Nov 23 2021
Data Analytics

Constituent Relationship Management: Benefits for Nonprofits

By tying stakeholders to data, constituent relationship management systems help nonprofits expand their reach and create new opportunities.

Although they don’t have customers in the same way many for-profit businesses do, nonprofits of all stripes remain key beneficiaries of customer relationship management software.

CRM tools have become vital for managing leads, connections and stakeholders throughout an organization. They also help keep those relationships in check as new opportunities emerge, through data analysis, marketing automation and other capabilities. CRM could be the perfect way to uncover new opportunities within a nonprofit’s existing base of donors and constituents.

What Is Constituent Relationship Management?

CRM, often called customer relationship management in the for-profit sector, is an operational process that helps manage relationships with an organization’s primary stakeholders.

At a higher level, it is one of many modules used in a broader enterprise resource planning system, but it gets a lot of attention for its ability to tie consumers to the inner workings of an organization.

For businesses, CRM tools are often used to nurture sales leads, particularly in business-to-business settings, and they may contact those sales leads only once. Nonprofits, on the other hand, tend to contact the same people many times, mostly for fundraising.

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The Benefits of CRM for Nonprofits

CRM tools are popular in the for-profit space in part because they make it easier to conduct sales and uncover strategic opportunities through data analysis. While nonprofits don’t necessarily have customers, their relationships with donors (both individual and institutional) and beneficiaries share many of the same relationship management cues, notes Erik Arnold, CTO of Microsoft’s Tech for Social Impact group.

“Increasingly, nonprofits are working with individuals who might play different roles in the organization, whether they be donors, peers or even a beneficiary in a disaster response context,” he says. “Nonprofits are becoming more digital and thinking about how to get a 360-degree view of the constituent.”

CRM software is a key element of modernization efforts for nonprofits. Trevor White, a research manager at Nucleus Research, says the sector has generally evolved in the same direction as the traditional CRM space, where the growing uptake of cloud technology has lessened the need for internal infrastructure.

“It’s followed the CRM trends, just maybe a couple of years behind the pure sales side,” he says.

Many organizations are looking for more flexible systems that can manage information on phones, tablets and other platforms, The NonProfit Times notes, and CRM is a key tool to have at the center of that equation.

White noted that this desire for flexibility and customization extends to internal CRM systems and is a key differentiator for many nonprofits. A nonprofit’s needs aren’t the same as those of an organization simply looking to close sales — and they often require additional features to get a deeper understanding of their stakeholders.

For nonprofit professionals, “it is really important to be able to add custom fields and new information so they can capture the essence of that person, as opposed to tracking sales, where you’re just working someone down the sales funnel,” White says.

MORE FOR NONPROFITS: What nonprofits need to know about cryptocurrency.

Types of CRM Systems

Some CRM systems serve more specialized needs for certain types of organizations. Two common ones are:

  • Donor management systems: Used by charitable nonprofits in particular, this system manages relationships with donors large and small and helps uncover long-term opportunities.
  • Association management systems: While professional and trade associations may have a charitable component, their focus is different from many other types of nonprofits. Their constituents are generally members, not customers, donors or beneficiaries. An association management system is tailored to these needs and may also include website builders, tools for email marketing and event registration, and other components.

CRM platforms aren’t limited to customer sale relationships. White points to political parties, which operate as a form of nonprofit and use their own CRM-style systems. Microsoft’s Arnold notes that the broad array of nonprofits means that every organization — whether a local youth soccer club, a sports league or a global humanitarian group — will have different needs but similar data management goals.

“There are commonalities in each and every one of those organizations,” White says. “They fundraise or work with constituents. They drive programs and deliver services to a beneficiary, whether that beneficiary is a person, a puppy or the planet.”

Technical Considerations for Nonprofit CRM Systems

One advantage of modern CRM platforms is that they are managed through cloud providers, offering significant benefits for data protection and security. White says this has helped improve CRM security by creating a framework for frequent updates, although cloud security in general remains an important consideration.

“As long as they’re going with a cloud solution, it’s not something that nonprofits need to worry too much about because they’re going to get the regular cadence of updates,” he says.

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There are other concerns, however, including data compliance. The most important one is Europe’s General Data Protection Regulation, which applies to nonprofits and many other entities worldwide and is a key element of data privacy programs at large. Microsoft’s Arnold notes that nonprofits need to use updated software to modernize their approach and maintain compliance.

“Having modern CRM platforms is a great start,” he says. “Having your technology on a platform that natively supports GDPR and that represents best security practices and best privacy practices is critical for nonprofits to be able to do the work that they do.”

One final concern for nonprofits is data portability and hygiene. Decisions made within a CRM platform can have a deep effect on an organization’s operations, both day to day and in the long term.

These issues have increasingly emerged as the CRM space has matured, leading to a number of mergers in the sector. White says this evolution has now made it more attractive to use CRM tools from larger companies.

“As the economy is waning and flowing, there’s safety in going back to the traditional bigger brands,” White says.

At the same time, the changes in the CRM market have raised concerns about data portability, as management of data has tended to complicate workflows. Arnold, who spent many years as the CIO of a global health nonprofit before joining Microsoft, noted that these complications often created data integration challenges in the past.

“No matter the conversation or the partner, even if they had done 400 other CRM implementations, it seemed that we were starting at the very beginning and building all the data architecture and workflows from scratch,” he says. 

MORE FOR NONPROFITS: What the industry needs to know about cloud security posture management.

To improve these issues, Microsoft has been working on the Common Data Model to create a consistent set of business practices around data integration. Other vendors in the CRM space, such as Oracle, have also started to work in this framework, Arnold says.

Even nontraditional Microsoft partners are collaborating on the Common Data Model, which Arnold calls “one of the best measures of success.”

Examples of Nonprofit CRM Software

In some ways, a CRM can be thought of as an extension of the spreadsheet of yore, but more deeply integrated into the full business. White explained that nonprofits’ CRM use tends to lean toward extremes.

“Some of them are really sophisticated, really at the forefront of the market, really pushing the boundaries of usage,” he says. “The other half of them are really just starting to move into a proper CRM system.”

The CRM space, likewise, is diverse, with many specialized smaller players and well-known companies taking part. Some of the best-known CRM providers include Salesforce, SAP, the Oracle subsidiary NetSuite and Microsoft Dynamics 365.

These platforms and others have become increasingly integrated with the cloud, making the CRM a part of a broader technology suite. For example, Microsoft recently announced Microsoft Cloud for Nonprofit to integrate its many offerings, including Azure and Dynamics 365, into a single piece that can leverage data from many different places.

Tools like these, if implemented correctly, can change the prospects of a nonprofit — and providers like CDW AmplifiedTM Services can help your organization tackle some of the complexities.

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