Five Ways Your Nonprofit CRM Is Costing You Money

Nothing in life is free. Well, nothing worth having, anyway.

When it comes to nonprofits, every penny counts. From office space to equipment, nonprofits need to get the highest quality at the most reasonable price to devote the highest possible percentage of their donors’ generous support to accomplishing their mission. Choosing a nonprofit CRM is no exception.

Now, when I say “your nonprofit CRM is costing you too much money,” I don’t simply mean the subscription fees are too high – or that there are costs hidden in the fine print of your contract. What I really mean is there are unseen organizational costs inherent in most donor software systems.

Here’s the truth: the lack of features, complicated processes, and bad data integrity provided by your nonprofit CRM software is costing you thousands of dollars each month—without you even realizing it. There are a variety of ways these costs accumulate, but in my experience with nonprofits over the past decade or more, I’ve found they can be lumped into two main categories:

  1. Gross inefficiencies that waste your team’s time and effort, which could be invested elsewhere, and
  2. Actual money coming out of your pocket every month that should be directed toward your mission.

Ways Your Non-Profit CRM is Wasting Your Money

With those introductory thoughts in mind, here are five possible ways your non-profit CRM is wasting your money.

1. Your CRM Creates Bad Data

In helping organizations migrate their data to Virtuous, I continually find an excessive number of duplicate donor records created by their CRM. Sometimes, it’s hard to spot: a husband and a wife may each have their own record; a supporter has moved, so there are separate accounts under both addresses; someone gets married, and their last name and address changes.

Other times, it’s much more direct. I’ve seen multiple accounts for givers with data that is virtually an EXACT match. Same name, same address, same email address. There have even been cases where a donor record was duplicated three or more times!

You may be asking, “What’s the harm in a few duplicates here and there? How does that cost me money?”

Let’s look at a real-life example. One of the organizations that recently migrated to Virtuous had over 900 duplicate records created in their former donor database. If they send 14 appeal letters annually—one per month with two follow-ups for calendar fiscal year-end mixed in—and quarterly newsletters, those costs will add up quickly. Broadly speaking, getting a piece of mail in the hands of a donor will cost $1 or more.

$1 x 18 mailers x 900 = $16,200/year

You read that right: sixteen thousand! And the cost is likely even higher than that.

Beyond the hard cost of sending too much mail on an annual basis, there are dozens of soft costs directly related to duplicate donor records.

  • Donors receiving duplicate mailings or phone calls may perceive the organization as inefficient or wasteful. They may think twice before writing that next $35 check.
  • Important notes or tasks associated with donors are attached to the wrong account and organizational knowledge is lost.
  • Duplicate contacts wreak havoc on marketing stats and reporting. It’s impossible to produce accurate “new giver” reports when data is duplicated or incorrect. This would affect revenue projections, ROI calculations on marketing initiatives, and can dramatically alter the annual budgeting process.
  • When data sometimes gets split between multiple accounts, you can’t get a full picture of who your supporters are and what their overall contribution to the organization is. You may even harm the relationship by not honoring their communication preferences because that information is only being tracked on only one of their donor records.
  • It takes time for your data management team to consolidate records, because it tends to be a very manual and protracted process. Not to mention that every hour spent consolidating records is an hour NOT spent doing something that will help  accomplish the mission of the organization.

2. Your CRM is Inefficient at Standard Back-office Tasks

Short, repetitive tasks can quickly take over your team’s time as weeks, months, and years add up. The most common task completed on a daily basis for nonprofits is the gift entry and receipting. This is important, because the generous supporters who make up your database are the lifeblood of your organization. They not only keep the doors open and the lights on, but also allow you to accomplish your mission. Quickly and accurately tracking gifts is the critical task that needs to happen on a daily basis.

Unfortunately, many nonprofit CRMs make this is either far too difficult or far too easy.

On the “far too easy” end of the scale, the software says, “Hey look, a gift! Do I know who this gift should be attributed to? Nope! OK, let’s create a donor record.” That’s one of the most common ways nonprofits end up with duplicate donors records. And as should be clear by now, that’s a bad way to operate.

On the other end of the spectrum, some donor management systems make you jump through a dozen hoops and make it a painfully long process to enter gifts in bulk. The data is accurate and clean(ish), but the gift entry process is long and arduous. When this happens, your team’s time is wasted, costs increase, and your team can spend less time furthering your mission.

3. Your CRM Doesn’t Play Well with Others

Most nonprofit CRMs fall into a trap common to software systems in the 1990’s and 2000’s. They work hard to hold your data hostage by not allowing it to easily integrate with other common systems. Instead of integrating, they try to be a one-stop solution for all of your organization’s needs.

Some CRMs are happy to offer you an API (application programming interface) for an annual fee. But once your fork over the money over, your technology team may find that the API requires coding acrobatics to integrate with the most basic third party systems.

Even more concerning are solutions that try to be all things to all people. Some CRMs claim to be great content management systems for your website, credit card processors, accounting software for your finance team, and email marketing platforms. On the outside, that sounds GREAT. Why wouldn’t you want to get everything you need in one place? But then again, when was the last time you bought a great meal, a new computer and got an oil changed all at the same place? That’s never happened for me, and I’ll wager it has never happened for you. The reality is, by trying to be all these things to all people, many popular donor management solutions end up struggling to do any one thing well.

4. Your CRM is Too Complicated

Here’s a helpful exercise. Take a moment and ask yourself, “When was the last time our CEO logged into our CRM?”

That’s not meant to be a joke. But unless your organization has five or fewer full-time employees, the answer is either “never” or “the first week we rolled out our current CRM, which was going to solve all of our problems.”

Why is that?

More than likely, your executive team needs to access the information sitting in your nonprofit CRM. But the system is either too complicated or requires too much training. As an alternative, they’ve quickly learned to rely on other team members for reports, insights and information stored in your CRM.

And this problem isn’t unique to your executive team. Many nonprofits have team members who don’t use their donor software. Often the tools are just too difficult to use unless you have a degree in data administration – or you’ve gone through a certification process offered by the software provider.

Think about that for a second. Some CRMs are so difficult to use, the companies that have built them offer weeks-long certification courses to train smart, capable, passionate people how to use their software correctly. When you combine that with the typical employee attrition rate at nonprofits and the cost/time to retrain new users you have a serious problem.

Too often, organizations have one or two people in IT or accounting they rely on for anything that extends beyond the most basic tasks in their nonprofit CRM. Need a report of gifts to a specific project since the beginning of the year? Get it on the never-ending IT to-do list and hopefully you’ll get something back by the end of the month. Need to run segmentation for an unexpected marketing opportunity that popped up? Hopefully the one operations person trained on the software is willing to drop what they’re working on to get it back to you today. Need to know what the response rate and ROI on direct mail initiatives was for that May appeal letter to major donors? You can see where this is going. Ask accounting or IT.

5. Your CRM Keeps People Out

In addition to limiting team member access because poor usability, some donor management software solutions literally limit how many team members are granted access to the system. Or worse, they limit how many users can be logged in at any given moment. In 2016 this is almost unheard of in the software world.

As a result, many organizations are reluctant or unable to empower their entire team. The result is often backoffice slow downs and a lack of data funneling up to major donor represents or executive staff.

About Virtuous Software

Virtuous is the CRM solution that simplifies donor management to help nonprofits build deeper relationships with their supporters, raise more money, and do more good.

The Virtuous team has been in your shoes. We know what it’s like to be handcuffed to antiquated and ineffective software solutions. Our founding team spent decades working in the nonprofit space because we’re passionate about empowering charities and reduce their costs.

What People Are Saying About Virtuous

“I’ve helped nonprofits manage donor and giving data for over 15 years. The Virtuous gift import tool is, without a doubt, the best I’ve seen anywhere to quickly enter gifts and make sure the right donor is thanked for their support.”

Kathy Nelson, Nonprofit Data Management Expert

“[When evaluating CRM options,] we considered modifying a CRM built for traditional B2B or B2C companies to meet our needs, but felt that we would spend too much energy trying to make the tool work for us. When you work in child welfare, you’re constantly at war against a huge, menacing bureaucracy. You don’t want to be fighting with your CRM too.

Ray Deck III, Founder & Executive Director, Skookum Kids

“Virtuous is the perfect tool for Louisville Rescue Mission. Making this change to our nonprofit CRM will enable us to connect with givers in new and meaningful ways and have a greater impact on the Louisville community.”

John Barnett, Chief Development Officer, Louisville Rescue Mission

What you should do now

Below are three ways we can help you begin your journey to building more personalized fundraising with responsive technology.

See the Virtuous platform in action.  Schedule a call with our team for personalized answers and expert advice on transforming your nonprofit with donor management software.

Download our free Responsive Maturity Model and learn the 5 steps to more personalized donor experiences.

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