What is Nonprofit Software?

There’s no single IT system for running a nonprofit organization. The phrase “nonprofit software” encompasses a wide spread of systems and back-office tools for managing both day-to-day operations and long-term planning. Having the right software in place can make the difference between impactful growth and mere survival. This applies to public charities, foundations, faith-based groups, higher education, artistic and cultural societies, and many other classes of nonprofits. And yet, software-buying is a challenging endeavor, especially for decision-makers with little IT knowledge. How do you find the best nonprofit software vendors? How do you decide what tools you need? What if you can’t afford much?

This guide will help you help you get started by defining the current market, dividing nonprofit software into major functional categories, and comparing solutions in each category.

Market Overview

Nonprofit Software Vendors, by Category

CRM/Donor Mgmt	Email Marketing	Accounting
Raiser’s Edge	MailChimp	Blackbaud
Salsa	Constant Contact	QuickBooks Nonprofit
Bloomerang	GetResponse	Xero Nonprofit
Aptify	SimplyCast	Intacct
NeonCRM	Campaign Monitor	Abila

Nonprofits and Technology

Nonprofits exist in and among the business world and face many business-like challenges; and yet, they operate under the banner of public good, which means assets and infrastructure often take a back seat. Some analysts have referred to this phenomenon as a “starvation cycle¹.” An organization feels guilty about monetary expenditures, and so misrepresents its costs to funders, receives a commensurately inadequate amount of funds, and is forced to cut corners on vital systems and technology.

When it comes to technology, nonprofits are notoriously ill-equipped. They use outdated operating systems and obsolete hardware, relying on home-brewed systems of spreadsheets, rubber stamps, and rolodexes to push through their daily workflows. A recent report from Techsoup² further defined the biggest IT challenges for nonprofits:

• Over 40 percent find training on new apps, systems, and software difficult
• The same number find technology planning difficult
• 34 percent find mobile technology difficult to implement
• Roughly a quarter of nonprofits have a hard time updating or purchasing new software

Other challenges include maintaining a website, maintaining a network, providing staff with IT support, managing databases, security and privacy, and backup and recovery of files.

Modern, cloud-based—or “software-as-a-service” (SaaS)—systems can help nonprofits overcome many of these obstacles by providing access to software that’s powerful, but also affordable and easy to learn. Most cloud applications integrate with countless other business tools and can be set up in under a day, although there are also larger software suites and enterprise products available for organizations with expansive needs.

Nonprofit Software Vendors: Common Use Cases

There are a number of different areas where the right software can shore up and automate business processes. That means a nonprofit can accomplish operational tasks with greater efficiency and put more energy into their bottom line, which is their mission.

Here are some of the most common functions of nonprofit software:

Donor Management:

Similar to customer, lead, or prospect management in the corporate world, nonprofits often use software to store donor contact records and relevant information like donation history, occupation, and social data. Donor management tools usually help nonprofits solicit future donations, create receipts, and use reporting features to analyze trends. According to a 2012 report by Pursuant, for every $100 given to nonprofit organizations, $96 was lost through attrition ³. It’s no wonder donor retention is one of the biggest strategic pursuits for almost every nonprofit.

Fundraising and Grant Management:

Helps nonprofits secure donations by managing fundraising campaigns and grants. Often found in nonprofit-specific CRMs or accounting software, these features create and track broad campaigns and the more minute, recurring tasks within, such as proposal drafting, online giving forms, and financial reporting.

Volunteer/Employee Management:

Most nonprofits are operated by some mix of volunteers and paid staff, which means they need a reliable solution for tracking hours, scheduling shifts, and entering payroll when applicable. Some software can even help you coordinate work on new projects or events based on who or what resources are available.

Accounting:

Even though their ultimate goal isn’t to turn a profit, nonprofit organizations still need to manage their money. That means keeping donation tracking, paying bills, recording expenses, creating purchase orders for requisition, filing tax forms, building budgets, and creating financial forecasts, among many other things.

Marketing Campaigns:

Nonprofits have been sending newsletters and fundraising pamphlets for years, but many are now venturing into various digital marketing mediums, like email, social, and mobile device campaigns. These campaigns can help you keep constituents informed and connected, as well as attract new or repeat donors. Marketing automation tools give you powerful analytics to determine the best channels for delivering content, measuring engagement, and turning prospects into pledges.

Event Planning:

Whether it be a silent auction, charity ball, phone-a-thon, or a fundraising dinner, it takes careful foresight and planning to plan a nonprofit event. Software with event planning features can help you organize logistics (like scheduling, table arrangements, and guest speakers), invite and follow-up with the right attendees, and capitalize on the new relationships that may emerge.

Now that you have a better idea of the nonprofit software marketplace and common software uses, let’s take a look at three major categories.

Constituent Relationship Management

Customer relationship management—or CRM—traditionally refers to software that stores contact records and pushes prospects, leads, and opportunities through the sales pipeline. In the nonprofit sector, on the other hand, CRM is usually taken to mean “constituent relationship management” because of nonprofits’ more diverse stakeholders (donors, volunteers, members, alumni, students, partners, vendors, media outlets).

The best nonprofit-specific CRMs will have tools for managing all your relationships, though not every solution is created equal. Some products in this category are billed as “donor management software” or “fundraising software,” with prominent features and use-intent varying slightly according to vendor. For example, some nonprofit solutions offer integrated marketing automation.

Case Study: Room to Read ⁴

Room to Read is a nonprofit advocacy organization that focuses on developing literacy skills among primary school children in Asia and Africa and battling educational gender inequality. The organizations was experiencing significant growth, but still using spreadsheets to manually enter donor and gift information, which made answering questions and pulling reports difficult. They turned to Blackbaud’s The Raiser’s Edge, which let them locate all data in a centralized system and improve overall efficiency. Other gains they experienced:

• Streamlined gift entry, reporting, acknowledgements, and mailings
• Growth of fundraising revenues from $4 million to $22 million.
• Improved retention and stewardship

Nonprofit Accounting

According to the National Center for Charitable Statistics, about half of U.S. nonprofits have less than $100,000 in total revenue ⁵. That means many organizations have to do a lot with a little when it comes to finances. Although some CRMs include basic accounting functions (like time and expense tracking), most don’t provide the end-to-end financial tools required to manage all the financials at a nonprofit organization.

Accounting software helps nonprofits perform the financial planning and reporting functions that keep them afloat without wasting hours inside of spreadsheets or paying an accountant to handle basic tasks.

Case Study: The Great Books Foundation ⁶

The Great Books Foundation is an educational nonprofit that sponsors interdisciplinary readings and literary programs to promote social discussion. Before Intacct, they were using an on-premise, publishing-specific accounting system, but as their organization grew, the system’s limitations become clearer. They started looking for a solution that could minimize the need for IT support and run without glitches and downtime, and also something that would allow employees to work remotely. After switching to Intacct Foundation Accounting Software, the Great Books Foundation experienced a number of benefits, including:

• Seamless integration with lead management and ecommerce applications
• Reduced IT costs and accelerated collections
• Reduced inventory by 33 percent
• Cut invoice days outstanding by 38 percent

Nonprofit Marketing Automation

Marketing automation is about using technology to manage your brand and attract new prospects across multiple engagement channels, whether it be website content, email, social media, mobile devices, or even an old-fashioned newsletter.

Sure, you could just send a mass email to all of your contacts, but that only addresses one aspect of a very nuanced, complex process—one with myriad opportunities for failure. Marketing automation software gives nonprofits valuable tools for preempting these failures and getting more supporters plugged in through volunteer work, donations, and event attendance.

How to Choose the Right Software

That’s where we come in. At TechnologyAdvice, we kind of know a lot about IT, but we aren’t elitist about it. Our goal is to help businesses connect with the technology that best meets their needs. We’ve compiled product information, reviews, case studies, features lists, video walkthroughs, and research articles on hundreds of leading IT solutions, all to make the buying process more straightforward for decision makers like you.

If you’re curious about any of the solutions listed in this guide, we’d love to talk to you about it. Call one of our in-house specialists for a free consultation, or use the Product Selection Tool on our site to get a personalized recommendation in seconds.

Visit www.TechnologyAdvice.com

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Sources

1. “The Nonprofit Starvation Cycle.” Stanford Social Innovation Review. Accessed February 17, 2015. http://www.ssireview.org/articles/entry/the_nonprofit_starvation_cycle/
2. Kindsvater, Laura. “Top Tech Tasks for Nonprofit Consultants: We Tell You More.” TechSoup. Last modified January 27, 2015. http://forums.techsoup.org/cs/community/b/tsblog/archive/2015/01/28/top-tech-tasks-for-nonprofit-consultants-we-tell-you-more.aspx
3. “The Donor Retention Dilemma.” Pursuant. Accessed November 7, 2014. http://pursuant.s3.ama-zonaws.com/2014/Pursuant/Infographs/TheDonorRetentionDilemma_08272014.pdf
4. “Customer Stories: Room to Read.” Blackbaud. Accessed February 18, 2015. https://www.blackbaud.com/fundraising-crm/customers/room-to-read
5. “Quick Facts About Nonprofits.” NCCS. Accessed November 5, 2014. http://nccs.urban.org/statistics/quickfacts.cfm
6. “Nucleus Research: Intacct helps The Great Books Foundation manage growth, cut costs, and increase visibility.” Intacct. Accessed February 18, 2015. http://us.intacct.com/customer-success-stories/great-books-foundation