Donor management software is a CRM for donors: it keeps a record of every donor, every gift, every pledge and every conversation, runs appeals for donations, and issues a proper tax receipt for each gift. A CRM, or customer relationship management system, is the database in which a sales team tracks its customers. Charities and NGOs use the same idea for the people who give them money. Donor management software is also called fundraising software or a donor CRM.
An NGO usually has thousands of donors and only a few staff. Some donors give once, and some give every month. Some are companies that give large grants, and some are foundations abroad. Without one shared record, the NGO forgets who gave what, sends the same appeal twice, or forgets to thank a large donor.
The software does four jobs. First, it records each gift: the donor, the amount, the date, the method of payment and the purpose, such as "education" or "where most needed". Online gifts arrive through a payment gateway on the NGO's website, by UPI, card or net banking. Monthly gifts can be collected automatically by UPI AutoPay. Second, it issues the receipt. Third, it runs appeals. It selects a group of donors, for example everyone who gave last Diwali but not this year, and sends them an email or a WhatsApp message. Fourth, it reports how much each appeal raised and which donors have stopped giving.
Take, for example, an NGO in Bhubaneswar that runs schools for girls in the tribal districts of Odisha. A donor in Bengaluru gives ₹10,000 on its website for "scholarships". The software matches her to the record it created when she first gave, two years ago. It records her PAN, because the tax receipt must show it. Within minutes, it emails her a receipt under Section 80G of the Income Tax Act. Section 80G lets a person who gives to a registered charity deduct part or all of the gift from their taxable income. After the financial year, the software lists every such donor in the NGO's yearly statement of donations to the Income Tax Department. The department then shows each donor's gift in that donor's own tax records. The gift itself is kept for scholarships by nonprofit fund accounting.
Indian NGOs follow one more rule. Money from abroad, such as a grant from a foundation in another country, may be received only by an NGO registered under the Foreign Contribution (Regulation) Act (FCRA). It must arrive in a separate, designated bank account. So the software marks each gift as domestic or foreign, and keeps the two apart in every report.
Other organisations raise money in similar ways. Universities raise it from former students through alumni management software. Professional bodies, which collect dues rather than gifts, use association management software (AMS).
How is donor management software different from an ordinary CRM? A sales CRM tracks deals that end in a sale. A donor CRM tracks gifts, which need tax receipts, and the purpose on which each gift must be spent.