Tags vs. Groups vs. Custom Fields
There are no hard and fast rules about when to use Tags, Groups and Custom Fields. Using the guidelines and examples below, you must decide for each piece of data which of the three is best suited to your needs. Consider not only the type of data, but what you will use the data for when determining which one is the best fit. Check out the user and administrator guide for more details.
Tags are best used for high-level categorization of contacts, activities, and cases in your database.
Groups are used to segment the contacts in your database - most often for controlling access to data and facilitating specific organization tasks. Groups may be created to serve the needs of short-term projects and may also represent persistent segments of your constituent/contact base. There are two kinds of Groups - Smart Groups and Regular Groups.
Smart Groups allow you to dynamically assign contacts to a group based on one or more characteristics and/or activities of those contacts. For example, you can create a Smart Group for "Recent Contributors from California" - which combines the "activity" of making a contribution during the current year and the "characteristic" of having an address in California. When new contacts in California make a contribution, they automatically appear in this group.
Regular or 'static' Groups allow you to explicitly place contacts in group independent of their characteristics. New contacts are NOT added simply based on some change in their data. For example, you would need to explicitly assign your Board Members to a "Board of Directors" group. You can then use this group to easily send board-related emails to this group. You may also want to restrict permissions to view and/or edit the contacts in this group.
CUSTOM FIELDS provide a flexible means of collecting and storing many types of data about your contacts, contributions, activities, members, event participants and more. Custom field values are searchable in Advanced Search and in the search screens for each component. This means you can easily do ad-hoc searches based on one or more custom fields ("Find all Individual contacts whose Profession is 'Nurse' and who works in a 'Private Hospital').