Nonprofit Donor Management | Tips & Best Practices (2021)

Nonprofit Donor Management | Tips & Best Practices (2021)

Nonprofit Donor Management

When you hear of donor management, you are probably thinking 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, tracking various donor details and interactions. Although it sounds simple, donor management requires paying close attention to your donors’ activity, habits, and experience. 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.

Nonprofit Donor Management

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.

What is good donor management?

Donor management involves good communications, for example, thanking and acknowledging your donors and remembering important moments of your donors, such as their birthdays or their first-donation anniversary.

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 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 age, race, location, and areas of interest (among other things).

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 to 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

2. Improved 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, your 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 set reminders about important life events, when the recurring donation period resets, and when someone makes any changes in a donor’s giving.

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.

Nonprofit Donor Management

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!

The average donor retention rate for nonprofits is just around 40%-45%. 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.

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 notifies you when your donors change and cancel their recurring donation plan.

Nonprofit Donor Management tips

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 contact.

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 results of fundraising events in real-time so you spend more time getting to know donors than tracking data
  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 and Mailchimp in a jiffy.

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

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 helps you gain other valuable information about their donor potential.

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 donor’s 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.

If, for example, you want to partner with local churches on a campaign, with donor segmentation, you should be able to enter “faith-based organization” or whatever you have programmed into your software for churches, choose only those who have been active within a year, and ask for any other specific information. Automatically, a spreadsheet with the relevant data is available to you.

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. Nonprofit Donor Management best practices

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 a specific interest in the content of your email.

Resources like Emma or 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.

5. Third-party integrations

If you look back at the section on tools that make online giving easy, there is quite a list!

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 will allow you to integrate landing pages, donation buttons, crowdfunding pages, and other important tools into your already existing site.

If you use SquareSpace, Wix, or WordPress, are you finding software that will allow the integration of tools to these sites?

If your donors use Google Pay, Apple Pay, or prefer other forms of payment, consider whether the nonprofit donor management software you are investing in allows integration of all platforms.

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.

Donor Management Best Practices

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 regarding 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.

2. Thank donors

No one likes their work or contributions to go unnoticed. Create a plan for your team when thanking donors. 46% of donors leave your nonprofit because they are not thanked.

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? Get creative and have a plan.

3. Keep donors updated and involved

53% of donors leave your nonprofit because of a lack of communication.

If you are not keeping your donors updated on your programs, success stories, community engagement, and annual reports, they will leave.

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 involved 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 needing $10,000 to meet your annual budget? Reach out to your biggest donors via email, phone, letter, or another method and ask.

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.

6. 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.

Donor Management Best Practices

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 as you develop closer, more meaningful relationships with donors.

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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