Nonprofit Donor Management | Tips & Best Practices (2022)

Nonprofit Donor Management | Tips & Best Practices (2022)

Nonprofit Donor Management

When you hear of donor management, you probably think of donor databases, thank you notes, and busy work. Or you might think about relationships, partnerships, and growth. Either way, you have some pieces of the puzzle.

Donor management and donor tracking can be complicated, much like any other aspect of nonprofit management.

You must wear many hats to have successful donor management.

However, when done right, it can take your nonprofit to the next level, morphing from just an additive in the community into an asset.

What is Donor Management?

Donor management is an essential aspect of nonprofit management that involves building and maintaining relationships with all your donors and tracking various donor details and interactions. Although it sounds simple, donor management requires paying close attention to your donors’ activity, habits, and experiences. As a nonprofit, you must be prepared to manage a large donor base that consists of all types of donors — recurring donors, one-time donors, major donors, or in-kind donors.

Why Donor Management is Important for Nonprofits

Your donors are giving a part of their hard-earned incomes to your nonprofit. They are investing in your mission and the meaningful work of your nonprofit. As a nonprofit fundraiser, the responsibility of directing these funds to deliver impact lies on you. It is also your responsibility to keep your donors informed about your activities if you are to build trust and lasting relationships with them.

Many donors, if not all, like to be involved with the work of your nonprofit. After all your mission is the driving force behind their association with your nonprofit, which in turn fuels your organization’s survival.

This is where donor management comes into play. When you manage your donors, you get to track all donor data, find out important milestones in their giving journey, and also reach out to lapsed donors. The donors who have been your biggest supporters can also be asked to become advocates for your cause. They can help you acquire new donors and raise more funds from their personal networks through peer-to-peer fundraising.

What is Good Donor Management?

donor management

Donor management involves good communication, for example, thanking and acknowledging your donors and remembering important moments of your donors, such as giving anniversaries or changes in recurring plans.

All of this is done in a way that does not amount to be tedious for you. That is why a functional donor management software should top your list of priorities — one which comes with all the features necessary to help you analyze your donor base.

With powerful donor management software, not only will you maintain strong relationships but will ensure that you maximize those relationships. In order to do this, you need to steward your donors in the best ways you can and engage well. This means having the right tools to understand who your donors are and the means to keep them satisfied and involved.

There are a few ways in which you need to approach donor management. But before we venture deeper into the subject. Let’s take a quick look at the expected benefits that come with good donor management.

4 Benefits of Effective Donor Management

Imagine you are at a fundraising event. There are dozens of people in attendance, and you are trying to speak to as many of them as possible. Of course, you can’t speak to everyone, but you will engage with those who might possibly give (if they are not donors already).

So, you find those who, according to you, are likely to donate to your nonprofit. Perhaps it’s someone older, retired, who lives within a few miles of your nonprofit. But what if you had access to information that suggests that your largest group of donors are millennials located in a different state entirely.

Now, this is not the scenario for everyone. However, one of the benefits of nonprofit donor management software is that it lets you easily access your donor database and pull out relevant donor insights.

Besides helping you target potential donors better, here are some more benefits of good donor management.

1. Understand your donors better

In order to understand your donors, you need donor segmentation — essentially categorizing your donors based on their location, giving frequency, donation amounts, campaign preferences, and more.

When developing donor profiles, you need to ask yourself some basic questions. How old are your donors? Where do they live? How long have they been giving? How frequently do they donate? Do they have a partner that is also involved in the organization? Did they buy tickets to your fundraising event last year?

This process may not sound important. But these are some necessary steps that will help you understand your donors and ultimately, manage them well.

Pro tip: Before selecting your donor management software, evaluate the filters you need. Although some software might provide a number of filters, they all might not be useful for you. As a nonprofit, you need to be able to sort your donors based on their donation frequency, number of donations, donation amounts, location, and donation time frame.

Here’s an example from Donorbox’s donor filters that allow you to sort donors on various criteria.

Nonprofit Donor Management filters and criteria

2. Improve donor engagement

Donor engagement is a key part of donor management.

If you have had donors that have been giving for a long time, but suddenly stop donating or, those who are typically active donors, reduce their donation amounts — there is a problem. It’s a sign that you need to engage more with the lapsed donors to ensure they keep engaging with you.

To find your most valuable donors, you may have to look past how much money someone donates, and even how often. What if that individual is required to donate a significant amount to meet a quota at work?

With the easily accessible information that is provided to you at the click of a button through a donor management database, you can get reminders about important giving milestones, when a recurring plan is canceled or updated, when there is a giving anniversary, and when someone gives for the first time.

Also, a good nonprofit donor management database will help you measure how engaged a donor is by immediately pulling data into their donor profile. It will show a timeline of how long they have given, information about events they attend, and more.

Save donor interactions, add specific notes and record important information about specific donors. With focused attention on your special donors, you can engage with them better, and easily provide context to your team — as you are recording all information within donor profiles.

Here’s an example of how Donorbox allows you to save your interactions with donors within donor profiles, as well as mark the interaction channel – social media, phone, etc.

improving donor engagement

3. Improve donor retention

If there is a trickle of donors that stop giving, perhaps it is time to consider what is missing in your ability to retain donors. Even if that is not the case, it is important to get ahead of any issues so you can build healthy relationships with donors that last for years to come!

As per the latest stats, the donor retention rate for new donors is 29% and that for repeat donors is 60%. There are some main reasons for donors dropping out — perhaps they didn’t feel appreciated, or they didn’t always know how their donation was being used, perhaps they no longer connect to your mission.

Whatever the reason your donors are no longer giving to you, donor management databases can help you avoid this entirely and create better donor tracking. Your donor management system should give you data based on which you can run LYBUNT and SYBUNT reports. They give you an idea of which donors gave last year but not this year and gave some year in the past but not this year respectively. These reports will help you reach out to these lapsed donors and start a new relationship.

Sharing impact stories, keeping your annual reports up to date, and publicly thanking donors are other ways to help with donor retention.

At Donorbox, with useful feedback from our nonprofit partners, we have created a feature that gives you a list of important moments depending on donors’ giving milestones.

donor management

The number next to “moments” shows how many moments are currently ready to be actioned. When clicked, you will see a list of donors, and their respective “moment” to address.

The following events will cause a donor to appear on the Moments list:

  • First-year anniversary – after one year since the donor’s first donation to your nonprofit.
  • Cancel recurring donation – when a donor cancels their recurring donation.
  • First-time Donation – when a donor gives for the first time to your nonprofit.
  • Change of recurring donation amount to a higher amount than before.

4. Save time and improve your efficiency

Streamlining your nonprofit’s processes in nonprofit donor management is going to free up a lot of your time. Ask yourself how much time you are spending right now keeping track of donor data through spreadsheets, paper files, and other methods?

Imagine if all of that was more automated and was all in one place where you didn’t have to search for file names or other random documents. That would save you so much time and you would have customer support along the way to answer any questions or help with hiccups.

A donor database can also:

  1. Track fundraising events data – purchasers, sold tickets, and donations made on the online event page.
  2. Store all of your email marketing, newsletter, and peer-to-peer fundraising information in one place so you don’t have to track it all separately.
  3. Remove the need for IT resources.
  4. Much more!

What is Donor Management Software?

Donor management software is a type of software that helps nonprofit organizations track, retain and engage donors at scale. With donor management software, nonprofits can easily collect, analyze and utilize donor information within seconds.

With a powerful donor management software like Donorbox, you can easily record all your donor communications effortlessly, within donor profiles. To drive strong donor engagement, you can even integrate our donor management software with Salesforce, Zapier, and Mailchimp in a jiffy. Also, your donors get dedicated accounts where they can log in and manage their donation plans and donation receipts, and repeat donations on the go.

Some prominent and widely used features include:

  • Tracking donor communications
  • Capture donor moments (Get important alerts)
  • Manage donor database with advanced filters
  • Send personalized emails instantly

What to Look For in Donor Management Software

donor management

1. Ability to create custom donor profiles

Custom donor profiles are essentially pages for each of your donors or volunteers with their giving history, communication history, volunteering history, event attendance history, and more.

Donor profiles are important because they help you engage with your donors on a deeper level, help you know exactly HOW donors like to give, and help you gain other valuable information about their donor potential. These profiles will be handy when you need to segment your donors and want to run reports on a specific set of data.

2. Donor segmentation

Donor segmentation is important because it –

  1. Helps you communicate with donors more effectively by avoiding generic messaging that is not targeted to them specifically and
  2. Saves time and energy through easily accessing information about donors’ financial resources, helps you determine where certain donors like being reached, and helps your nonprofit organization address those who are more directly involved in the work you do, improving those interactions.

Good nonprofit donor management software will have opportunities for you to pull reports if you are looking for specific donors. For example, you may want to see how many donors showed interest in your last fundraising campaign online. Your donor management system should have a filter for that. It should take you only a few moments to get a list of donors who gave to the campaign. With this data, you can reach out to them to thank them over the phone or find the ones with the highest donation amounts to make a more personalized appeal for an upcoming event.

Whatever be the reason for segmentation, your nonprofit can highly benefit from this piece of data.

3. Task management and reminders

Everyone needs help remembering tasks from time to time, especially those juggling the responsibility of nonprofit management. When considering nonprofit donor management software, it is important for your team to easily assign tasks, set reminders for tasks, and check off completed tasks so you are all on the same page.

Tools like Trello and Asana offer great task management resources, with free plans for your team!

However, if a donor management software you are already paying for has task management capabilities, it’s important to keep as much information there as possible.

4. Email campaign management

Email marketing can help grow your nonprofit and tell compelling stories, keeping your donors engaged, both of which are incredibly important for nonprofits.

You need to look for email campaign management that allows you to customize your message as much as possible.

If you have segmented your donors, maybe there are emails you will send only to a certain age group, people who live in a certain geographical area, or those who have an interest in a particular type of campaign.

Resources like MailChimp could be options for your nonprofit, with monthly plans starting at around $9.99. Try to find a donor management software platform that offers integration with resources like MailChimp. That way, you can easily get set up and don’t have to worry about your donor data being available in a separate place.

5. Third-party integrations

You are aiming to make life simpler, obviously, and if you are finding separate donor management software and options to help streamline each tool, that is not helpful! Instead, find a “one-stop-shop” so to speak–a donor management software that also doubles as an online fundraising solution. It should let you easily embed donation forms on your website and as donors make donations, the donor information should automatically get stored in the donor management database. See, how simple it is!

Not just that, your donor management software should also let you integrate with Salesforce and Zapier to automate most tasks and make analytics and creating reports an absolute breeze.

Donorbox lets you embed its recurring donation forms on website builders like Squarespace, Wix, WordPress, Weebly, and more.

Your donors might be more comfortable with digital wallet payment options than traditional card or bank payments. Again, a certain range of your donors might prefer bank transfers. In that case, you need to ensure your donor management software integrates seamlessly with all these options – Google Pay, Apple Pay, Venmo, Mercado Pago, PayPal, direct debit payment options (Bacs, Canadian PADs), credit/debit cards, etc.

Donor Management Best Practices

Now that you know what tools to look for in donor tracking and to help cultivate donor relationship management, let’s dive into some of the best practices for using the tools provided by donor management software to engage with donors.

1. Personalize donor communication

Use the tools provided by nonprofit donor management software to engage with the donors regarding their interests.

If they have expressed interest in events, put them on your email marketing list for events.

If they have expressed interest in volunteering with a specific program your nonprofit offers to the community, send updates about the particular program. Keep good notes about your donors and communicate accordingly.

Personalize every communication piece you send to or use with your donors, including fundraising scripts, appeal letters or emails, thank you letters, and more. Train your volunteers and staff to know how to deal with specific groups of donors and the ways to inspire them to give.

2. Thank donors

No one likes their work or contributions to go unnoticed. Create a plan for your team when thanking donors.

Assign one person in the organization the task of thanking anyone who gives in-kind gifts.

Assign another individual the task of thanking those who give $50 or less through thank you notes or other methods. And so forth.

For the donors that give more, provide special benefits when it comes to your fundraising events. Do they get into the event early? Do they get a special swag bag with marketing materials from your nonprofit? Have your board members make a call to personally thank them. Get creative and have a plan.

Remember your approach should be targeted and personalized to all your donors, irrespective of the donation amount.

3. Keep donors updated

If you are not keeping your donors updated on your programs, impact, success stories, community engagement, and annual reports, they will leave. Send them updates from online campaigns they’ve donated to. Make the updates regular. Choose software that lets you add updates and images directly to the campaign, such as the one shown below. It helps visitors and campaign donors check all updates in one place.

donor management best practices

Encourage them to sign up for newsletters. If your donors prefer contact through mail, send out physical quarterly reports. For bigger donors, email and mail annual reports with fiscal information easily accessible.

Also, don’t be afraid to ask your donors for help in other ways. Are you opening a thrift store to help raise more funds for your organization? Ask your donors to come and volunteer at your grand opening.

Are you having a ribbon-cutting ceremony for a new location or building your nonprofit is adding? Ask your donors to attend.

The more updated and engaged they are, the more they will continue to contribute.

4. Keep asking for donations

No one can read minds, not even faithful donors. If you don’t ask for what you need, how are people supposed to know you need it?

Keep a running list of needs for your organization and update donors frequently. Even if it is something small like hand soap or coffee for the breakroom, ask.

Are you at the year’s end and in need of $10,000 to meet your annual budget? Reach out to your biggest donors via email, phone, letter, or another method and ask.

Pro tip: While asking for donations, especially a significant amount, keep the case statement handy. It helps your donors get a level of transparency and you explain about your nonprofit’s cause, vision, impact, and immediate goals.

5. Feature donors

Who does not like for others to know about the good work they are doing? Unless your donors have specifically asked to remain anonymous, they would likely appreciate public thanks.

Consider including a donor spotlight in your monthly newsletter. Include information about why the donor got involved, how long they have worked with you, and what keeps them coming back.

Also, consider adding a donor spotlight to your social media schedule. Perhaps you thank a bimonthly, monthly, or weekly.

Pro tip: Add a donor wall to your website or fundraising page. A donor wall, essentially, recognizes each donor publicly, giving you the opportunity to instantly acknowledge their contribution and their participation in your work. Check this example below for a better understanding.

6. Involve donors in the fundraising

Yes, your best supporters would love this opportunity. Think of a donor who lives in the community and often offers help with volunteering and makes a donation to help you reach your goals. Details like this stored in your donor management software will help you reach out to these people easily.

Now, explain to them how peer-to-peer fundraising can help you boost donations and multiply the impact. It doesn’t even have to be complicated and hard. If your donor management software doubles as a fundraising software, you should definitely have this option in it. With Donorbox, that is the case. Also, you can just toggle a switch to create a peer-to-peer campaign and then, invite your donors from the tool. They’ll receive an email and will be guided on the tool to create and customize their own fundraising pages.

Your donors will feel included in the mission, they’ll be more involved and engaged, and would love the fact that they’re helping you create a bigger impact. Check this example here. The fundraiser has helped the nonprofit successfully raise over $1000 in donations while definitely getting them new donors as well. Now, imagine involving 10 such donors. You’d easily raise $10,000 of more donations or so.

7. Spot opportunities in the data

Where did your donors receive inspiration to get involved with your work? Was it a personal experience? Or just an affinity for your work?

A nonprofit donor management software can help you store this key information and determine how to better secure other donors.

Not only can you spot information on donors, but you might also notice through data how you can provide more inclusive options for donors.

Over to You

Now that you know what to look for in donor management software, it’s time to search for one that works for you and your team.

With effective donor management, your nonprofit will survive, thrive, and achieve its goals.

This is essential in saving time, energy, and money. And, it can help you relate to donors better, increase donor retention, and help you develop closer, more meaningful relationships with donors.

Donorbox helps nonprofits of all types with a simple and effective donor management system. But that is not all. It’s an all-in-one, simple-to-use online fundraising platform that includes features like Crowdfunding, Peer-to-Peer fundraising, Text-to-Give, Recurring Donation Forms, Customizable Donation Pages, Memberships, Events, and more. Learn more here.

If your nonprofit is looking for ways to scale its fundraising potential, Donorbox Premium is here with expert fundraising coaching, high-performance tools, and priority support.

Get tips and resources on managing your donors better and running your nonprofit more effectively on our Nonprofit Blog.

Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.

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