In the nonprofit world, most registered charities derive the majority of their funding from donors who are individuals, businesses or foundations. Among them are those who treat their donor database system as critical to their success. Unfortunately, there are a large number of nonprofits who treat their donor database as an afterthought or do not have a donor database system at all.

Why Isn’t a Donor Database Considered An Essential Tool to Success?

If you were to ask a nonprofit why they aren’t using a donor database, you might hear one or more of the following:

  • We don’t know what a donor database can really do
  • We don’t have the manpower to manage it
  • We’re hesitant to invest a portion of our budget
  • We don’t know how it enables effective fundraising
  • We don’t get a lot of funds from individual donors (United Way funding or grants)

This lack of understanding and focus on what a donor database is and can do results in more lost revenue every year due to changing mindset of most donors.

Donors Now View Themselves as Investors!

Please not the italics and exclamation point above. The days of the annual appeal being similar to a never ending ATM are rapidly coming to an end.

Because current and future major donors approach their philanthropic giving as if it were an investment, relationships and communications are critical. A close relationship provides insight and feedback on the results of their investments. This is where the donor database tool comes into play.

RolodexA Donor Database is the Evolution of the Rolodex

Before the days of smart phones, it wasn’t uncommon to refer to a rolodex as being invaluable. Why was that the case?

Those rolodexes contained the names, contact information and perhaps personal tidbits about hundreds, if not thousands of customers, prospects, investors and/or influencers. Every owner of a jam-packed rolodex darn well knew how to use it daily. This daily usage included these two key actions:

  1. The personal information on each card was added to or updated
  2. New cards or contacts were added and old irrelevant ones removed

Why are these previously-astute owners of nonprofit rolodexes so often perplexed with the equally-valuable donor database? Simply stated, most databases are not easy or intuitive enough for rolodex owners to use!

Think how valuable the donor database can be if those former rolodex owners used them as well or better than they did the rolodex. You see, the rolodex could not facilitate communications with or remind you of next steps with or record information important to donors.

Donors Happy and Retained Equals Great Asset

The summary of this post is simple: if the donor database becomes the tool facilitating donor communication and contentment – which enables higher retention and giving – then it is truly one of the greatest, if not the greatest asset of your nonprofit!

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Jay Love

Jay Love

Co-Founder & Chief Relationship Officer at Bloomerang
A 30+ veteran of the nonprofit software industry, Jay Love co-founded Bloomerang in 2012. Prior to Bloomerang, he was the CEO and Co-Founder of eTapestry for 11 years, which at the time was the leading SaaS technology company serving the charity sector. Jay and his team grew the company to more than 10,000 nonprofit clients, charting a decade of record growth. Prior to starting eTapestry, Jay served 14 years as President and CEO of Master Software Corporation. MSC provided a widely used family of database products for the non-profit sector called Fund-Master. He currently serves on the board of the Center on Philanthropy at Indiana University and is the past AFP Ethics Committee Chairman. Jay is also the author of Stay Together: How to Encourage a Lifetime of Donor Loyalty.