Editor’s note: A few weeks back we led a panel discussion on how to choose a donor management system with Eric Leland, Robert Weiner, and our own Karen Graham. The webinar was so popular and the questions so good that we couldn’t get to everything in the hour. But we didn’t want your questions to go unanswered. Our panelists split up the remaining questions and offer their answers.

Our second installation comes from Robert Weiner, a longtime nonprofit technology consultant and a good friend of Idealware’s since the the beginning. He has worked with hundreds of clients to set up donor management systems and is deeply involved in numerous organizations that help nonprofits manage their data and technology more effectively.

If your organization hasn’t done much fundraising in the past, is it prudent to start with a donor management system or better to start with spreadsheets and such?

I am 99% opposed to using spreadsheets. The exceptions are organizations that have very few donors, don’t seek or get multiple gifts or grants from the same source, and don’t need to track relationships between constituents. It would also be ideal if they don’t need to track multiple addresses for constituents. While it’s possible to work around each of these issues, it’s seldom worth it. Spreadsheets are delicate and grow like weeds. One wrong click and poof — no data. See my article “Back Away From That Spreadsheet.”

For very small NPOs (500 – 1000 members), can a DMS also function as a membership database if you are moving from a spreadsheet-based approach to tracking members and donors?

Yes, many donor management systems can track simple memberships, just like they track annual gifts. You’ll need to set up some codes to track your membership levels (if you have more than one), renewal dates, and any benefits the members should get (or might decline).

For a tiny organization with a budget of $25,000, the rule of thumb would indicate that we should plan to spend $100 a year on a DMS, which would mean we shouldn’t get anything, even if it is warranted by our needs. Correct?

Your needs must come first. The rule of thumb is just a starting point for thinking about your budget. Don’t cut off your ability to track your donors to comply with a made-up rule. Also, keep in mind that you might (might) be able to find a DMS for $100/year. Just remember that they might be “free like a puppy.” See Laura Quinn’s and Michelle Murrain’s Idealware blog posts about the true costs of free software: