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

June 19, 2022
10 minutes

Are you wondering what in the heck donor management software is? As in, why would anyone need software to manage donors or how exactly does a donor management system manage your donors? Welp, here’s a big, clear, detailed answer to your question: “What is donor management software?” 

What is donor management software?

As a nonprofit, you rely on your donor community to champion your cause and keep the lights on. That means those donor relationships are crucial. And like any relationship, they need to be nurtured. However, unlike other relationships, they also need to be tracked in a database so that you can use them to inform your strategy. (PS: we don’t want to make assumptions. Maybe you track all your relationships in a database, and if so, that’s fine and dandy!) Anyway, that’s where your donor management software comes in handy. 

Donor management software is a CRM (customer relationship management) tool that takes all that juicy donor data—giving history, demographics, interactions, and more—and collects it in one accessible, user-friendly place. (Or at least Funraise’s donor management software does. We’re not so sure about the rest of them.) 

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 relationships. 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 strategy. It’s like a digital filing cabinet, compiling all that donor data in one place.

Additionally, a good donor management system can segment your data, monitor campaign metrics, prioritize prospective donors, track family and employment 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 your donor management software.

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

Donation software is the software that 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 supporter database.

Here it is in action: If someone makes a donation on your website, your donation software will accept and process that payment. Then, your donor management 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 platforms out there offer only one or the other. Here at Funraise, however, we offer both! Now that we’ve cleared that up …

Why do I need a donor management system?

With an effective donor management system in place, you’ll be able to foster stronger donor relationships, leading to greater donor retention and more recurring and major gifts. So yeah, donor management 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 reasons to get on board the donor management train: 

  • 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 fundraising. 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 donor management software?

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

  • Donor profiles
  • Dashboards and reports
  • Software integrations
  • Fundraising tools
  • Matching gift capabilities
  • Donor communications
  • Donor accounts

Donor profiles

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

  • Contact information
  • Donation history
  • 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. Your software should include ready-made reports and dashboard templates to get you started as well as the ability to customize them 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, 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 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 tools

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

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

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 fundraising tool, we want to call it out because it requires little-to-no effort and pays off big time. So, look for a donor management software that supports corporate donation matching through an integrated company match search and automated matching process.

Donor communications

If great relationships are built on great communication, then it stands to reason that you want a donor management software that puts communication front and center. Look for the ability to send automated tax documents and donation receipts, email marketing outreach, and text messages. And every single one of those interactions should be logged into the appropriate donor profile.

Donor accounts

Your donor management software 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 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.

Funraise has every feature we’ve mentioned—and then some. Click here to learn more.

Tips on choosing the right nonprofit donor management software

Ready to take the CRM 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 specific 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 that integrates 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 software 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 features you’ll never use.

4. Do a trial.

Most donor management software has a free version so that you can take things for a test run before committing. 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.

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 a 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 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 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.

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 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 the cost, 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 ;)

Donor management software: Key takeaways

When it comes to nonprofit success, donor management software isn’t a nice-to-have—it’s a must-have. Here’s a final rundown.

  • Donor management software collects 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.
  • Whether you’re small, big, or somewhere in between, you can benefit from a donor management software—just look for one that fits your budget and meets your unique needs.
  • A great donor management software also automates processes, creates reports, streamlines donor communications, integrates with other platforms, and provides fundraising tools.
  • If you’re debating which donor management software to choose, speak to your team, consider features and budget, sign up for a free trial, confirm they take security seriously, and be sure to read reviews.
  • Finally, and we think most importantly, you’re already in the right place to start or continue your donor management software journey: Funraise! We’ve got everything in this article covered—and then some. So, get your free Funraise account now and see what it’s all about.
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