16 SEPTEMBER 1, 2015 THE NONPROFIT TIMES www.thenonprofittimes.com

BY DAN RIVAS

Technology has radically transformed the way nonprof-its interact with donors, particularly via the Web. An or-ganization can get a retweet in the morning, send anemail just after lunch, and get an online contribution in

the evening all from the same donor. That’s old news. Some 15 years into a new millennium, online

engagement is no longer a trend. It’s the foundation for everyfundraiser’s outreach strategy. Many questions remain, though,amid a maturing marketplace for donor management software. Thequestions include: What are the new trends that will guide the fu-ture of nonprofit fundraising?; Are vendors keeping up with whatfundraisers and executive directors need to sustain and grow theirorganizations?; and, Are organizations building the capabilities nec-essary to take full advantage of the technology at their fingertips?

On behalf of The NonProfit Times, Idealware interviewed indus-try experts with donor management software expertise. The mar-ketplace has seen few major breakthroughs since four years ago,they said. Some trends have continued to grow, while others haveleveled off.

This might have a lot to do with the economic cycle that turnedover in 2008. According to Keith Heller, CEO of Heller Consulting inOakland, Calif., when the tanking economy created a sudden dip infundraising, few nonprofits risked big investments in technology.Similarly, vendors saw revenues drop and many had to tread waterjust to stay afloat.

As the economy improved by the end of 2011, nonprofitsbegan to once again evaluate their options and vendors workedhard to reposition themselves at the top of a growing marketplace.As a result, donor management systems rapidly grew more power-ful, while costs stayed low.

“[Donor management] is a very dynamic and complex mar-ket,” said Robert Weiner of Robert L. Weiner Consulting in SanFrancisco, Calif., but the trends haven’t changed much in the pastfour years. Mobile access and integration continue to be importantas users find more ways to make use of so much data. Hosted sys-tems continue to increase in popularity, and users still want morepowerful reporting capabilities.

What’s interesting are the nuances within these trends andwhat they might signal for a future wave of innovations.

TECHNOLOGY IS PERSONALThe rise of the smartphone and tablet is about more than just

mobility. People carry these devices everywhere. They use themfor work, but also for play and to take pictures and catch up onnews. Technology is more personal than ever. That shifting rela-tionship is having a strong influence on what users expect fromenterprise software.

“People no longer expect technology to be this box that doesthings,” said Tracy Kronzak, co-founder of BrightStep Partners inSan Francisco, Calif. “They expect it to be a personal extension oftheir lives. Organizations expect technologies to be a personal ex-tension of their mission.”

As fundraisers spend more time with the software and growmore familiar with other powerful consumer technologies, user-friendliness is becoming a top priority. “User experience is a big-order winner,” said Jeff Haguewood, co-founder of SidekickSolutions, with offices in Spokane, Wash., and Denver. Most non-profit professionals now have years of experience with one or twosystems, giving them a better sense of what they want and needfrom technology. Many are choosing simplicity.

“It’s not uncommon to hear from (fundraisers at) small non-profits that their current system is too much,” said Janna Finch,senior market research associate at Software Advice in Austin,Texas. “Some are downgrading.” People expect their technology towork more like an iPad app than a mainframe. They want to click a

button and know what they’re going to get. “There are a lot of bells and whistles in the market,” Hague-

wood said. “What clients actually want is something simple, clean,and straightforward.”

The mobility of personal technology is having a big influenceon donor management systems. Eric Leland, a partner at FivePathsin San Francisco, Calif., said juggling devices away from your deskis that much more difficult on a small screen. Fundraisers don’twant to have to keep zooming in or scrolling left to get what theyneed. “Basic responsiveness is what it comes down to,” he said.“When they call us, they’re not asking whether the solution comeswith an app. They’re asking: ‘Does my database work on theroad?’”

Many fundraisers are not yet good at getting the full value oftheir newfound mobility, according to Amy Sample Ward, chief ex-ecutive officer of the Nonprofit Technology Network (NTEN) in Port-land, Ore.

“The portability that comes with a Cloud database is really notbeing capitalized on, even if they have a Cloud tool in place,” shesaid. She pointed to events management as an example. Whendonors fill out paper forms, staff members have to take them back tothe office, decipher them and then enter them into the database. Alot of time is burned doing something their software can do in real-time at the event. Sample Ward said more training would be neededif fundraisers hope to take their databases out into the world.

Vendors seem to be responding, and consultants are betting thatorganizations will figure out how to work in a mobile environment.“The amount of mobile use is skyrocketing,” Leland said. “It’s goingto be absolutely critical that these systems work well with all the keydata input, lookup querying, and reporting through a phone.”

INTEGRATION OPENS UP CHOICESIntegration was just getting off the ground four years ago, but

today, buyers are “demanding” it, according to Tompkins Spann, vicepresident of business development at KELL Partners in Austin, Texas.

Donor management systems have made significant progress,but it’s still a tricky business moving information from one system

S P E C I A L R E P O R T: D O N O R M A N A G E M E N T S Y S T E M S

The Evolutionof Donor ManagementAnd Its Fundraising Future

Special Report, page 17

‘‘People nolonger expecttechnology tobe this boxthat doesthings. --Tracy Kronzak

•September 1 2015 NPT_Layout 1 8/20/15 3:23 PM Page 16

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18 SEPTEMBER 1, 2015 THE NONPROFIT TIMES www.thenonprofittimes.com

to another. That frustrates a lot of fundraisers.“There’s not a lot of depth to integration out

there,” Haguewood agreed. “A lot of solutionshave free access to an API (application program-ming interface), but you often have to build mid-dleware and do other engineering to make itwork.” An API is a set of rules for how systemscommunicate that works like a digital poweroutlet. You “plug in” your data source and allowthe host program to “power” its use.

“The single biggest challenge nonprofits faceis the lack of integration,” said Bill Connors, aSan Francisco-based independent consultantand trainer. He thinks vendors are not doingenough to facilitate integration, leaving manysmall nonprofits in the cold. For example, somevendors are content to provide import/export ca-pability, which can be cumbersome and putsusers at risk of working with old data. Othersoffer APIs, but the support is so minimal that or-ganizations often need consulting help to sharedata across systems.

“Many small organizations can’t afford inte-grations using APIs,” he said, and Connors is notoptimistic much will change. “I don’t think there’sa ton of money to be made in getting products totalk to each other. Vendors just aren’t motivated.”

Heller agreed that vendors are still behindwhen it comes to integration, but he’s more opti-mistic. “It’s not been prioritized, but we’ll seegreater effort on the part of vendors to open upcore products to integration because nonprofitsare wanting choice and flexibility.”

Connors would like to see more of a commit-ment to integration through projects such as theOpen Philanthropy Exchange. “Vendors are goingabout solving the program of integration differ-ently,” he said. “What we need is standardizationacross vendors and products to better exchangethe data.”

Kronzak thinks vendors might be learningfrom the remarkable growth of Salesforce appsand the strong community that constituent rela-tionship management (CRM) system has built.

“Power has shifted in the marketplace,” shesaid. “[DMS vendors] are starting to understandthat a vibrant community of both users and inte-grated application, third-party vendors is criticalto the success of their own platforms.”

Everyone seems to agree that a lot of thequestions around integration remain unresolved.“It’s like a wild west,” Leland said, adding thatwhen it comes to APIs, there’s a lot of variation inwhat’s published and the level of access. “SomeAPIs are available, but only for certain purposes,and you have to pay for other uses. It’s very hardto figure out.”

Kronzak thinks recognizing this dynamicmight doom some vendors. “Those tools that are

keeping their API as a closed little mystery andmaking it difficult for developers to integrate arethe ones that are going to start dying off next,”she said.

DMS-CRM LINES ARE BLURRING“In 10 years, there might not be any such

thing as a donor management system,” saidSpann. He sees a marketplace where thebreadth and flexibility of a CRM system willeventually win out over the more limited focus ofa DMS. Market sentimentation might supportSpann’s point of view.

“Smaller buyers are often looking for [an all-in-one system] and are sometimes disap-pointed,” said Finch. Haguewood said he hasnoticed a similar trend with his clients.

Vendors are recognizing the need to offerbuilt-in capabilities beyond traditional donormanagement, including marketing automation,fundraising, payment processing, website inte-gration, volunteer management, and event man-agement tools. In fact, Kronzak said many donormanagement and volunteer management sys-tems are now being marketed as CRM systems.

However, as Sample Ward pointed out, you’renot likely to get best-in-class tools for each ca-pability from an all-in-one system. “Each systemis probably better at some things than others,”she said. Over time, that unevenness can widen.Kronzak sees some vendors getting caught in anendless game of “catch up.”

Of course, a CRM system isn’t an all-in-onesolution to an organization’s needs. Many fund -raisers make the mistake of trying to take advan-tage of more features than they can reasonablymanage, spreading staff members too thin. And tomanage events, emails, and payment, organiza-tions that choose a CRM model, but want the besttools, still struggle with integration.

Spann said he envisions a day when consult-ants will sell integrated technology packages,much the way WordPress templates are nowavailable. However, that model is still years awayand might never come to fruition. In fact, theCRM-ization of donor management systemsmight simply be a pendulum swing in the back-and-forth tension between simple, cost-effectivesystems and the desire to implement powerfultechnology.

A 360-DEGREE VIEW OF DONORSIntegrated or all-in-one systems are impor-

tant to fundraisers because access to data andtools in one place is the best way for organiza-tions to achieve what is commonly called a“360-degree view” of donors.

“There’s value in centralizing data so thatyou’re better able to understand the full pictureof what any single supporter does, and then re-flect that in the messages you send,” said Sam-ple Ward.

A holistic view of donors is effective for morethan receiving more donations or adding volun-teers. According to Heller, platforms such asAmazon and Facebook, which offer seamlessexperiences, have built an expectation amongdonors that organizations will know a lot aboutthem and can personalize every interaction. Un-fortunately, with or without more tools, many or-ganizations struggle to gain a clear view.

“The average nonprofit doesn’t know what todo with [all their data],” Connors said. “Theyneed help finding the gold nuggets among all therocks and pebbles out there.”

Connors also believes that many organiza-tions are not collecting the data needed for amultichannel fundraising effort. For example,email address fields often don’t contain any ad-ditional information about how the donor usesemail. “We need to stop treating email ad-dresses as phone numbers and more like mail-ing addresses,” he said.

When it comes to achieving a 360-degreeview of donors, the tools are there. “A lot of data-bases just aren’t being used to their full poten-tial,” Haguewood said. “Organizations are missingout on a lot of what they can do.”

MOVING TOWARD OUTCOMES“We’re moving from a phase where technol-

ogy was primarily a productivity tool to do whatwe already do faster and cheaper, and into aphase where technology is transformational,”said Tom Lehman, founder of Lehman Associatesin Alexandria, Va. He sees a greater emphasis onoutcomes measurement in future soft ware de-sign. “The software companies are going to beincreasingly asked to tell not just what their soft-ware can do, but how it can address major orga-nizational goals.”

Weiner sees larger organizations alreadyasking for dashboards and visualization tools intheir donor management systems. “They want tobe able to drill into data,” he said.

Kronzak believes the sector is ready to movebeyond what she calls the “stats class” ap-proach to data and begin working with data on amore multi-dimensional plane. “The world welive in is not just charts,” she said. “Data needsto be visual and an experience rather than just aset of numbers.”

Lehman said the power to use donor man-agement software to see and understand datalike never before is causing a change in how in-formation technology professionals work today.“I tell IT people, ‘Your job is changing,’” he said.“You’re not the operators of technology any-more. You’re more consultative now. You helpstaff gain real value from the technology.”

HEADS IN THE CLOUDCloud-based software was a hot new trend

not too long ago. Today it’s a fundamental realityof the marketplace. The Cloud-based Software-as-a-Service (SaaS) model is now the mostcommon way donor management software isdelivered. The arguments in favor are familiarand persuasive, but a few interesting trendshave emerged in the gaps between those argu-ments -- especially for small nonprofits.

Nonprofits outside of big cities don’t always

have access to fast, reliable Internet service,which affects their software. “You have to have astrong Internet connection [to run Cloud-basedsoftware],” Leland said, “not just an averageone. You’re constantly doing clicks that pullqueries across the Internet. It’s heavy stuff.”

Leland noted that even affluent rural com-munities such as Monterey County in Californiastruggle with this issue.

Rural nonprofits where staff members wantto continue to run desktop software and hosttheir own data have fewer and fewer options. Inone case a firm was acquired and the newowner told installed users if they didn’t move tothe current version of the software, their desktopversion would be “turned off” remotely, cuttingoff their access to the old software and, effec-tively, their data. Other vendors have stoppedsupporting their installed software and are let-ting those systems die through benign neglect.

Renting software also carries with it the riskof running behind on your payments. Dependingon your agreement, you could lose access toyour data if you stop paying for service.

These risks also bring new freedoms thatcan make a big difference for small nonprofits.Although there are implementation costs withany new system, software that you pay for on amonthly basis requires less upfront money to getrunning. This smaller initial investment alsomeans organizations have more flexibility toadapt as the world around them changes.

“Thanks to the subscription-based system,it’s easier to try it out and if it’s not working, youcan move to something else,” said Finch. “I don’trecommend that, but there are more options be-cause you’re not paying these huge upfront feesanymore.”

SOFTWARE POWERS CHANGEPowerful software that can help an organiza-

tion be more efficient, productive, and betterserve its mission is now more accessible thanever. This is a blessing and a curse.

“As the tools become more powerful, thetemptation to do everything at once is gettinggreater and greater,” Kronzak said. “When yousay yes to everything, it’s hard to move forward.”

This might be the oldest trend of all. The in-ability to sort out “wants” from “needs” and thelack of expertise needed to make the things yousay “yes” to work are the primary limiting fac-tors. It’s not likely any technological innovationwill fix these very human challenges. NPT

Dan Rivas is managing writer for Idealware inPortland, Maine.

S P E C I A L R E P O R T: D O N O R M A N A G E M E N T S Y S T E M SContinued from page 16

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20 SEPTEMBER 1, 2015 THE NONPROFIT TIMES www.thenonprofittimes.com

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