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10 nonprofit software mistakes and how to avoid them
3 min read

10 nonprofit software mistakes and how to avoid them

Looking to improve your nonprofit operations in 2023? Implementing new software can help - but only if you avoid some common pitfalls. Read on to learn the top 10 nonprofit software mistakes and how your organization can steer clear of them.

What to Expect

In this blog post, we'll cover key mistakes nonprofits make when selecting and implementing software across five critical areas:

  • Customer Relationship Management (CRM)

  • Donation Management

  • Volunteer Management

  • Project Management

  • Financial Management

For each area, we'll overview typical errors and provide tips to avoid or correct them. We'll also point out red flags to watch for when evaluating new software.

Whether you're exploring options or gearing up for a software rollout, this guide will help you choose and implement solutions tailored for nonprofit success. Let's get started!

Customer Relationship Management

CRM software helps nonprofits manage constituent data, relationships, and outreach. It's essential for fundraising, donor retention, and communication.

Mistake #1: Choosing software without constituent management features

Many CRMs lack tools purpose-built for nonprofits, like donation tracking and volunteer management. Opt for solutions with constituent-focused features like:

  • Donor profiles with giving history

  • Email marketing and segmentation

  • Event management and registration

  • Integrations with nonprofit accounting software

Mistake #2: Selecting software that's hard for staff to use

Ease of use is critical, especially for non-tech savvy employees. Ensure the CRM:

  • Has an intuitive, clutter-free interface
  • Offers robust training resources and support
  • Allows customization to fit your nonprofit's needs

Donation Management

Accurate donation tracking is essential for nonprofit fundraising and financial reporting. Here are some key mistakes to avoid:

Mistake #3: Using spreadsheet-based donation tracking

Spreadsheets are prone to errors and invisible data corruption over time. Choose dedicated fundraising software with features like:

  • Online donation forms and Stripe integration

  • Robust reporting on giving metrics and trends

  • Automatic tax receipt and acknowledgment emails

  • Seamless syncing with your CRM

Mistake #4: Minimal payment processing integration

Look for software that centralizes donation processing by integrating tools like:

  • Online credit card processing

  • ACH payments and bank transfers

  • Text-to-give mobile campaigns

  • Apple Pay/Google Pay

Robust integration avoids manual entry and reduces human error.

Volunteer Management

Volunteers are a nonprofit's lifeblood. Avoid volunteer management mistakes with the right software approach.

Mistake #5: No centralized volunteer database

Trying to track volunteers via spreadsheets or notes creates duplicates and inaccuracies over time. Invest in a volunteer management system that:

  • Maintains a central database of volunteer records

  • Allows self-signup and coordination of availabilities

  • Posts calendar-view schedules and assignments

  • Tracks hours served for reporting

Mistake #6: Communicating last-minute vs. proactively

Lack of proactive communication leads to forgotten shifts and frustration. Look for tools with:

  • Automated reminders of upcoming assignments

  • Email and text capability

  • User portals for self-managing profiles and shifts

This reduces the burden on staff and boosts volunteer retention.

Project Management

Bring order to chaos by improving nonprofit project coordination. Watch for these project management pitfalls:

Mistake #7: No central task and deadline tracking

Shared project information gets lost across email chains and personal lists. Opt for shared software like Trello or Asana that allows you to:

  • Create project boards with tasks, due dates, and assignees

  • Set reminders for upcoming deadlines

  • Attach files and include comments/notes

  • Give project team members access to collaborate

Mistake #8: Communicating within silos

Email and personal contact lists create internal silos. Ensure your software encourages cross-department sharing via features like:

  • Organization-wide access to projects and workflows

  • Task assignments and notifications across teams

  • File-sharing across projects and teams

Breaking down silos boosts productivity and alignment.

Financial Management

Don't undermine your mission with poor financial oversight. Here are nonprofit finance software traps to avoid:

Mistake #9: Using poorly-fitting accounting software

Many small business tools lack nonprofit-specific features like fund accounting, grant management, and FASB compliance. Choose systems designed for nonprofit finance like:

  • Aplos

  • QuickBooks Online Nonprofit Edition

  • Sage Intacct

  • Xero

Mistake #10: Manual processes and spreadsheets

Tedious financial tasks and spreadsheet-based reporting drain staff time. Look for process automation like:

  • Online purchase approvals

  • Automated invoicing and expense reimbursement

  • Scheduled financial reports

The right software removes bottlenecks and creates transparency.

Moving Forward

Avoiding common nonprofit software pitfalls takes research and planning. But powering your mission with purpose-built technology yields big rewards in efficiency, accuracy, and insight. Use this guide to inform smarter software decisions that empower your nonprofit.