There are three different kinds of databases, and the jargon about them can get quite confusing. Here is an overview of each type:Generic DatabasesThese databases are not designed specifically for fundraising. The two most common are Microsoft Access and FileMaker Pro. They start with a general program that can be built upon to manage any number of needs, from a small import/export company’s inventory list to a small nonprofit’s donor base. Once you purchase the database, you decide which elements to use and in what ways. You’re essentially building your own database to meet the needs of your organization.Generic databases are generally inexpensive, so small groups with modest budgets like to take this route. Building your own simple database in-house or with well-meaning volunteers may seem the ideal option.Can this program do what you need? Yes, but only if you build it that way.Many groups have found that the time and effort they put into designing and building a database program in Microsoft Access would have been better spent purchasing a low-cost program designed specifically for fundraising. Open Source SoftwareA newer trend in the development of fundraising software is free databases that, like Access and FileMaker, require the technical skills to customize them for your organization’s particular needs. They are more sophisticated in their functionality than Access and FileMaker, and some of them are designed to be integrated with other management systems.I don’t recommend going this route unless you’re able to allocate sufficient staff resources to developing and maintaining the program. If you have the capacity to work with Open Source options, they provide more flexibility than the packaged software programs described above. But they’re not a good choice for smaller, grassroots organizations with no dedicated IT staff.As you can see, with a great database, your nightmare can turn into a rosy dream of informative reports, targeted asks, and increased fundraising success. Dedicated Fundraising SoftwareThese databases are specifically designed for fundraising. When it comes to organizing donor information, many groups need the same types of functions, and these databases have prepackaged them for you. Fields, a wide variety of reports, thank-you letter merges, and more are already set up in these programs. Prices vary from $89- $3,000 to start. For more sophisticated programs, you can pay tens of thousands of dollars.Keep in mind that the purchase price is only one cost associated with setting up a fundraising database. Ongoing costs include technical support and training on the use of the software (and training time for new staff). There may also be server/network and multi-user costs. Some software companies charge very little for a basic system and then charge extra for additional functionality, such as event management capability.Within this category, you have another choice to make – purchasing software that you own and install on your own computer and/or network, or going with an online program where your data are hosted by the software company and you pay a monthly charge for the service.With online databases, there’s nothing to install on your computer or network. All of your data are maintained by the vendor online, and you have access to your information from anywhere. These services vary in expense (some are free) and in the kinds of services you receive. If you have 1,000 or more records, they can be expensive. However, over time, the overall cost might be lower than the cost of managing an in-house program. These databases do come with some risks. For example, how will you have access to your information if the provider’s server or your Internet connection is down? And what happens if the company goes out of business? Source: This article was originally published in the Grassroots Fundraising Journal.About the author: Maria Petulla specializes in database management, direct mail, Special events, and major donor campaigns for New York City nonprofits. Reach her at [email protected] or (917) 698-9209.