According to the just-released Giving USA 2013: The Annual Report on Philanthropy, total charitable giving in the United States last year was $316.23 billion (about 2% of GDP), most of it from individuals. This represents an increase of 3.5% from 2011. The fact that most types of charities are now seeing increases in donations following several years of decline is due, in part, to the slow-but-steady economic recovery. At least some of the credit also goes to technology – namely, the widespread deployment of Constituent Relationship Management systems.
These systems boast a range of features and functionality designed to address the specific needs of nonprofit organizations. Most of the systems combine all of the key technology components, from email marketing, content management and online donation processing to database management and performance reporting, into an integrated platform that also combines with offline donor management. This allows nonprofit personnel to apply best practices to managing multi-channel campaign planning, execution and reporting, as well as the backend data cleansing, integration and storage, in a way that parallels their for-profit counterparts.
Among the requirements of a nonprofit organization is the need to interact not just with one primary constituent, as is typically the case with for-profits, but with many different (but often overlapping) constituencies. These constituencies generally include individual donors, institutional donors, foundations, event participants, advocates, staff, board members, and volunteers. Of course, “volunteers” are a diverse constituency by themselves. Moreover, as nonprofits have moved their organizations online and begun to leverage social networking to their advantage, they have developed a range of new constituencies, including Facebook and Twitter followers.
Constituent Relationship Management systems provide basic CRM functionality but are tailored to the day-to-day work of growing individual donor value, increasing the number of active donors, and mobilizing advocates, volunteers and other non-donor constituents. The tools are also geared toward increasing control over campaign development, execution and analysis.The systems make it possible to create a single, unified database of all constituent relationships. This allows staff to access a complete history of a particular constituent’s interactions: website visits, email newsletter subscriptions, phone calls, office visits, volunteer work, donations, event and social media participation, etc, so that they can then engage that individual in the most effective way possible.
The platforms are proving out their value. The nonprofit organizations that embrace them are largely outperforming their industry peers with respect to several key performance metrics, including donor acquisition rates, donor renewal rates, average donation size, fundraising costs and overall fundraising growth. In fact, according to Gleanster research, 34% of Top Performers using Constituent Relationship Management technologies report that growth in donor contributions over the past 12 months has increased by more than 20%. By contrast, only 18% of Everyone Else report similar gains. For 7% of Top Performers, funding growth has increased by more than 50%.
To suggest that, historically, the nonprofit sector has lagged behind the technology curve may be a bit of a generalization. That said, with the exception of some political action committees that have gained widespread attention for their sophisticated use of data analytics for campaign fundraising and various high-profile organizations that have made effective use of social media to drive word of mouth, the nonprofit sector is not traditionally known for embracing technology innovation. With the implementation of Constituent Relationship Management systems from solution providers like Blackbaud, Sage and Salesforce.com, however, that perception is rapidly changing.