Why do we need Fundraising Software? By Cascade Data Solutions We have very few donors. We can manage a list in Excel. We have QuickBooks for Nonprofits. We don t have the funds in our budget to purchase software. These are just a few of the common objections I ve heard as to why small nonprofit organizations delay purchasing, or refuse to purchase, fundraising software. If you have ever tried to convince your board that you need something more efficient to track donor relationships, I m sure you have heard some of these same objections. If you are on a board, you may have made some of these objections yourself. The purpose of this article is to layout in detail why every nonprofit, no matter how small, should have fundraising software in place. It doesn t matter how small you are, it doesn t matter that 99% of your donations are from grants or government funding. Donors are the foundation upon which every nonprofit stands. The stronger and broader that foundation, the more stable and effective a nonprofit becomes. First we need to clarify what fundraising entails and eliminate some misconceptions that exist. Fundraising is about one thing; building relationships with people. You can send out mailings and you can have gala dinners and golf tournaments, but those things are not actually about asking people for money, or even raising money. Sure in many cases they can be avenues for generating funds, but their true main purpose is to introduce new potential donors to your mission. Ask yourself why people come to your golf tournament. They like golf. Sure. But there are many opportunities to enjoy their love of golf for less money. They are there because at some basic level they believe in your cause. Some more than others, but they all believe your nonprofit is worth supporting. This brings us back to what fundraising is truly about; building relationships with people who believe in your mission and are willing to help support it. This support can be financial, it can be through volunteering, participating on your board, or any other support that helps you further your mission. I ve spoken to many nonprofits over the years whose fundraising consisted of three or four significant events into which they put a huge amount of work. Those events, along with a few grants and a government program or two, kept them going. They had access to hundreds, perhaps thousands of donors, but they didn t have fundraising software. They ended up with multiple lists containing duplicate records, little or no history of giving, and in some cases simply paper records showing this person and that person gave at one point or another. Then all of a sudden, something serious happened. They lost a government grant or some other major source of revenue. They were sent scrambling for funds. They cut services. They cut staff members. Clients who relied on them heavily suffered significant hardship. The sad thing is all of these problems, with a little investment and a little forethought, could have been avoided. Let s look at a few of the normal objections.
We have very few donors. You have very few donors, but is that the way you want it to remain? With fundraising software you are able to document every new contact your organization makes. Every person introduced to your nonprofit is a potential donor. Building a wide base of people who believe in what you do and who are willing to support you is your goal. Every person who shows the mildest interest in your organization needs to be pursued. While your list of prospects grows, you begin to include them in your normal correspondence, you invite them to your open house, or you invite them to your annual gala. In some cases people will respond, either by attending or even by sending you a small gift. These are indications that you have found a new person that believes in your mission and is willing to help. In many cases, if not most cases, you will not receive any response. Believe it or not, this is equally vital information. These may be good and wonderful people, but they don t believe in what you do enough to help you. This process is giving you the information necessary to focus your efforts on those that will generate success in reaching your fundraising goals. It is also giving you the information necessary to keep you from wasting time on those that aren t going to support you. Fundraising is only hard if you are constantly asking people for donations who don t believe in your cause. How much easier would fundraising be if the only people you had to approach were people that have already expressed interest in your mission? Fundraising software helps you track potential donors and build relationships with them. Some of these potential donors will become your major givers or will someday respond to your planned giving appeal. Organizations that say we only have a few donors have no idea of their potential. If you want to have just a few donors then you are right; you have no need for fundraising software. We can manage our donors in Excel or Access. Most small nonprofits start by managing their fundraising in Excel. Excel is handy for generating lists and doing complex calculations. Generally you start with one spreadsheet to keep track of everyone you want to send your newsletter. Then you create a spreadsheet to track everyone that attended your event. Then you create a spreadsheet that lists all of your donors and their donations. This usually continues until it becomes unmanageable and your new development director creates a new master spreadsheet. You probably see where this is going. Spreadsheets are a good place to start, but to truly grow your donor base you need to start documenting and cultivating relationships. Trying to use Excel for anything beyond the most basic needs begins to look frighteningly like programming. Using Access takes you firmly forward into the realm of programming. This is rarely a place you want to go as a small nonprofit with a nonexistent IT department. What you need is a solution that has been already developed, a solution that has documentation, a solution with an organization backing it that works with many nonprofits that can support you. This usually has a cost associated with it, but this cost is known and can be budgeted for. Designing your own fundraising database system leaves you without any support if the person who designed it leaves. It also wastes a great deal of time and resources. Costs associated with in-house
software development are not always obvious (your development director was working on your Access database instead of securing a major donation). The board that pushes this solution for managing donors is sabotaging the very nonprofit they say they believe in. Excel and Access allow you to manage your donors with little financial investment until that grant, donor, or board member comes along that understands how important having a broad foundation of donors is and is willing to help fund the purchase of software. We have QuickBooks for Nonprofit. This is a common board objection. We spent an extra $100 to get the nonprofit version of QuickBooks. Why do we need fundraising software? The misconception here is that QuickBooks is a valid substitute for fundraising software. In fact, QuickBooks is accounting software designed to mange for-profit organizations. The nonprofit version changes some terminology, but really doesn t have anything to do with donor relationships. Yes, you can keep track of donors as customers and keep track of all their donations. Yes, it will generate a thank you letter. But it is not fundraising software. It is little better than a spreadsheet. For a resource development person, or for an executive director, it is basically useless for managing relationships with donors. Is the accountant in your organization going to be going out and doing in person face to face asks? I don t think so. QuickBooks does little in building donor relationships beyond simply documenting their gifts. It manages the accounting very well, as long as your accountant has an understanding on how to mold its for-profit account design around the needs of a nonprofit. It is not fundraising software and should never be considered such. We don t have the funds in our budget to purchase software. This is the best objection there is to purchasing fundraising software. This is the most positive. They are acknowledging with this statement that fundraising software has value and is something they need. They just can t afford it at this time. (Unless they say we don t have room in our budget for that because it is a waste of money. Then make sure they read this article, or any of the many that exist about the importance of fundraising software.) The way to move forward from here is to develop a fundraising plan to raise the money necessary to purchase software. Very often it can be difficult to find donors that are willing to provide a nonprofit with the funds to purchase administrative items. People want their donations to go directly to those in need. They don t want their money wasted on paying your salary or buying a desk for your office. This perception was created by the fundraising industry s own competitiveness, We only spend ten percent of our donations on administrative costs. As soon as one nonprofit advertises this, they have effectively slandered all other competing nonprofits that have higher administrative costs. Waste can be reflected in administrative costs, but the reality is that every dollar spent on necessary administrative expenses is more valuable than any money spent towards supporting the mission. If you don t cover your costs you either cease to exist or end up wasting paid labor and possibly volunteer labor because you don t have the proper tools. It is the responsibility of the board and the executive director to make sure this sort of waste doesn t occur. When you build an ask in your
effort to purchase software, whether you are going to individual donors or applying for a grant, you need to focus on how fundraising software helps you be more efficient, effective, and better able to raise money for your mission. This harks back to the old proverb, Give a man a fish and he will eat for a day, teach him to fish and he will eat for a lifetime. The donors that contribute to purchasing fundraising software are effectively buying you a fishing pole instead of giving you a fish. How does fundraising software help a nonprofit be more efficient & effective? It saves you time. Fundraising software helps you generate the mass of correspondence that goes along with a fundraising program. It generates thank you letters, reminders for outstanding pledges, and tax receipts. It allows you to build solicitation letters that include previous giving information, making them more personal and more effective. It makes it easy to generate lists of givers that meet certain criteria such as everyone who receives your newsletter or a listing of memberships that have expired and need renewal notices sent. Fundraising software makes it simple to acknowledge your donors for their giving in your newsletter or in your year-end report. It generates a wide variety of reports quickly and easily, reports you otherwise would have had to manually build in Excel or some other system. It allows for generating sets of labels when you need them or allows you to email groups of donors based on their interests and current events that affect them. All of these things take up a significant amount of time without fundraising software. That time you save can be spent focusing on building closer relationships with your donors. It exposes fundraising opportunities. Fundraising software allows you to dial-in on which donors should receive more focus, or which ones need to be contacted that might have been missed or neglected. It will also show you trends in giving that you might not see otherwise; such as they only give at a certain time during the year, or their gifts have been increasing every year. Which donor should you contact more often: one that has been contacted ten times in the last few years and has never responded, or the one that has been contacted three times in the last few years and donated each time? Time is a tight commodity for development staff. Without fundraising software they are likely to miss important contacts or spend time in areas that might seem right, not realizing that they are missing huge opportunities. I spoke to one nonprofit the other day about a donor that gave $4,000 every year around the same time. It wasn t a pledge. It was just a general gift. One year the donor forgot to give, and the nonprofit didn t notice. Later that year the donor approached a rather embarrassed development person and apologized that she had forgotten and wrote her a check. If this donor hadn t come forward they would have lost a significant donation and potentially lost an important donor. This was likely just one of many opportunities they were missing because they were not using fundraising software.
It builds closer relationships with your donors. This is one of the key components of fundraising software. The relationship you have with your donors is your lifeblood as a nonprofit. This relationship needs to be respected, nurtured, and given an opportunity to flourish. Fundraising software provides you with the tools needed to manage this. First and foremost, it allows you to document who your donors are. This may sound obvious, but many nonprofits have long lists of names in Excel and still don t have a clue who their donors are. They don t know that Jim Smith gives every year after he gets his tax return check. They don t know that Jenny Johnson asked their previous development director to only contact her in December regarding a donation. They don t remember that Sarah Jones wants desperately to support their new reading program (even though at the opening of the reading room she mentioned how important this was to her). They don t know that ten percent of their donors from last year haven t donated yet this year. Fundraising software documents when donors give, how much they give, and how often. It enables you to connect donors to the programs you provide that are most important to them. You can note how they want to be solicited and what they can afford to give. It helps you motivate donors and keep them involved through mailings and newsletters. It allows you to treat them with the respect they deserve through annual tax receipts, prompt thank you letters, and recognition. Also, you can use fundraising software to manage specifically when you contact donors and for what reasons. This sort of professional communication builds strong relationships. Suppose your development director finds a new job after having been with you for a few years. Is a new development director going to be able to pick up those relationships without missing a beat? Or are they going to have to start over and learn about your donor s needs and interests from scratch? Starting over with your donors truly is a waste. These are your donors. Fundraising software allows you to show them how important they are to you. Fundraising is the fundamental underpinning that allows you to continue your mission. There is nothing more important than doing it and doing it in a professional manner. It provides for accountability. Your resource development person made forty-five calls today and visited three potential donors to talk about the needs of your nonprofit. Where do you document those conversations? How do you show the efforts being put into your fundraising? The executive director met with a potential major donor yesterday. Where do you document that meeting? Your board charter stipulates that the board is also responsible for fundraising. How do those efforts get reported back to the board? One of your board members brings in twenty-five new donors in a year and because of this you raise an additional $20,000 in donations. Are the efforts of this board member recognized or are they even noticed? Fundraising software allows you to easily report on your fundraising efforts. It allows you to automatically track solicitors that are associated with donors and report on their performance. Don t you think the board member who worked so hard this year is going to feel a little less enthusiastic next year if no one notices his efforts? How can you manage your fundraising and make decisions about what is working and what isn t without the proper reporting and feedback? Fundraising software gives you this information. If
something needs to be changed, you are going to be able to make that change confidently and without guesswork. It protects your mission s future. A well designed and actively used fundraising database system is the key to your donors and thereby the foundation of your nonprofit. Without your donors you cease to exist. Through that system every piece of information that ties those donors to you will never be forgotten. Through good times and bad, after the loss of executive directors or development directors, that database remains. An interim executive director can quickly pick up the reigns and keep things moving forward. A new development director can immediately contact your major donors and let them know they are still valued. The more a donor feels like they are a part of your organization, the more ownership they take in your success and the more willing they are to help you in whatever way they can. Without fundraising software nonprofits often lose track of donors. They forget about pledges that were made and never collect on them. Thank you letters get missed. Annual tax receipts never get sent. When the stewardship of your donors becomes lax, your donor s faith in your nonprofit declines. No one will continue to donate to an organization they do not believe in or have faith in. Your donors make it possible for you to fulfill your mission, fundraising software allows you to show them how truly important they are. Ok. We need fundraising software. Hopefully at this point you, or your board, no longer question the value of fundraising software. This is just the beginning. Going forward you will have to carefully evaluate the needs of your nonprofit, the types of information you want to track, and how such a system will be implemented. Fundraising software is so important and has such a significant impact on the success of a nonprofit that it must be carefully researched. Once you know what you want from your software you are ready to look at the various options. Match them to your needs first and then to your budget. Although fitting within your budget is important, remember that if it doesn t do what you need the money you spent was wasted. Also make sure you provide for continuing support and training in your budget. If your staff doesn t know how to use the software it won t help you. When you have found one or two solutions that will work for you, talk to other nonprofits using those systems. Find out how the software they have chosen is working for them. Are there bugs in the software? Is support prompt, friendly, and effective? Is it easy to get training? Have they had any successes they attribute to the introduction of fundraising software to their organization? Once you have fundraising software and your staff is trained, you should find going forward that the amount of money you raise will increase every year. It is a fact that nonprofits with a specific fundraising program, supported by fundraising software, consistently raise more money than nonprofits without software.
If you are a nonprofit that is not using fundraising software and is not doing fundraising, I suggest you take a long hard look at your mission and what your plan is to protect that mission. Even if your funding seems stable now, if you are not always working to build a broad foundation of donors that will support you, at some point, some day, you will be faced with seriously hard choices. When that day comes you won t have many options. Fundraising software is necessary for all nonprofits no matter how small. Prove to your donors how important they are to you. Treat them with respect and thank them often for their support. Send them tax receipts, remember their interests, and respect their wishes. Fundraising software will create an aura of professionalism that will give your donors confidence in your organization, confidence in its future, and confidence you value their support.