A few years ago one my former consulting clients came to me with a question. “My board member is questioning my purchase request for XYZ Nonprofit CRM database and asking why I can’t just use XYZ regular CRM package. How do I let him know we really do need this?!?!”
My client said he had tried to tell him that the other package wouldn’t do all of the nonprofit-specific things he needed his staff to do, but his board member wouldn’t have it. His objections, which I’ve heard way too many times, went like this:
- Isn’t fundraising basically the same as sales?
- Isn’t donor or volunteer tracking the same as customer management?
- Online donations is just a shopping cart right?
- Event planning is basically just webforms right?
The answer, of course, to each of these questions is “Yes, but no.” I talked with my client about these three themes I see that make a nonprofit-centric CRM absolutely necessary.
- Supporter Profiles that Aren’t Company-Centric
Your nonprofit-centric CRM certainly does have many of the characteristics of a for-profit CRM, but the biggest must be the baseline view of a customer profile. It’s this one big difference that makes configuring a for-profit database for nonprofit use extremely difficult. In a standard for-profit CRM database the profile hierarchy starts with the ‘Company’ record at the top level. Individuals are then added as contacts associated with that ‘Company’. In a nonprofit database an individual must be a top-level entity. This is important as the direct relationship of the nonprofit can be either to a company (vendor, Foundation, or company) or an individual (family member, donor, volunteer, or event participant) whereas for a for-profit business the standard relationship component is business-to-business (B2B).
The ability to track the interwoven relationships that can happen at a nonprofit means that basic characteristic is absolutely critical. Think of this scenario:
- A high net worth individual donates to a nonprofit during an event they attended
- This same individual, along with their spouse, are members of the organizations program at the top level group
- The company the individual is CEO of donates in-kind product and services at a low-level sponsorship tier
- Now an event for the organization comes up and an employee at the donors company asks for sponsorship benefits above their sponsorship tier
- Typical answer would be to tell the sponsor no, but a nonprofit-centric database lets the organization employee realizes there is a personal relationship that affects the business sponsorship and a compromise may be best to work out in order to maintain the relationship with the high value donor.
Without the unique relationship tags that nonprofit CRM databases include, such as householding (matching individuals to individuals without a company relationship), soft credits (crediting a donation to another related donor or company without impacting reporting totals), and a flexible database hierarchy this organization might have damaged a relationship with a valued donor.
- Not a Sales Pipeline with Transactions
The standard linear sales pipeline used in your modern B2B CRM systems doesn’t work for a nonprofit organization where the interactions and transactions come from multiple sources and via multiple transaction vehicles. The nonprofit-centric CRM must intake transactions and interactions from various sources (storefront, donations page, multiple events, third party, social, and more) and credit a single transaction across multiple entities or individuals as described earlier. As in our example above, we have three separate relationship actions (donor, member, foundation) involving two different records and, most likely, transacted at different times over the course of months or years.
To add one more layer of complication that nonprofit organizations must comply with for all of these transactions is the notion of restricted funds. Organizations are required to honor donor intent. This insures donated funds are spent to the purpose for which they are given. The CRM database must be able to not only record the transaction, match to the multiple records involved correctly, but also track the restrictions on the donated dollars for reporting to the accounting department. If tracked incorrectly it can cause a PR nightmare…as many nonprofits have publicly had over this issue in the past.
- Reporting that makes the Transactional Relational
Lastly, with all important constituent data tracked in the platform, your organization must run reports on all relationships and interactions that influence the organization. The 360° view of a constituent involves many more elements than a for-profit database can handle. All of the constituents, their relationships, transactions, and interactions with your organization means creating relational reports that aren’t necessary for a standard for-profit business.
With proper reporting organizations can understand their supporters more intimately and determine the best way to stay close to them, support them in their relationship with the organization, and grow their commitment to it.
Thus, they are able to move from creating a transaction (a donation, membership or ticket purchase, etc) to connecting the dots and building a relationship with the constituent that extends for, hopefully, years to come.
Use the Right Tool for the Job
My former client took these points to his board member and was successfully able to explain why a nonprofit-centric CRM solution was the right tool for the job. There are certainly for-profit equivalencies for many business processes, expense reports and payroll are examples that come to mind, but there are others that must be industry-specific to allow for maximum effectiveness, staff efficiency, and to empower mission growth.