digital oceans. By now, it should come as no surprise that we are firmly Team Donor Management Software. Why? Here's a quick list of “reasons donor management software is the key to unmitigated bliss for your nonprofit”:

Improves communication
Provides security
Automates time-consuming processes
Consolidates everything in one place
Saves time and energy searching
Helps build stronger relationships
Identifies donor trends
Streamlines event planning
Bakes cookies every Sunday

We're still holding out hope that Funraise will be able to add that last advanced feature, but only time (and incredibly advanced technology) will tell. TL;DR: having a great donor management system is really important and will make things better across your whole organization.

And to dive even deeper, check out a step-by-step instruction session on managing donors with the best donor management software.

Hold up: Do small nonprofits need donor management software?

If you're a small nonprofit, you might be wondering if you need donation software. After all, you can list all your donors from memory—not to mention that you have a tiny budget to match your tiny size! We totally get it. But you, too, can benefit from the magic of donor management software. Here's why.

Since you're small but mighty, you probably have a small team, and that means everyone's stretched thin. A donor management software with a range of features will lighten everyone's load, saving you time and energy in the long run. Additionally, chances are you're going to be growing in the future, and it's way easier to wrangle your donors and campaigns now than later. And if you're worried about fundraising costs, keep in mind that a smaller number of licenses means a cheaper software solution, so don't assume this will be a prohibitively expensive investment.

A couple of extra tips for you wee ones: First, consider a software with lots of integrations, so that you can keep using your well-loved current solutions. Second, as a small nonprofit, you probably don't need a super-powerful software solution. Those are often complex and pricey, with bells and whistles that just aren't necessary. Instead, go with something intuitive and simple that can grow with you. Something friendly, something fun … something like Funraise! Just an idea ;)

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Donor management software FAQ (answered by AI and our writer)

Is a CRM for donors the same as donor management software?

Yes, basically. Both CRMs and donor management software collect all your donor data in one place so you can access what you need with the click of a button and easily manage your donor relationships. This is the best way to connect your fundraising efforts with your donor stewardship efforts.

What are donor management objectives?

When it comes to donor management objectives, you've basically got two: saving money and saving time. No matter what your needs are, there's a donor management software that fits your budget and automates processes, creates reports, streamlines donor communications, integrates with other platforms, and provides comprehensive tools.

How should a nonprofit choose a donor management software?

If you're debating which donor management software to choose, speak to your team, consider the range of features and fundraising costs of this suite of tools, sign up for a free trial, confirm they take security seriously, and be sure to read reviews. Start by talking to Funraise!

What's the best nonprofit donor management software?

You're already in the right place to start or continue your donor management software journey: Funraise! We've got all the advanced features in this article covered, and then some. So, get your Funraise account now and see what the best donation management tools can offer.

What is a donor manager?

Well, you're probably a donor manager. If you're a fundraiser or nonprofit development professional or someone who uses donation management tools, you're a donor manager. If you can look at a CRM and make decisions about donor retention and evaluate donation history, you're a donor manager.

Does donor management software work with other apps?

Your donor management software very likely integrates with other online tools, like accounting software, social media platforms, marcom software, email sending programs, and more. Once you understand your nonprofit's needs you can look for valuable tools that integrate and get them working together in sync.

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