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Donor Management in the Era of Technology: Do You Know Your Donors?

Donor Management in the Era of Technology:  Do You Know Your Donors?

       I was at an event for my organization, recently, and I was asked an interesting question, “What is the most important thing to know about fundraising?” With that question in mind, I began having flashbacks, more like nightmares, of all the mishaps and blunders I’ve made with donors. I thought of the pain I felt every time one of our emails or letters went out addressed to “Dear Friend.” I recalled the pain-staking hours I’ve spent at a computer trying to make sense of an excel sheet only to find the same donor listed three different ways. And as much as I hoped to forget, I remembered the time I sent a donor’s receipt to the wrong person. I tend to wear my heart on my sleeve so at this point I’m sure my inquirer was wondering what was behind the anxious look on my face. I apologized for my hesitation and calmly responded, “You have to know your donors.”

       To date there are more than 1.2 million registered nonprofit organizations. This number does not include all of the organizations that have revenues of less than $25,000 or those that are faith-based. Hartford Institute suggests that there are more than 335,000 religious organizations, which brings the total number of nonprofits to approximately 1.5 million. The good news is that the nonprofit sector is gaining traction and is being validated as a true profession. The challenge is that there is more competition for resources than ever before. So how do we beat out the competition for our donors’ support? It’s simple; we have to know our donors.

       I have worked with organizations in various sectors that include: Faith-Based, International Development, Science Education, Social Services, University, and Zoological Study. No matter the type or size of our organizations, we have to know our donors! To do that, I believe we must start with a good donor database.

       Due to my passion for the nonprofit field I have many friends who work in development so I often ask them about their donor knowledge and database use. What I’ve come to discover is that there are generally three categories of donor/donation understanding.

Common Categories of Donor/Donation Understanding

 

Too busy – This group tends to use Excel, Access or Act to store basic contact information such as address, email and phone number. They focus almost solely on whether they are in the red or the black. There is no connection between the donations coming in and the communications going out. As a result communication is one size fits all.

In transition – This is the largest and most risky group. They tend to use detailed spreadsheets or have just begun using donor software. The majority of their information is basic contact information. Organizations understand general giving trends but lack information about individual donors. They make general assumptions about donors’ interests. Consequently donors receive personally addressed communication discussing issues they have little interest in. As a result, they are left wondering if the staff person was actually listening when they last spoke. Many organizations are not prepared to strategically gather information and work through this phase. As a result they stay in this confusion and feel that the donor software is the problem.

Strategic User – This group maximizes their use of donor software. Not only do they store contact information but they also note the personal interests of their donors. They know exactly when a specific donor likes to communicate and by what method. When they do communicate with their donors they reference previous discussions. Their use of the software supports their knowledge of the donor as a whole individual. As a result, solicitations are personal and appropriate which leads to a greater success rate.

       As professionals in our field we benefit greatly when we better understand our donors. We owe it to our industry and we owe it to the populations we serve. Commit to not letting another Dear Friend communication go out again as long as you are at your organization. The reality is, you may or may not commit to quality communication but your donors already have and they expect it from you too. Many nonprofits will say, “this sounds great but what you’re suggesting is impossible.” “If only, you knew my organization, my boss, my budget, my skills…” You fill in the blank; I’ve heard it (and likely said it myself). Just because it has been our past, does not mean it has to be our future. So as professionals what should we be doing? Let’s get started by dispelling three major myths about donor databases.

Myth #1: Not the “D” word!
• While DATA is a four-letter word it doesn’t have to be treated as one.
• We don’t have to be geeks to know how to analyze it, though some of my friends might say I am.
• Think of your data like songs on your iPod. There are lots of them in there. Each is segmented by genre. Because you know them so well, you can quickly select the one you need for the occasion.

Myth #2: We don’t have the resources to buy and manage it!
• Exactly, that’s why you’re reading this and why you should have donor software.
• You don’t need an IT team. The software is simple enough that after some assistance in setting it up, it will require almost no maintenance. There are also forums you can subscribe to. I’m on one specifically for my software and I post questions and answer regularly.
• It costs almost nothing to get started, depending on your size. If you are small nonprofit you can even get an excellent product called GiftWorks for only $25 (visit techsoup.org).

Myth #3: Set it up and watch the money roll in!
• False! Remember all those wonderful analytical skills you used to determine just how you were going to get to work today? The same applies. The software will help you pull quick and easy reports on your donors and giving. Those are your maps. Using those reports, you can determine what route to take with specific groups of donors.
• Now you’ll be in a great position to solicit help from your board and staff.
• Please let me reinforce this again for Directors and Board Members. No technology will ever raise the money for you, but it sure can make the job easier.

       Throughout my career I have used Raiser’s Edge, Convio, Advance and now I’m on GiftWorks. I was interested in hearing what the software companies themselves thought about this topic and the future of technology for fundraising, so I contacted the CEO of GiftWorks, Mary Pat Donnellon.

7 Questions with GiftWorks CEO, Mary Pat Donnellon

McKenna: How is a donor database different than a spreadsheet, such as Excel?
Donnellon: Excel is fine for storing flat, analytical data but it doesn’t handle relationships well. A donor database was created specifically for nonprofits and manages relationships very well. It sees the intersections of many different pieces of information.

McKenna: If an organization is small or funded by a few grants is it really necessary?
Donnellon: Younger organizations have an advantage in that their data can be organized easily for planning and growth. The concern with relying on a few small grants is that the economy is changing rapidly and organizations should be diverse. It’s generally a good practice to have several revenue streams and a great tool will help them do that.

McKenna: What do customers say is the biggest benefit of the software?
Donnellon: That’s easy. Personalizing communications for donors and strategic planning.

McKenna: There are so many uses for technology, when it comes to fundraising. Mobile giving is on the rise as well. How should an organization manage all of these mediums?
Donnellon: It would be too much for an organization to manage them individually. Know what your needs are and find a software company that can integrate them all for you. Think of it like a hub and spoke with your data at the center.

McKenna: How much should an organization spend?
Donnellon: That depends on the organization. You will need to spend more up front to get started but after that it should be minimal ongoing costs. I believe it should be priced to encourage mission development. For some organizations, that will be more than others. It should never be a barrier to getting software though. There is assistance through organizations like Techsoup.

McKenna: Who should manage the database?
Donnellon: The Development Director should probably make the decisions and manage it. The Executive Director should understand it well and use it for putting in contact notes. Some organizations also have a development staff assist with processing gifts. The most important thing is that the decision making include the staff, not made solely by the board.

McKenna: What’s the first step for a nonprofit interested in software?
Donnellon: Just call GiftWorks! –laughing- The best approach is to list what your needs are and then do some research. You can find information on databases at idealware.org. Know how much you’re willing to spend and then always try before you buy.

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       So which category is your nonprofit in? Maybe you are just realizing that it’s time to start using donor software. Or, like so many others, maybe you have software but you are not getting the most from it and now it has become more of a trouble than a tool. If you are a strategic user and have had great success, maybe it’s time to start thinking about how you’ll integrate the next wave of communication tools like mobile media. Wherever you are, remember this: In a world of high-tech, low-touch; people are craving for personal attention. It’s our job to see that they get it and a good donor database may be just the tool to help us.

 

    
Brad McKenna
Director of Development, Goods4Good
M.S. in Fundraising and Grantmaking 2011
 

 




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