What Is a CRM and Why Does Your Nonprofit Need One?

8 June 2023

by Leigh Brown Perkins

If you have been asking yourself, “What is a CRM?” and “Does my nonprofit really need one?”, the answers are straightforward. CRM stands for “customer relationship management,” and is often called “constituent relationship management” when used in a nonprofit or educational context. And, yes, your nonprofit probably needs one.

A CRM is a system that manages and optimises information related to current or prospective clients or donors, including contact information, interactions, personal and behavioural data, and communications. In turn, customer or constituent data in the CRM can help any size organisation develop strategic insights and create customised reporting with the goal of increased revenue and improved customer experience.

A CRM stores and segments customer and prospect data in one centralised location, making it easy for anyone in any department—from the executive team to customer service—to access and update essential client information.

What Does a CRM System Do?

A highly efficient evolution of the traditional customer database, a CRM system can do so much more than keep your address book updated. A CRM system is a technology solution that stores historical and current data related to your entire customer pipeline—all active, past, and prospective clients.

An advanced CRM software system is multifaceted, but its central purpose is to track every outbound communication—phone calls, emails, meetings, letters, and proposals—and every inbound response from constituents, such as purchases, donations, attendance at events, engagement, and correspondence. Most CRM systems today are cloud-based and scalable to grow as your organisation expands.

Features That a CRM Offers

CRM capabilities are designed to be practical and specific for your industry or goals, but there are a few features that a CRM offers to every user.

  • Centralised database: A CRM organises and tracks your contacts, and anyone with access to the platform can update, search, and use customer lead information and interactions
  • Automation: You can set rules for scheduling email blasts, payment reminders, and follow-up calls
  • Personalisation: Communicate with clients based on their unique interests or preferences (no phone calls before noon, scratch golfer, serves on the hospital board) and detailed past with your organisation (major gifts, customer service tickets, referrals)

For a nonprofit organisation requiring more specialised database functions, a CRM system purpose-built for the needs of an organisation like yours can address the challenges common to fundraisers and executive teams. Data from the inbound-outbound interaction in the nonprofit CRM can guide fundraisers to identify likely supporters for a new campaign. It can help nonprofit leaders create reports to identify what motivated donors in the past, manage the advancement team’s portfolios, and make smarter strategy decisions based on constituent analytics and predictive modelling.

CRM software for nonprofits also can help nonprofit executives and fundraisers evaluate and manage:

  • Campaign progress
  • Automated recurring gifts
  • Duplicate records
  • Donor participation by metrics such as region or age
  • Fundraising goals
  • Cultivation and stewardship process
  • Donation receipts
  • Gift shop pricing
  • Volunteer management
  • Automated processing of payments and pledges
  • Staff performance
  • Integration with digital platforms (accounting software, social media)

Additional features are also available for nonprofit organisations: mobile CRM, talk-to-text, data health services, email marketing, and event planning.

Advantages of Using CRM Software

What are the benefits to supporters or donors when your organisation adopts CRM software? They will receive only the information that’s relevant to them and they will receive it when and how they prefer. For philanthropic organisations, the advantage of using CRM software for nonprofits is similar to the benefits gained by for-profit companies: focusing your team’s attention on the mission and the supporter, rather than administrative tasks.

The bottom line: a CRM built for nonprofits will help you do more social good, improving both operations and outcomes.

Donor Retention

Nonprofits grow when they build loyalty to their cause. To connect supporters to your cause, in-depth analytics tools in a CRM system can help fundraisers and development staff identify donor churn so they can address the drop-off points.

Insights in hand, fundraisers can automate tasks proven to boost donor loyalty:

  • Thank-you letters
  • Invitations to lapsed supporters
  • Birthday greetings
  • Surveys
  • Volunteer recognition

Too often these touchpoints are dependent on the memory of a single employee rather than an automated workflow.

Greater Efficiency

A CRM system streamlines data, reporting, and administrative processes such as manual data entry and appointment setting, freeing up staff to do more important work. Additional efficiencies include tracking key metrics in real time and automating payments.

Increase in Fundraising Revenue

A CRM system provides fundraisers full visibility into which activities and contacts are most profitable. Data from this 360-degree view of the donor cycle informs projections and campaign strategy. A CRM system also can help advancement specialists identify and connect with the ideal donor, which can reduce the time to close and provide referral opportunities.

Increase in Forecasting Accuracy

Gartner reports that only 45% of sales leaders and sellers have high confidence in their forecasting accuracy. When a fundraising team uses a CRM system with high-quality data and is motivated to use its tools regularly to track customer interactions, the accuracy of reports increases—and so does confidence. Adding predictive modelling and machine learning to a CRM system delivers reports with even more detailed insights.

Better Donor Experience

Qualtrics reports that 94% of consumers are likely to recommend an organisation if they have a very good customer experience. Paying close attention to a donor’s needs and preferences pays off in loyalty, recommendations, and revenue. A CRM system can do much of that work automatically. It can provide insights about past activities and predict the best approach to keeping each supporter informed and enthused about your organisation.