How to Calculate the ROI of a Donor Management System
October 21, 2022
Think a DMS is too expensive? Using one will save you time and help you generate more revenue.
We won’t skirt around the issue, measuring the Return On Investment of a Donor Management System (DMS) is difficult. A DMS touches on so many aspects of a charity’s day-to-day work, from supporting administrative tasks such as reporting or tax receipting, to enabling you to send effective communications and carry out strategic stewardship, that it makes determining the dollar value return, specifically from the system, difficult to calculate.
Donor management system providers have stated a return anywhere between 10% to 46% in their clients’ first year; we thought it would be worth taking a deeper look at how a Donor Management System provides a return on investment.
In this blog, we will explain why a charity should invest in their administration and fundraising functions, and attempt to breakdown the advantages of investing in a donor management system both in terms of what your charity stands to gain, what it will save, as well as some intangible benefits.
Why Should A Charity Invest In Themselves?
It is important for charities to invest in themselves. This is more true than ever in our increasingly digital world that demands charities improve their data management processes and online presence. In 2021, CanadaHelps conducted a Digital Skills Survey which found that charities, particularly small charities, lag in digital adoption, even while 38% of charities surveyed feel it will be harder to do what they do without improving their digital capabilities.
“[T]he sector cannot be successful if it continues to be starved of the resources needed to modernize, work more efficiently, and operate effectively in the digital era.”
Across the charitable sector, only 1% is spent on fundraising and 9% spent on administration.
Investments that allow you to scale-up your programming, improve donor communications, and ensure records are being kept properly are well worth making. Consider what a donor management system can do to support your charity’s digital transformation and fundraising.
What does a charity gain from investing in a DMS?
A System That Helps You Build Stronger Relationships
Fundraising is all about building relationships. A Donor Management System can be transformative in this regard by helping you and your team to deeply understand your donors and your relationship with them. Having this information enables you to send the right communications at the right time.
Easily build lists that you can reach out to time and again. Build lists of donors that are active/engaged.
Segment them by types of campaigns they support
Segment them by how they like to participate
Segment them by times of year they engage with your organization
By using a Donor Management System, you no longer have to rely on manual data filtering to see what interests and actions tie your supporters together. You can scale up your communications while reaching out in a way that feels both tailored and genuine.
Did you know that in the latest report by the Fundraising Effectiveness Project, they found that just about 15% of donors account for close to 90% of dollars raised? While these figures may fluctuate for your charity, it’s clear that major gift giving is a significant source of donations and where most fundraisers should invest any extra time.
A Donor Management System makes it easy to see these opportunities, identify your most likely prospects to cultivate, particularly those that may give “major gifts” to your organization. You can use this list to engage in one-on-one communication, provide relevant education about gifting securities or legacy gifts, or send a personalized thank you.
Another opportunity for low-hanging fruit, are the donors that donated once but are no longer engaged. Improving your donor retention rates even by half a percentage point can make a big difference to your bottom line. Default reports in the CanadaHelps donor management system include the LYBUNT and SYBUNT - supporters that donated “Last year but unfortunately not this,” and “some years but unfortunately not this.” Try re-engaging these donors with a relevant message.
One of the biggest benefits of investing in a donor management system is time and money saved. Looking only at donation revenue numbers does not fully capture the return on investment.
A System That Saves You Time On Administrative Tasks
By saving just 2.5 hours a month with a donor management system, the investment pays for itself¹.
In your organization:
How much time is spent on tax receipting?
How much time is spent on manual data entry or importing and exporting?
How much time is spent on thank you messages?
Once your donor management system is configured, these tasks can be carried out at the click of a button or even fully automated. This not only saves you time but gives donors a good impression of your organization by ensuring no one is left unthanked or falls through the cracks. You can ensure everyone receives a tax receipt for their donation and not just those that reach a certain gifting threshold.
In a real life example, the BC Crisis Centre spent roughly 2-3 days at the end of each month on monthly reconciliation. After implementing the CanadaHelps Donor Management System, this process only takes them 45 minutes, saving them up to 20 hours of work a month.
Reporting is ubiquitous in charity management; from reports for your finance team, to those for your senior leadership. Consistently checking in on your numbers allows you to understand the progress you’re making towards your organizations’ goals and whether individual campaigns are working. Reporting is a key feature of any good donor management system and should make it easy for all stakeholders to self-serve and get the reports they need.
Unlike spreadsheets, a donor management system ensures your team is accessing the same up-to-date information; this is important when donor details and relationships can change. Spreadsheets are also less secure and prone to manual errors.
Access preset reports by campaign, campaign groups, and funds to better understand your donors.
What are some of the intangible benefits of investing in a Donor Management System?
Beyond what your charity can gain and save, there are further intangible benefits to investing in a DMS.
1. It can improve your office morale
Clunky technology interfaces or disjointed spreadsheets can make every fundraising task feel harder than it needs to be. Fundraising professionals deserve the same easy-to-use yet robust technology as for-profits. Choose a donor management system that ensures ease of use, top-notch support and you might see a reduction in staff frustration and turnover.
2. It can support a seamless remote-first work environment
The results are in, there is a strong preference for working from home. Having a centralized system which can be accessed securely and simultaneously by various staff can give you and your team the flexibility for remote work. Support better work-life balance for your staff.
3. It can help you scale and future-proof your organization
We’ve discussed in passing some of the ways a DMS can help you scale your donor management and communications - this is closely tied with the ways it helps you to future-proof your organization as it grows bigger and better. Making do with spreadsheets or even a system that doesn’t fully support all your organization’s donor management needs can stunt your charity’s growth.
As a charity, we understand how valuable your time is. Charities need to know what to invest their time and efforts into. With a donor management system you can not only save time but do things better. Having a donor management system is the cornerstone of a successful fundraising program. For the price of a coffee a day, level up fundraising for your charity.
For more help on understanding the ROI of using or upgrading your Donor Management System, speak to our team today. We would love to connect to learn more about your fundraising needs and whether the CanadaHelps Donor Management System would be a good fit for your organization. Set up a time with our Charity Engagement Specialists today!