Do You Need New Donor Management Software?

New donor management software will improve your life, solve all your organization’s problems and make all your goals a reality. Right? And it comes with prime waterfront property in the Everglades. This last sentence is only slightly less true than the first, but we take it as common wisdom. In fact, many non-profits change systems when they don’t need to, for the wrong reasons, or in an ineffective manner—and sometimes all of the above!

The truth is, new software may not make anything better—in fact, it could make things worse. While it’s easy to get caught up in all the features of a new system, the only guarantee is that moving to a new system will cost you money and staff time.

Choosing appropriate software is fraught with issues. Converting data and re-tooling business practices is difficult and time-consuming. People resist change and adapt slowly, if at all. And you have to manage it all while still tending to your constituents.

What’s that you say? Your software salesperson didn’t mention this? That’s why they call it selling. A software salesman won’t tell you about the challenges of implementation anymore than a car salesman will remind you about depreciation. A new software system isn’t designed to address people issues, company culture, business practices and politics, but many people ignore those issues and blame the system instead.

So what’s a development director to do? The good news is you could be sitting on the solution and not even know it. We’ll take a look at whether the system you have could, in fact, work fine for your needs. But first, let’s consider what you might need in a fundraising system.

What Do You Need Your Software to Do? (And Why Isn’t It Doing It Now?)

Fundraisers often feel stymied by their software. They spend hours putting in all the necessary data only to spend additional hours trying to get it back out in a logical format. The temptation is to look over the fence for greener grass. But before you make that leap, it’s good to take a step back and review what you need your fundraising software to do for you. Fundamentally, it should support implementing and measuring your fundraising strategies, such as direct mail, major donor cultivation and email outreach. It should help by:

• Easily segmenting your prospect pool so that you can target each prospective donor for the appropriate strategy.
• Facilitating your prospect communication and cultivation activities of each strategy—like sending direct mail pieces, recording major donor cultivation activities, etc.
• Allowing you to quickly record resulting donations and turn around acknowledgments.
• Providing reports that allow you to measure the efficacy of each of your strategies so you can continue what’s working and modify what isn’t.

Think through how well your current system supports both your workaday and strategic needs. Where are you struggling? What can’t you do? What takes up most of your time? Consider your strategic plans for the next three to five years. Does your current software have the flexibility to serve those strategies—or at least adapt to them?

When assessing shortcomings, it’s best to be specific. What are the exact tasks you’re unable to do, or that require great effort? Which are the particular prospect segments, appeals or reports that are especially difficult to generate? How committed are you to anticipated strategic adaptations or tactics? Are these wishes on a whiteboard (e.g. “We should be coordinating email and direct mail, providing donor tax letters online...”) or have you investigated and committed to these items in a planning process? Often people are tempted by software features they’ll never use, or that are widely available and improved by the time they are in a position to use them.

Signs That a New System Won’t Cure What Ails You

In truth, most off-the-shelf fundraising software packages have many of the same abilities and features. When the software doesn’t seem to be working, the reasons are often a result of one or more of the following:

• Business practices are inconsistent, either currently or historically, so information is spread all over the system, making it difficult to gather accurate prospect lists.
• Codes in the system don’t align with current strategies, so useful reporting is challenging, if not impossible.
• Commitment to staff training has been sporadic or absent, so no one knows how to use the system.
• The staff sharing the system or departments requesting data from it do not have a basic trust of the system—or each other!

If any of these sound familiar, there’s no reason to think they will change when new software is implemented. Often, many of the benefits people realize from switching software don’t have to do with the new software itself, but the process of implementation. During implementation, obsolete data is left behind and the remaining information is logically organized. Business practices are examined, streamlined and documented. Staffs are properly trained.

However, all this could be accomplished without the cost and expense of switching software. It’s like living in a house overrun with too much stuff, and deciding to buy a new one. If your staff doesn’t have a shared vision—if they aren’t organized now, if nothing’s documented in your current system and training never sticks—new software shouldn’t be the first thing on your “Solutions” list.

Signs That a New System Would be Helpful

However, if you’ve organized and streamlined your existing processes and system, and still find it falling short of supporting your strategies, it could be time to start looking.

Some organizations simply outgrow their software. You could be limited by the reporting functions needed to communicate effectively with your accounting department, your board members, or simply the amount and type of data your system will hold. Another common scenario is an organization that has grown in sophistication and size, reaching a point of diminishing returns. If you cannot serve your longstanding donors with the same personal and immediate acknowledgment to which they have grown accustomed, you could lose their support.

Making sure your fundraising database grows with your organization can help keep communication effective, efficient and transparent where necessary. If you have expanded your fundraising staff from a small group with one person managing your database to a larger team with multiple users doing everything from data entry to strategic reporting, it might be time to evaluate if your fundraising software is user-friendly for all of those who work with it.

Another reason to consider switching software is to share donor information and campaign strategies across regional nonprofit offices or an entire system, such as a hospital system, university or national organization with local chapters. For instance, Allina Health System saw its philanthropic revenue double in a single year through a strategic alignment of fundraising strategies and operations. Before this effort, Allina was unknowingly asking prospects for a fraction of what they could truly give. By identifying high-capacity prospects using data from all its regional offices and matching their interests to needs in the system, Allina developed deeper relationships with its donors and unlocked greater giving potential, resulting in stellar returns for the system.

How Much Will Switching Cost?

So if a new system might be helpful, is it likely to be helpful enough to be worth the expense of switching? You can only know by detailing out the benefits and the costs.

There are two major costs—the software itself and the associated services. On the software side, you have the license fees and setup fees from the vendor. These are usually the most obvious costs, but they’re unlikely to be the only ones. You’ll need to move the data from your old system to your new one, customize your new system with the appropriate fields, reports and letters, evaluate your business practices to see if they’ll need to be changed to accommodate the new system, train your staff, and help them adapt to the change. As a rule of thumb, assume that the services to implement the system will cost about the same amount as the software itself.

Making the Choice

Ultimately the decision to switch to a new donor management system comes down to an analysis of the return on investment. What can’t you do right now that you’d like to do? Write up a clear “wish list” to define your needs. When you review this list, is it clear that new software is the answer? Or would revamping your processes help as much or more? Are the problems you’ll solve and the benefits you gain worth the trouble and expense of switching? Sometimes the answer is a resounding “Absolutely!” More often, it’s a qualified “Yes, if... .”

The most important thing is to avoid the temptation to assume that the grass will be greener with another system, or to be seduced by shiny new features that you don’t really need. A new system could in fact bring you the more advanced features you need to expand your fundraising efforts. But it’s also possible that it will just be a costly road to get you back to the same troubles you started with.

Does a new system make sense? Or is it the equivalent of that prime waterfront property in the Everglades? You’ll need to assess the benefits and the costs for yourself to know for sure.

If you’ve decided you do need new software, read Keith Heller's second installment in this three-part series, 'Four Principles for Choosing Donor Management Software.' Read more> [2]


Keith Heller is the founder and Principal of Heller Consulting, a fundraising technology and development operations consulting firm specializing in Raiser's Edge. Since 1996 Heller Consulting has helped over 600 organizations streamline their existing donor management systems or implement new ones. Keith frequently speaks at local, regional and national conferences for nonprofit professionals.