Applicant Tracking Software (ATS) has revolutionized the way employers scan through resumes and cover letters. No longer do they have parse through every single application. ATSes do all the work for them. This makes life a lot easier for employers, but it can leave job seekers in the dark if they aren't prepared.
As you are probably aware, the two main parts of your job application are your resume and cover letter. If you want these documents to be get through the ATS, you are going to have to tailor them. This means making use of job key words in your resume. These key words can be found by going through the job description. You then need to sprinkle these in through your resume (Note: Make sure it's not at random. It has to make sense). Examples of key words depend on the type of job for which you are applying. For instance, a resume for a fundraising job should include words like "development" or "developing relationships."
Cover letters are handled a little differently by ATSes. Very few of these programs are able to scan cover letters as an attachment. They treat the body of your e-mail as the cover letter instead, so it's imperative that you write it there. When creating your cover letter, think of it as an additional medium to list more key words and skills that you weren't able to fit into your resume. The more key words an ATS finds, the higher it will rank your application. And that means it has a much better chance of getting into the hands of an actual human. Imagine that!
One thing to keep in mind: Not all ATSes keyword-search cover letters, so don't spend too much time tailoring it towards them. The majority of your energy should be spent making your resume as ATS-friendly as possible.