14 Nonprofit Donor Management Best Practices for 2025

Modern philanthropy runs on data. Today’s nonprofit organizations can access an abundance of information about current and potential donors and what motivates them to give to a good cause. The challenge lies in using data effectively as part of a smart donor management strategy. To meet this challenge head-on, nonprofits are taking up new donor management tools, such as constituent relationship management (CRM) systems, to make the most of their donor data. Innovating, integrating and automating donor management in this way can support nonprofits’ highest priorities in such areas as donor acquisition and retention — all leading to greater financial stability for their organization. This article explores leading practices in donor management and the potential benefits they bring.

What Is Donor Management?

Donor management is the process of establishing and nurturing nonprofits’ relationships with their supporters. Across the donor life cycle, from prospect to long-term supporter, nonprofit organizations connect digitally and personally to establish and build financial ties and supportive relationships with donors. As part of an effective donor management strategy, different types of outreach and messaging are tailored to donors’ profiles to draw them in and keep them close. This makes donor management a data-intensive process.

Key Takeaways

• Effective donor management can increase donor acquisition and retention rates.
• Donor management best practices include donor segmentation, multichannel fundraising and stewardship activities.
• Nonprofits improve donor management by employing digital strategies and tools, such as constituent relationship management (CRM), an adaptation of customer relationship management systems but geared specifically to nonprofits.

Importance of Donor Management

Donors sustain most nonprofit organizations and programs. This simple fact of philanthropic life makes donor management one of a nonprofit’s highest priorities. In fact, a survey by the Nonprofit Finance Fund found that three out of four U.S. nonprofits say that long-term financial sustainability is a top concern. And for good reason. The Fundraising Effectiveness Project has estimated that over the past decade, the number of American donors has declined by 19%. And Giving USA reported that in 2022, actual donations dropped more than 10% in inflation-adjusted dollars.

These conditions are compounded by intense competition for donors and continued growth in demand for nonprofit services, throwing off the financial equilibrium of many organizations. Nonprofits everywhere are looking for new and better ways to raise money for the arts, social justice, poverty reduction and other causes. By focusing on building strong relationships with donors and implementing effective donor management strategies, nonprofits can enhance their fundraising efforts, secure sustainable financial support and achieve their mission-driven objectives.

What Does Good Donor Management Look Like?

Donor management operates like any other type of relationship-building effort, thriving on personal insights and interactive engagement. Good donor management plumbs data to gain insights on donors’ giving histories, identities and motivations. Nonprofits segment current and prospective supporters into different categories, depending on these and other attributes, and then tailor their interactions accordingly. Here are some of the most important categories:

• Donor interest, such as the arts, social justice or poverty reduction.
• Donor demographics, such as age, location and occupation.
• Recency, frequency and monetary value (RFM), which is a “score” that can, for example, distinguish a major one-time donor who has dropped off from a small donor who provides sustaining monthly contributions via credit card.
• Communications preferences, such as in-person, direct mail, phone or online via email or text.

Donor segmentation can delve further into data to determine whether a donor might be at risk of lapsing, for example, or ready to give more in a moment of crisis. That’s because, increasingly, nonprofits use sophisticated constituent relationship management (CRM) systems to enhance donor management. CRM systems store, organize, track and analyze donor data as the basis for personalized and often automated communications, much the way customer relationship management systems do for traditional, for-profit businesses.

Meanwhile, CRM systems are revving up with new artificial intelligence and machine learning (AI/ML) capabilities to take donor management from reactive to proactive. Beyond servicing email lists of active donors, for instance, nonprofits can now use CRM systems to analyze various forms of engagement to predict how a targeted subset of their donors might respond to a particular appeal to help a specific group of people in need. Forward-looking indicators might include social media activity, patterns of giving or history of volunteering.

CRM systems can also reduce the manual sorting of donor data to save resources at a time of constrained budgets. More than four in 10 nonprofits cited improved efficiencies/reduced costs as a top priority for digital transformation in a recent Amazon Web Services survey — ranking this goal on par with increased donations/revenues.

The Donor Management Process

Donor management paves the way for better results in acquiring, nurturing and retaining donors at increasing levels of giving. Otherwise, donor relationships tend to be short-lived. In fact, it’s estimated that 70% of donors give to a cause just once or twice.

How does a nonprofit recipient of that first gift work to scale the donation into a lifelong commitment? For that matter, how does a nonprofit even get the first donation? Management techniques throughout the donor life cycle are broken down below, and best practices call for tracking donor interactions and analyzing data in CRM systems at every stage.

1. Donor Identification and Acquisition

Adding donors starts at home. That is, nonprofits first need to dig deep into their own CRM systems or spreadsheets to find lapsed supporters, untapped volunteers and any other people who have expressed interest in their work. Organizations should also encourage board members, current donors and volunteers to help with introductions to their networks of peers. In both cases, familiarity can increase the chance of success. Other ways to identify and acquire donors include:

• Digital advertising: Search and social advertising can generate leads at relatively low cost. For instance, more than two-thirds of respondents to a survey by the Nonprofit Marketing Guide said they buy advertising on social media. A separate survey by nonprofit consultancy M+R shows an average of 15% of nonprofit digital ad budgets going to lead generation to capture prospects’ emails, instead of paying for direct fundraising campaigns or other activities.
• Mailing lists: Nonprofits can buy lists of people who give to causes similar to their own, or they can purchase research on prospects who have attended their events. Organizations can also look into wealth screening tools, foundation directories, giving platforms, grant search engines, mailing list rentals and many other donor identification and acquisition tools.
• Do-it-yourself donor identification and acquisition: Nonprofit development teams can do more hands-on research instead of — or in addition to — the tactics described above. For instance, public records on real estate transactions, political donations and business affiliations can yield important information to combine with social media and other online data to start painting a donor profile. At a more institutional level, researchers can visit foundations’ websites to analyze recent grantmaking; ditto for the corporate social responsibility sections on companies’ websites.

2. Donor Cultivation

Donor cultivation often precedes any requests for donations. The cultivation phase is a time for nonprofits and potential donors to get to know each other, with organizations gauging what their prospects care about while also sharing relevant information about their mission and programs.

One-on-one meetings, events, online social interactions and even simple web forums can feed into this stage of the donor life cycle. Key questions nonprofits can ask might focus on how donors prefer to interact, as well as on which types of activity they’d most likely support. Volunteer programs can also play a role in cultivation, since volunteers often become donors.

3. Donor Solicitation

Solicitation is where “the ask” happens. A nonprofit that has completed the identification and cultivation phases should be in a better position to ask prospects to support a cause they care about, at an amount that makes them comfortable, during a time when they are most likely to be in giving mode.

The operative word in any solicitation is “personal.” Used right, CRM systems can personalize solicitations to everyone, from foundations and major individual donors to small contributors on an email list. Here’s how:

• Big donors: The bigger the donor, the more hands-on the donor management process should be. When it comes to soliciting a major foundation, for instance, the first step is to understand the particular grant maker’s mission and programs. The solicitation process is usually formal, involving published guidelines, letters of interest, deadlines, meetings and other steps. Unless a nonprofit’s work aligns with the prospect’s strategy, a foundation is unlikely to invest in it. With major individual donors, personal networks and extensive profiling should inform the type and amount of the appeal. The solicitation process could be less formal for a major donor than for a foundation, with an emphasis on personal meetings. A nonprofit’s approach to corporate giving will vary by company size, combining foundation and major donor tactics and adding the promise of brand recognition.
• Small donors: Digital fundraising strategies can reach wide swaths of small donors, across email, social media, fundraising platforms and other channels. CRM systems can automate digital appeals, for example, by segmenting email lists to target specific groups with messages that are likely to resonate. On their own or integrated with email marketing tools, CRM systems can also automatically personalize solicitation mailings with the names of recipients, as well as pull data from fields such as giving history to emphasize programs donors care about. Online responses to digital fundraising are yielding a fast-growing percentage of total giving, accounting for over 10% of the U.S. total and representing an even larger percentage of smaller nonprofits’ returns. Remember, too, that small donors can become big donors over time.

4. Donor Acknowledgment

Delayed gratification is no way to treat a donor. On the contrary, according to the Association of Donor Relations Professionals, donors should receive grateful acknowledgement of their gifts within the same week (or the next, if allowing for receipt by post). Tax documentation should accompany the message of thanks, which should include personal touches, reemphasize the purpose of the gift and make the donor truly feel a part of the organization by sharing some exciting new information.

For some donations, private acknowledgement is only the prelude to public expressions of gratitude, whether in a nonprofit’s newsletter, at a special event, via press release, with membership in a special “giving circle” or otherwise. Nonprofits should be sure to understand donors’ preferences regarding public acknowledgement.

5. Donor Stewardship

Providing prompt, sincere and appropriate donor acknowledgement is the on-ramp to donor stewardship. Long after that first “thank you,” nonprofits should continue to steward strong, healthy donor relationships that can lead to recurring gifts and other benefits.

Donors want to feel good about their engagements with nonprofits. To nurture mutually beneficial relationships, nonprofits need to understand supporters more deeply over time — in part, by continually recording and analyzing information from every interaction with them. Then, knowing the donor well, a nonprofit can continue to engage them in conversations about the impact of their gift, the importance of the cause being supported and the mutual benefit of a donor’s further engagement.

At a customer service level, understanding donor preferences, in matters such as publicity for their support, frequency of communications and transparency in grant accounting, can also contribute to donor stewardship in a big way.

6. Donor Reporting

Impact is the gold standard in nonprofit work. Donors want to know that their gifts are actually doing some good in advancing a cause, elevating local culture or addressing a pressing global issue. Nonprofits should send impact statements and compelling stories about their beneficiaries as often as possible to their broad constituencies, in the form of alerts, newsletters, annual reports or other communications.

Official donor reporting is even more demanding. Foundations and other grant makers may require specific accounting reports as a condition of their grants. Development teams and finance departments need to work together to deliver both accurate financial reports and program-impact narratives to fulfill these donor reporting requirements.

7. Donor Retention

The ultimate priority of the entire donor management process should be donor retention. While donor acquisition ranks nearly as high, donor retention can often deliver more benefits, at a lower cost. The importance of retaining donors puts a high premium on capturing and analyzing information from all steps in the donor management process that are described above, using tools such as CRM systems.

Donor retention can mean heavy lifting if not supported by CRM systems that, ideally, integrate with other fundraising and accounting tools. Donor contact details need to be kept current, past donations tallied, event participation noted, volunteer work recorded, outreach and meetings documented, donor reporting tracked, email interactions captured and external prospect research incorporated with internal commentary from the development team — all tasks a CRM system can support.

Benefits of Good Donor Management

Diminished giving amid economic uncertainty has produced weaker acquisition rates and lower retention rates at many nonprofits, according to the Fundraising Effectiveness Project. To keep doing their philanthropic work, many are stepping up donor management by using more and better data and digital tools. Qualitatively and quantitatively, nonprofit experts report the benefits of strong donor management in the following areas.

• Increased donor retention:

  The average attrition rate for first-time donors is 80% in the U.S., according to an academic study titled “Loyalty Meets Philanthropic Psychology.” Nonprofits often spend time and money on donor acquisition but then fail to follow up with donor retention efforts, the study noted. Donor management can facilitate donor retention by streamlining the data collection and analysis involved and then automating its use in more targeted campaigns. Nonprofits that make a 10% improvement in their attrition rate can reap a 200% increase in giving over time, the study’s authors suggest. This improvement reflects the fact that retained donors often increase the amount they give year after year, provide word-of-mouth recommendations to other prospects and eventually consider legacy gifts. Experts also agree that focusing on donor retention can reduce the need for higher-cost donor acquisition efforts.

• Enhanced fundraising efficiency:

  CRM systems can help development teams analyze data and recognize patterns they might not otherwise see, increasing fundraising efficiency and effectiveness. A case study recently published by the Chronicle of Philanthropy described what it called “the power of an organization using its data.” By analyzing email data, a researcher identified the 20 people who had opened email most often and clicked on links inside. Five of these were revealed to be potential major donors (defined as giving more than $25,000 annually, in this case), after their names were run through a wealth screening tool. Upon solicitation, one of these email recipients became a major donor within a year.

• Improved donor satisfaction:

  Some experts, such as nonprofit academic Adrien Sargeant, consider donor satisfaction with the quality of nonprofit service to be the biggest single driver of loyalty. Nonprofits can improve donor satisfaction by using CRM systems to segment donors according to their communications preferences, automate prompt acknowledgments of gifts and avoid the annoyance of duplicated mailings. Directly asking for feedback, with a short online survey, can also help improve the donor experience, while also showing contributors that they matter.

• Increased giving:

  Donors make decisions about giving based on limited information. So, impact metrics can be a game-changer for nonprofits, swaying contributors to their side and keeping them there, amid stiff competition for donors. Side-by-side comparisons of nonprofits, using comparable metrics, such as the number of people who benefited in the past year, led to an 80% increase in the number of people choosing the most effective organization, according to a study by the Impact Genome Registry, a repository for impact data on over 2.2 million nonprofits. CRM systems integrated with program and financial management systems can produce this kind of data and convey it to donors in targeted online email campaigns.

• Greater accountability:

  Donors demand and deserve statistical and anecdotal accounts of how their gifts are being used and to what effect. These days, donors are looking for more reporting than ever. In a survey of nonprofits by the BDO consultancy, 58% of nonprofits said donors had requested more program impact data in the past year, and 39% said donors were asking for more qualitative narratives, as well. CRM systems can integrate with a nonprofit’s other systems for program and financial management to streamline reporting.

• Improved organizational culture:

  People work at nonprofits to solve pressing societal problems or to advance other lofty altruistic goals. Working with minimal funds and diverting their time from the primary mission to raise funds can sap their motivation. So, anything that streamlines and automates donor management to make it more lucrative contributes more broadly across the overall organization. In the for-profit sector, 74% of respondents to a Deloitte survey said that process automation had helped their staff work more efficiently.

14 Nonprofit Donor Management Best Practices

More than one in four midsize nonprofits are prioritizing digital transformation over the next 12 months, according to the BDO consultancy. CRM systems represent the cutting edge in digitizing donor management, in conjunction with integration with other fundraising and financial management tools. Given this context, here are 14 best practices for nonprofit donor management, with examples of each.

1. Donor Segmentation

Nonprofits sort donors in their CRM systems into different segments to target them most effectively with fundraising appeals and other communications. Segments can go to any level of granularity, depending on the donor management tools being used. Segmentation examples cited in one academic paper include:

• Demographics: Age, location, gender, household size, educational level.
• Preferred types of charities or causes: Child well-being, health, education, civil rights.
• Preferred source of information: Newsletter, direct mail, email, social media, display ads on mobile devices, personal solicitation, word of mouth.
• Preferred method of donating: Nonprofit’s website, mobile payment, text message, through the workplace, postal service, at a fundraising event, via sustaining subscriptions.
• Preferred social media: Facebook, YouTube, Snapchat, LinkedIn.
• Motivators: Compelling mission statement, solid reputation, knowing how the gift will be used, hearing a compelling story about beneficiaries, seeing evidence of impact, receiving acknowledgment for a donation.

2. Data Analysis

Data analysis tools, including AI and ML, are improving the predictability of giving, experts say. In another Chronicle of Philanthropy case study, a hospital used ML to identify prospects by analyzing big donors’ past gifts to other organizations. The development team found a strong correlation between people who give to international causes and those who donate to hospitals. The results, upon solicitation, were striking. Potential donors identified by the ML algorithm moved from the first “touchpoint” to making a donation 17% faster than other prospects, and they gave an average of 22% more.

3. Personalized Communication

CRM systems and other digital fundraising tools can target different personas with messaging specific to that particular segment in the database. They can personalize email messages to varying degrees, starting with the now-standard practice of including the name of the recipient in the message. They can also do more, for instance, to help curate outreach to major donors. One Chronicle of Philanthropy case study described building psychographic profiles of donors, based on available data about attitudes, interests, hobbies, emotional triggers and lifestyle. Research from the Institute for Sustainable Philanthropy has suggested that changing just a few words in a communication, based on input such as this, can double giving and boost donor satisfaction.

4. Multichannel Fundraising

Nonprofits use many online and offline channels to reach donors, often tracking their communications preferences and reviewing which channels perform best. Online outreach may include email, social media, digital advertising, mobile apps, crowdfunding platforms and an organization’s own website. Offline contact includes direct mail and ads in the media. The M+R nonprofit consultancy recently published findings comparing mobile and desktop devices. While 57% of nonprofit website traffic came from users on mobile devices, for instance, 43% of revenue came from donors on desktops.

5. Simplified Donation Process

Ease of use is a must for any donation process — think, for example, of convenient features, such as donation buttons on an organization’s website. An academic study has shown that almost 40% of donors surveyed prefer to give on a nonprofit’s website, compared with fewer than 10% by regular mail. CRM systems help nonprofits collect and use data on which donation process a donor prefers.

6. Acknowledgment and Recognition

Donors deserve (and expect) prompt acknowledgment of their gifts, as well as receipt of related tax documents. CRM systems can automate acknowledgment of small-donor contributions online, including personalization of thank you messages. For big-donor contributions, CRM systems can facilitate a more curated approach, because they hold important data about those donors’ altruistic motives and other characteristics. The systems can also store information about how much or how little public recognition a big donor might prefer.

7. Donor Retention Plan

Donors don’t usually remain loyal to nonprofits out of inertia. As one of a nonprofit’s top priorities, donor retention requires assiduous planning, especially since long-term donors have been found to provide more funds, at lower fundraising costs, than one-off contributors. Yet only 29% of new online donors in 2021 were retained in 2022, according to M+R. Every organization should have a nonprofit retention plan for analyzing current donors, setting retention goals and executing objectives by means of donor segmentation, personalized communications, reactivation of lapsed supporters and other measures.

8. Regular and Transparent Reporting

Reporting can deliver the key to donor retention. Donors want to see a nonprofit achieve measurable results with the contributions they’ve made toward the causes they care about. They want to hear stories from beneficiaries whose lives have improved. Indeed, when a donation comes from a foundation or company, specific reporting requirements are often included in the grant agreement. Leading practice is to provide clear, accurate statistical data embedded within a compelling narrative, delivered on a regular schedule. Many nonprofits post their IRS filings on their websites, demonstrating an additional act of transparency.

9. Stewardship Activities

Donor reporting feeds into donor stewardship, and both can be data-intensive processes. At a donor-by-donor level, data management tools, such as CRM systems, help to plan, execute, record and follow-up on all the activities involved in ensuring that a contributor is informed, satisfied and likely to renew. Data analysis can help target email and in-person communications, invitations to events, engagements as volunteers, and other stewardship activities that may be included in a nonprofit’s donor retention plan. Data collection might capture phone call responses, email engagement metrics, response to fundraising appeals and other touchpoints with donors.

10. Donor Surveys

Donor relationships should always be interactive, and surveys provide an avenue to strengthen connections in two ways. Even a short, emailed survey can show a nonprofit’s inclination to involve its donors in its work, contributing to donor satisfaction. And surveys can also help fill in details in donor profiles, enabling the nonprofit to improve donor service and to send donors appeals that match their interests. For instance, a Harris poll revealed these top three motivations among poll participants:

• 27% were inspired to give or increase giving because of a personal experience.
• 24% were inspired by current events in the media.
• 22% were following their set charitable giving routine for the year.

11. Planned Giving

Planned giving defers a gift for a span of time, which can occur during the donor’s lifetime or upon their death. Experts point to donor-advised funds (DAF) as the fastest-growing vehicle right now for planned giving. Major financial services companies and others hold these tax-efficient investment accounts for wealthy donors, who can direct where the funds are to be contributed over time. DAFs represent 9% of U.S. donations today, according to the National Philanthropic Trust, a DAF administrator. Nonprofits are advised to treat DAF givers as they would treat any other major donor.

12. Donor Privacy

Privacy policies assure donors that their personal information will not be used without permission. In some cases, this involves providing a choice to opt out, rather than opt in. Nonprofits also need to follow an increasing number of data privacy regulations, including such globally influential standards as the General Data Protection Regulation and Payment Card Industry directives. Nonprofits should have policies for collecting, storing, archiving and sharing data, though only about two-thirds do, according to a survey by NTEN, a nonprofit technology training group. And because nonprofits are frequently targeted by cybercriminals looking to steal personal data, they should also have a specific cybersecurity strategy in place.

13. Collaborate With Board Members

Beyond setting organizational and fundraising strategies, board members can be particularly useful when it comes to donor management because of their influence among networks of potential donors. Most board members understand that fundraising is part of their responsibilities, but many have reservations due to feeling ill-equipped or fearing their appeals will be rejected, among other concerns. Nonprofit executives should encourage board members to advocate and raise funds in several ways, such as making fundraising and donor engagement part of the formal job description for open board seats, providing directors with the support they need, and periodically reviewing board fundraising expectations and performance during board meetings.

14. Staff Training

Nonprofits need to skill-up to use data more effectively for donor management. For instance, nearly three-quarters of the NTEN survey respondents said that only one in four staff members (or fewer) is capable of running custom reports. It’s advisable to educate all staff in at least the basics of donor data management. That way, even those who don’t handle data directly can still understand the types of input available from trained staffers for use in their campaigns. Another tip: Nonprofits should drive home the need to maintain data hygiene, such as keeping data up to date and avoiding duplication.

What Is Donor Management Software?

Donor management software enhances and streamlines donor acquisition and retention by storing, segmenting, updating and analyzing information about current contributors and prospects. CRM systems represent the leading edge of donor management software, especially when integrated with other tools, such as donor prospect research, financial accounting systems and email marketing tools. CRM can replace older tools, such as spreadsheets.

Manage Your Donor Connections in NetSuite

NetSuite CRM can generate a 360-degree view of donors and prospects, providing actionable information for donor management — beginning with leads and extending to interactions, donations, renewals and ever-deepening engagements and commitments. NetSuite Social Impact also partners with nonprofits to advance their digitization of donor management, including cloud technology donations, product discounts and other support.  

In today’s challenging nonprofit landscape, donor management is critical to organizations’ financial sustainability. By effectively managing donors, organizations can significantly boost donor acquisition and retention rates, as well as giving levels. Many are embracing digital strategies and tools, like constituent relationship management (CRM) systems, to strengthen their bonds with donors, paving the way for increased impact and long-term success.

Donor Management Best Practice FAQs

What types of data are handled by donor management systems?

Donor management systems store, sort and analyze data across the life cycle of a donor, including contact information, demographics, favorite causes, communications preferences, interactions with members of the development team, engagement in a nonprofit’s events or volunteer programs, and more.

What is a donor management system?

A donor management system lets nonprofits store, sort and analyze information about donors and prospective donors to better understand them, communicate with them and persuade them to contribute. Donor management tools range from basic spreadsheets to sophisticated constituent relationship management (CRM) systems that can integrate with other program management, financial and fundraising tools. Together, they enable personalized, compelling messaging for specific segments of donors and automate interactions, such as email acknowledgments of online donations.

How do you keep donor information organized?

Constituent relationship management (CRM) systems represent the most advanced way to track donor information. When integrated with a nonprofit’s financial systems, CRM systems can help development teams use data about donation recency, frequency and monetary value to communicate with donors and deepen their commitment. Donors are also organized into many other segments defined by attributes, such as demographics and altruistic motivations, to target appeals and other communications.

How do you prioritize donors?

First priority should go to retaining existing donors, which affords greater fundraising success at lower cost than that needed to acquire new donors. Nonprofits can prioritize donors in many ways when they are armed with insightful data about contributors’ giving histories, capacity to donate, affinity for particular causes and other attributes. Constituent relationship management (CRM) systems facilitate this kind of donor segmentation and aid in prioritization.