September 9, 2009

Is It Donor Management Software Or Business Intelligence

By Paul Clolery

You would think that if someone adopts a dog or cat at a shelter that the organization would immediately know if that person was also a donor. But that wasn’t the case for an organization in the Midwest.

The organization changed its software and now coordinates information between departments. “For the first time they will know when a donor adopts a dog because their donors, adopters, volunteers, service providers and the people who drop off stray animals all reside in the same, easy-to-use system,” said Keith Heller, principal at Heller Consulting which is implementing Common Ground for the animal welfare organization. Heller has operations in Berkeley, Chicago and New York.

The systems used to be called donor management software. Now it’s a business intelligence solution. It sounds complicated, but it’s really just the same software, with upgrades and new delivery methods.

“This echoes what’s going on in the business world, with a movement from merely tracking data to an emphasis on using it strategically to make business decisions,” said Laura Quinn, executive director at technology nonprofit Idealware in Portland, Maine. “It’s a useful mentality for organizations to have -- to ensure that they’re tracking and then actually using the data that will help them decide how to fundraise most effectively.”

The phrasing can be misleading. “I don’t know that the vendors who talk about ‘business intelligence’ actually provide a lot more features to help with this, though. Rather, they’re trying to position donor management -- correctly, I think -- as a strategic tool, that organizations should invest in,” she said.

Sharon Burns, chief information officer at the John D. and Catherine T. MacArthur Foundation in Chicago, spends her day making software talk interdepartmentally. She believes that successful technology initiatives solve business problems. The challenge is providing what everyone in the organization needs to know.

“It is difficult to implement good technology solutions without knowing the goals of the organization. Cost containment goals are fundamentally different from the desire to be perceived as the leader in a field. While both goals are not mutually exclusive, it is important for the technology group to know the organizational goals to design successful technology projects,” said Burns.

“Because of its unique status as a private foundation, the MacArthur Foundation does not engage in fundraising. We do, however, use donor management software to track our outreach activities. Direct marketing has been using business intelligence software for years to track the success of various online market initiatives and to identify new segments for additional revenue generation,” she said.

With adequate investment in people and software, nonprofits can learn from the success direct marketers have realized by implementing business intelligence software, said Burns. “Where traditional donor management software provides tracking for simple donations, pledges, memberships, memorial and annual donations; donor management software with business intelligence functionality can help identify new strategic opportunities for fundraising.”

Where traditional donor management systems provide for passive measurement of donations, donor management systems, with a business intelligence component, can provide tools for analysis of donations to identify segments of donors where donations may be falling or increasing, depending on the donation messages being delivered, Burns said.

This is going to take more than money. “The new business intelligence software tools for donor management require a new skill set and strategic focus by the group tasked using them to generate increased donations,” she said.

Delivery and use of donor management systems is also dramatically changing with the advent of cloud computing, open-source software, and the software-as-a-service (SaaS) model where the software resides at the vendor.

According to Idealware’s Quinn, “There certainly is a growing trend towards SaaS solutions. It’s a low maintenance option that can work really well for nonprofits, especially those without a big IT infrastructure. But there will always be organizations that prefer to have their system installed in-house -- perhaps because want to integrate it in complex ways with other systems, or they have special concerns around the privacy of data. And installed systems are often cheaper in the long run if you have the IT infrastructure to support it. Installed systems aren’t going away anytime soon.”

Burns said that the issue is not the costs of software but cost of system upgrades to handle new bells and whistles, as well as IT staff costs. “As I look at controlling costs and the size of the IT support staff, I have relied on cloud service providers to provide high-quality software to our staff, and control my software maintenance costs. In evaluating software products, application service providers (SaaS and cloud) is always our first choice because I’m able to provide the service and not add to my internal software support FTE cost,” said Burns. “We choose off–the-shelf software second and only develop custom applications when our business needs dictate a custom solution.”

Despite the fact that the software resides elsewhere and that vendors are updating the interfaces so that users find them easier, the software is not yet idiot-proof. “I don’t think you'll ever be able to make a donor management system idiot-proof. Fundamentally, they can help you manage a fundraising process, but they can't replace the need to establish sensible procedures and then to actually follow them,” said Quinn. “There will always be opportunities to enter terrible data, categorize data ineffectively, or run misleading reports.”

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This article is from NPT TechnoBuzz, a publication of The NonProfit Times.

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