July 8, 2016

Should You Use a Custom Donor Management System?

Most nonprofits make use of technology to manage donor information, fundraise and collect donations, and track results. However, the technology used varies dramatically, from simple spreadsheets, to robust, all-encompassing, donor management products.

According to data reported in the 2016 Lehman Reports™ study of Donor Management Systems, nonprofit organizations using custom systems and office applications are only about half as satisfied with their solutions, when compared to those using Donor Management Software (DMS) products.

Average satisfaction levels for donor management products are 6.1 on a 10-point scale, modest but unchanged from 2014. In contrast, satisfaction ratings for custom systems and office database applications are just half of that at 3.7 and 3.0, respectively.

These satisfaction ratings are reflected in success metrics. Only 48% of organizations using custom and office database solutions report year-over-year contribution increases, compared to 58% of organizations that are using a DMS product. The rate is even worse for organizations with no solution at all.

Contributions Chart

What’s Behind the Numbers
What accounts for such dramatic differences in satisfaction numbers? Several possibilities come to mind.

First, staying abreast of technological change is a challenge for everyone, but it’s nearly impossible for part-time developers to keep pace. If you’re organization is trying to cement bits and pieces of a solution together, you’re likely missing out on the latest technologies and new feature advances available in the leading software product.

Keep in mind, too, that technological change is exponential. So, “keeping up with the Joneses” is likely to get harder and harder with every passing year.

Second, the online fundraising capabilities that are in greatest demand likely are the very capabilities that are not available in an office database and that are hardest for small, or part-time custom shops to develop. It is challenging even for large product providers who can invest significantly in ongoing development. Going it alone can be a very difficult endeavor.

Finally, it is increasingly important that applications share data to support fundraising and donor engagement, and much of that takes place across online applications. Local databases and most custom systems are simply not up to the task.

What to Do
The simple answer is to consider moving from a local database application or custom system to one of the available donor management products. By doing so, you will gain immediate benefits and will be investing in your own future. Software companies have a great incentive to continue to incorporate new technologies and capabilities in order to compete successfully in the market. Additionally, advanced online capabilities give software companies the greatest competitive edge, so it’s likely that those developments are a high priority.

Plus, you’ll be in very good company.

There is a very clear trend away from home-grown systems toward DMS products, in the market today, with only about 35% of non-profits planning to stay with their home-grown systems.

DMS Retention Chart

Is it time for your organization to make the move to a DMS product? Every organization is different, of course, but it’s becoming more and more clear that if you’re still nursing along a home-grown solution, you are likely to be operating at a competitive disadvantage, and time and market trends are definitely not on your side.

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Tom Lehman
Tom Lehman is president and founder of Lehman Associates, LLC, a strategy and research firm located in Alexandria, VA. Lehman works with nonprofits on technology strategy and with technology providers on market and competitive intelligence. The Lehman Reports™ 2015-16 Donor Management Systems Use and Satisfaction Study is in its third year and is undertaken in collaboration with NTEN. The study gathered information from nearly 1,300 US-based nonprofits on questions. The Lehman Reports series also includes the annual study of Association Management Software (AMS) Use and Satisfaction, and the Association Technology study of use of third-party applications beyond the AMS. More information available at www.LehmanReports.com
Interest Categories: Fundraising
Tags: CRM, donor management