How much should you spend on a CRM?
I get this question a lot "is there a good, low-cost donation management software package for my nonprofit?" I have to admit, I cringe when I hear that, because it means that an organization hasn't thought about the value of a DMS/CRM to them. On the other hand, I also hear "we spent [insert large sum of money here] for our donor database, and have to spend [insert egregiously large sum] each year for maintenance." And I cringe at that, too.
Figuring out how much to spend on a donor management/CRM package seems like rocket science, sometimes. It's like figuring out how much you should spend on your website. I've heard various guidelines bandied about, from some percentage of your annual budget, to something related to how many development staff you have.
One thing is true - the adage "you get what you pay for" is both true, and untrue in this realm. I know, not helpful. In general, the more expensive the software, the more features it has. But, there are several reasons why more expensive doesn't mean better. For one, you can get very powerful software (such as Salesforce.com, CiviCRM, and OrangeLeap) for no cost of acquisition. And their features rival those of expensive packages. But you won't get an implementation of any of those packages in a way that will work for most organizations without significant investment in consultant expertise.
Also, the most expensive packages, even though if they are considered the "gold standard" are overkill for many organizations. I know organizations that have paid an order of magnitude more for their DMS/CRM than they should have. And, frankly, sometimes they are just simply too expensive for what you get. But, on the other hand, some organizations have opted for the cheapest alternative they could find, and they are limping with a package that doesn't suit their needs.
Different organizations are different in what they track, and their dependence upon donations. A very large nonprofit that is primarily funded by grants or government funds needs a very different package to manage their very small numbers of individual donors than a small or medium-sized organization that entirely depends on small donations. And you should think a lot about the value of a DMS/CRM to your organization. How much staff time will it save from the current system? How much easier will it be to follow up with donors? Will it help increase donations?
So, how much should you spend? You should spend what you need to get a DMS/CRM that fits your needs. Finding out how much that is will take some time and research. Sometimes that's going to be more than you think (or would like to spend) and sometimes that's actually going to be less.
Figuring out how much to spend on a donor management/CRM package seems like rocket science, sometimes. It's like figuring out how much you should spend on your website. I've heard various guidelines bandied about, from some percentage of your annual budget, to something related to how many development staff you have.
One thing is true - the adage "you get what you pay for" is both true, and untrue in this realm. I know, not helpful. In general, the more expensive the software, the more features it has. But, there are several reasons why more expensive doesn't mean better. For one, you can get very powerful software (such as Salesforce.com, CiviCRM, and OrangeLeap) for no cost of acquisition. And their features rival those of expensive packages. But you won't get an implementation of any of those packages in a way that will work for most organizations without significant investment in consultant expertise.
Also, the most expensive packages, even though if they are considered the "gold standard" are overkill for many organizations. I know organizations that have paid an order of magnitude more for their DMS/CRM than they should have. And, frankly, sometimes they are just simply too expensive for what you get. But, on the other hand, some organizations have opted for the cheapest alternative they could find, and they are limping with a package that doesn't suit their needs.
Different organizations are different in what they track, and their dependence upon donations. A very large nonprofit that is primarily funded by grants or government funds needs a very different package to manage their very small numbers of individual donors than a small or medium-sized organization that entirely depends on small donations. And you should think a lot about the value of a DMS/CRM to your organization. How much staff time will it save from the current system? How much easier will it be to follow up with donors? Will it help increase donations?
So, how much should you spend? You should spend what you need to get a DMS/CRM that fits your needs. Finding out how much that is will take some time and research. Sometimes that's going to be more than you think (or would like to spend) and sometimes that's actually going to be less.
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2 Comments:
Hey, a topic close to my heart! In fact, I have a post brewing about CRM systems on a shoestring. In the meantime, though, a few thoughts.
I think it's important to distinguish a "fundraising database" from CRM. They're not synonymous to me. CRM implies a lot of support for a bunch of different constituents, while fundraising database implies strong support for fundraising in particular (I would call these donor management systems... and I know far more than anyone would ever want to about the low cost ones, as we're just putting the final touches on a report in this area). While you would hope there were a lot great systems that do both, there's not many. While the three systems you mentioned are certainly all CRMs, only Orange Leap has enough functionality to really be termed a donor management system in my mind. Salesforce, in fact, has very little support at all for fundraising processes out of the box - you need to do a lot of configuration to support them, some quite convoluted.
On one hand, I agree - donor management and CRM are not synonymous, and organizations have to know what level of donation tracking they need. And for sure, Salesforce has no support for fundraising processes out of the box - it's a sales tool. But the SF nonprofit template, as well as CiviCRM do have fairly robust donation tracking tools. Not at the level of OrangeLeap and other packages more dedicated to donor management, but quite enough to fit many nonprofit orgs.
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