2013 donor management systems use and … associates, llc 2308 mt. vernon ave, suite 713 alexandria,...

Lehman Associates, LLC

2308 Mt. Vernon Ave, Suite 713 Alexandria, VA 22301 703-373-7550 www.lehmanconsulting.com / www.lehmanreports.com [email protected]

2013 Donor Management Systems Use and Satisfaction Study

LEHMAN ASSOCIATES, LLC All Rights Reserved, 2014 Page 1

Donor Management Systems: Use and Satisfaction

Nonprofit research conducted in collaboration with

April, 2014

Lehman Associates, LLC

2308 Mt. Vernon Avenue, Suite 713 Alexandria, VA 22301

Tom Lehman

President

703.373.7550 www.LehmanConsulting.com

www.LehmanReports.com


Table of Contents

Overview ......................................................................................................................................... 3

Donor Management Systems in Use .............................................................................................. 5

Purchasing Patterns ........................................................................................................................ 7

Satisfaction – All Donor Management Solutions ............................................................................ 9

Satisfaction by Type of DMS Solution ......................................................................................... 9

Donor Management Product Satisfaction .................................................................................... 10

Importance .................................................................................................................................... 12

Methodology and Sample Demographics .................................................................................... 13


Overview

Welcome to the findings report on the first annual Lehman Reports™ study of the Use and Satisfaction with Donor Management Systems. This study was conducted in collaboration with the Nonprofit Technology Network, NTEN. The donor management system (DMS) is a core application for nonprofits for fundraising,

communications and donor engagement campaigns. By providing a 360 view of donors, these systems enable organizations to target and tailor campaigns around specific interests, behavior, and relationships. Increasingly, social media profiles and activity are a part of the donor view, helping to power online and peer-to-peer fundraising programs. Leading systems go beyond management of donor information to offer a range of functions to directly support fundraising campaigns, email communications, social media engagement, and advocacy. Nonprofits use a variety of applications to manage donor records falling in three general categories: donor management software products, custom systems, and office database applications. Over 100 donor management products are cited by study participants, but nearly half are using one of just four products. The other half is spread across dozens of products, including products such as email marketing and advocacy systems that are not true donor management applications. Nonprofits that are using custom systems or office database applications are far less satisfied with those systems than are those using a DMS product. Those ratings are among the lowest recorded in similar Lehman Reports technology studies in the association market. Still, as a group, even the satisfaction ratings for donor management products are only moderate with average satisfaction ratings for individual products ranging from 4 to a little over 7 on a 10-point scale. The three leading products in the mid-to-large nonprofit segments are Raiser’s Edge, SalesForce.com, and Donor Perfect. GiftWorks holds the fourth-largest overall share as a result of its strong presence among smaller nonprofits. All receive solid satisfaction ratings. On average, nonprofits make a donor management system purchase decision about every three years. As such, most systems in use today were installed, upgraded, or renewed within the past three years, and a similar proportion expect to enter into a new decision process by the end of 2016. Of those using one of the donor management products, and particularly one of the leading products, most are likely to stay with that product at the next decision point. That is understandable given the cost and disruption moving to a new product can entail. The growing use of digital and social media-connected fundraising requires more sophisticated donor


management capabilities. Many nonprofits favor donor management systems that incorporate a suite of capabilities to support fundraising, communication, and advocacy programs. Of those currently using an in-house custom or office database solution, many are likely to move to a donor management product. Similarly, those currently using one of the more limited DMS products are likely to move to products that offer a broader set of capabilities. Many smaller nonprofits have little, if any, in-house technical expertise, and limited funds to spend on these systems. Cost and ease of use are the two most frequently cited decision factors for these smaller nonprofits. While cost is always an important consideration, large organizations also cite product capabilities and features, options to integrate with other in-house or external applications, and advanced reporting capabilities as important decision factors. Overall, organizations are well satisfied with several longstanding donor management system functions. These include data security, basic reporting, relationship tracking, customer support, and data import / export capabilities. They are much less satisfied with system capabilities required to support emerging digital engagement and fundraising such as mobile options, a

360 view of donors that includes social media activity, online donation customization options, and peer-to-peer / personal fundraising capabilities.

About the sample

The Lehman Reports Donor Management Study is based on an online survey of nonprofits conducted during October-November, 2013. The NTEN list of contacts was augmented by a purchased list of contacts in nonprofits with at least a $1M annual budget. A total of 1,481 fully completed surveys from nonprofits were recorded. After weighting to adjust for multiple entries from a given organization, the analysis dataset includes a total of 1,399 organization responses. To calculate full market findings, the response set is weighted by organization size (annual budget) to match a comparative distribution of 990 filings from 501c3 organizations.


Donor Management Systems in Use

Nearly all of the nonprofit organizations that engage in fundraising are using some type of application to manage donor records. Of these, the vast majority, 83%, are using one of a number of donor management products and services. Only 17% are making use of a custom system or office database application. Large nonprofits are more likely to be using a DMS product, but even among small organizations, most are using a DMS product.

There are over a hundred DMS products referenced by these organizations, but nearly 50% cite one of the four leading providers, Raiser’s Edge, SalesForce.com, Donor Perfect, and Giftworks. Nearly 90% reference one of just twenty-eight products. That leaves a small portion of the market split across a large number of products. Consolidation among smaller providers is likely.

83%

3%

14%

Type of Donor Management Solution

DMS product or service

Custom DMS

Office database / application

Of those using any type of donor management solution


11.3%

0.5%

0.5%

0.6%

0.6%

0.7%

0.7%

0.7%

0.7%

0.9%

0.9%

1.2%

1.3%

1.5%

1.5%

1.7%

1.7%

1.8%

1.9%

2.0%

2.2%

2.3%

5.0%

5.0%

5.2%

7.9%

9.9%

14.6%

15.2%

0% 3% 6% 9% 12% 15% 18%

Other products

Enterprise

Millennium

Databank

Patron (on Salesforce)

Constant Contact

Network for Good

Luminate CRM

MailChimp

iMIS

netFORUM Pro

Little Green Light

Fundraiser Select / Pro

DonorPro

Blackbaud Enterprise CRM

Salsa Fundraising

DonorSnap

Fundraising 50

Exceed

DonorDirect

Common Ground

NEON

Team Approach

CiviCRM

eTapestry

GiftWorks

Donor Perfect

SalesForce.com

Raiser's Edge

Nonprofits with a DMS product or service

DMS Products

Excludes custom solutions and office database applications (weighted by size)


Product market share varies by organization size. Raiser’s Edge is the clear market leader for mid-to-large nonprofits and the margin of that lead increases with organization size. Donor Perfect and SalesForce.com have solid presence across much of the market. Giftworks is primarily used by smaller nonprofits.

Purchasing Patterns

The marketplace for DMS products and services is dynamic. Nonprofits assess and make a decision about their donor management solution every 2-3 years. Over the past few years, many have installed new systems, replacing office database, custom systems, and other DMS products. The growing use of online and social media fundraising places new demands on donor management systems, even for smaller organizations. Looking forward, the market of donor management products is likely to consolidate. This will be driven in part by the economies of scale required for continuing product development and new customer marketing. Consolidation may accelerate as nonprofits gravitate towards a subset of products that offer robust capabilities at affordable levels. While the market is dynamic, the situation is less dynamic at an individual organization level where the data shows that nonprofits tend to stick with their chosen product for some time. Changing products can be costly, disruptive to current operations, and present challenges for staff to learn a new system. As the level of integration increases between donor management systems and other applications, the time and cost to install a new product will also increase. Similarly, as nonprofits come to rely upon a more in-depth donor record, the challenge of migrating that data to a new system increases.

6.6

6.6

6.6

7.3

7.7

7.8

7.9

8.1

1 3 5 7 9

Cost advantage or promotions for continuing

Our working relationship with the provider

Perceived risks with a new product

Easy upgrade path

General satisfaction with product

Likely disruption to our staff and operations

Staff familiarity with product

Costs of installing a new product

Mean importance on a 10-point scale

Factors in Upgrade / Renewal versus New Product Decision

Excludes custom and office applications


Nonprofits who anticipate moving to a new donor management product need to expend sufficient time and resources to make the best selection possible for their particular situation. The new system is likely to be in use for at least 3-5 years, and quite possibly longer.. Given the pace of change, particularly around digital and social fundraising and the use of advanced analytics to drive personalized engagement, even a few years with a product that does not keep pace will limit opportunities for the organization to take advantage of new technology and online models. In considering a new product purchase, nonprofits most frequently cite cost and ease of use as top decision factors. This is followed by tracking and reporting capabilities reflecting a desire to leverage the information in the donor record and from campaign tracking to improve targeting and fundraising productivity. This includes the use of more advanced analytics. Rounding out the top four most frequently cited factors is consideration of the full range of product features and capabilities. There are differences in the importance ranking of these decision factors by organization size (annual budget). Smaller organizations are much more likely to cite cost and ease of use as the major factors, while larger organizations place greater comparative importance on product capabilities and capabilities to integrate with other internal and external applications.

Mobile is a highly visible trend in the online industry as a whole and most of these organizations believe it will have a growing importance for them as well. If these organizations were choosing a donor management product today, nearly 60% believe mobile options for both donors and staff would be an important decision factor, including over 20% who say it would be an absolute requirement. Fewer than 10% express an opinion that their organization is unlikely to use mobile.

14%

14%

16%

23%

29%

43%

46%

64%

68%

72%

82%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Impression of provider as a working partner

References from other customers

Best practices and training options

Experience with organizations like ours

Breadth of fundraising capabilities

Integration with other applications

Technical and customer support

Product capabilities and features

Tracking and reporting capabilities

Ease of use

Cost / pricing structure

Percentage citing factor as one of top five

Purchase Decision Factor Importance


The mobile environment is evolving rapidly and new business and use models are emerging on a regular basis. When assessing donor management products, nonprofits will need to understand not only current mobile capabilities, but also the provider’s longer term mobile strategy. This will help ensure that the chosen provider and product will continue to invest to stay abreast of this rapidly changing environment, enabling its customers to take full advantage of these opportunities.

Satisfaction – All Donor Management Solutions

Nonprofits are only moderately satisfied with their current solution. The study includes two measures of satisfaction. The first asks how likely the respondent would be to recommend their organization’s current donor management solution to a colleague. The second asks respondents to rate satisfaction with their current solution across 29 distinct areas of functionality and services. Both are rated on 10-point scales. The average rating on a 10-point likelihood-to-recommend scale is 6.1 and the average satisfaction rating of the detailed items is lower, just 5.7.

Satisfaction by Type of DMS Solution

However, nonprofits using DMS products and services are much more satisfied than those managing donor records using a custom system or office database. They are much more likely to recommend their solution to a colleague, an average rating of 6.6 versus less than 4.0, and they assign significantly higher average product satisfaction ratings, 6.1 versus 5.0 and 3.9 respectively, for custom and office databases. These are dramatic differences. The non-product ratings in this study for both satisfaction and likelihood-to-recommend are among the lowest recorded across all Lehman Reports technology industry studies.

22%

35%

32%

7% 4%

Importance of Mobile in Next DMS Decision

Very important, likely required

Important, but not required

Nice to have, not an important factor

Not likely to use, not a factor

Don't know / other


Donor Management Product Satisfaction

For donor management products, nonprofits assign higher satisfaction ratings to core donor management capabilities including security, basic reporting, relationship tracking, import / export capabilities, and customer support. Nonprofits are much less satisfied with capabilities to support digital donor interactions including mobile support, customization of donation web pages, peer-to-peer fundraising, and options for donors to manage their own contact information. Satisfaction ratings are also low for product capabilities to provide a full view of donors that includes social, a requirement for effective CRM and social-enabled fundraising campaigns. The importance of these capabilities is likely to increase. Nonprofits in the market for a new donor management product may want to pay special attention to capabilities that receive below average ratings to be sure that prospective systems meet their needs in these areas. While some may not be critical today, most are likely to be important to the organization in the future.

3.6

3.9

6.6

1 2 3 4 5 6 7

Office db / application

Custom DMS


Average rating on a 10-point scale

Likelihood to Recommend by Type of DMS Solution

3.9

5.0

6.1

1 2 3 4 5 6 7

Office database / application

Custom DMS


Average satisfaction on a 10-point scale

Average Satisfaction by Type of DMS Solution


6.1

1 2 3 4 5 6 7 8

Mobile for donors include online donations

360° view of donors including social

Customize e-commerce / donation web pages

Peer-to-peer / personal fundraising

Member / donor self-service, eg contact info

Overall e-commerce capabilities

Support for affiliates or component orgs / chapters

Website / CMS integration capabilities

Events management

Mobile access for staff

Options to extend product through toolkit or API

Integration with internal systems

Integration of online, mail, and other marketing

Planned giving cultivation and mgmt

Online donation capabilities

Development direction of the product

Fundraising campaign planning and mgmt

Advanced reporting, BI

Average rating

Support for recurring donations

Cost and ease of upgrade options

Major gift solicitation, cultivation, moves mgmt

Ease of use, staff and constituents

Campaign management

Product documentation / online help

Data import and export capabilities


Donor relationship tracking (family, professional)

Basic reporting capabilities

Data security

Average satisfaction ratings on a 10-point scale

Satisfaction Ratings for DMS Products and Services

Excludes custom and office applications


Importance

Respondents are also asked to rate the importance of each of the detailed items to provide a context for satisfaction ratings. The data presented includes all organizations. There are few differences in importance ratings across organization size and current type of donor management solution. Larger organizations place somewhat greater importance on tools for major gift giving (major donor cultivation, planned giving support), higher level analysis capabilities, technical options to customize the product, and support for affiliated organizations. However, even within these areas, the differences are small.

0% 20% 40% 60% 80% 100%

Support for affiliates or component orgs / chapters

Options to extend product w/ toolkit or API

Peer-to-peer / personal fundraising

Mobile access for staff

Member / donor self-service, eg contact info

Overall e-commerce capabilities

Mobile for donors include online donations

Development direction of the product

Customize e-commerce / donation web pages

Planned giving cultivation and management

Events management

360° view of donors including social

Website / CMS integration capabilities

Fundraising campaign planning and management

Campaign management

Major gift solicitation, cultivation, moves management

Online donation capabilities

Advanced reporting, BI

Support for recurring donations

Product documentation / online help

Integration with internal systems

Donor relationship tracking (family, professional)

Integration of online, mail, and other marketing

Cost and ease of upgrade options


Data import and export capabilities

Data security

Basic reporting capabilities

Ease of use, staff and constituents

Importance of Donor Management Solution Functionality

Very Important Somewhat Important Neither Important nor Unimportant Somewhat Unimportant Very Unimportant


Methodology and Sample Demographics

The Lehman Reports Donor Management Study is based on an online survey of nonprofits conducted during October-November, 2013. Email invitations and reminders were distributed using the NTEN contact list augmented by a commercial list of nonprofit contacts. Each survey respondent is encouraged to suggest an additional or alternate contact within the organization and many do so. A total of 1,481 fully completed surveys from nonprofit organizations were recorded. After weighting to adjust for multiple organization entries, the analysis dataset includes a total of 1,399 responses. A weighting system was also developed to balance the sample by organization size for selected full-sample analyses. This weighting is based on a dataset of 990 filings by 501c3 organizations with at least $100K in contributions, grants, and gifts. The response set includes data for all sizes of organizations, with categories ranging from “less than $500K” to “over $25M.” However, a review of both the distribution and returned sample suggests that study findings are most representative of organizations with annual budgets of at least $500K.

Sample Demographics

The sample is a good cross-section of nonprofits who engage in fundraising with major donors and / or individual contributors. Three-quarters are using a donor management product with most of the remainder managing donor records using an office database such as Microsoft Excel and Access. Given the title and description of this research, it would be expected that nonprofits who engage in fundraising and use some type of system to manage donor records would respond at higher rates. This appears to be the case. While this has an impact on calculations on a few items such as product share of the total nonprofit market, it is likely to have little impact on the key findings of the study that relate to organizations using donor management systems, and specifically, to the installed base of donor management products. All data presented in this section are the actual response distributions, adjusted only for duplicate organization responses. As noted in several charts, many of the overall findings presented elsewhere in the report are weighted by organization size. The weighting is based on an analysis of 990 forms for 501c3 organizations citing at least $100K in contributions, grants, or gifts. The majority of responses come from charitable organizations and “other” nonprofits. The most frequently cited programmatic focus areas are education, human services, health and youth. Many organizations indicated more than one programmatic focus.


52%

25%

5%

4% 3% 2%

9%

Type of Organization

Charitable organization

Other nonprofit

Advocacy network

Trade or professional association

Philanthropic foundation

Public sector / government

Other (please specify)

2%

4%

6%

7%

10%

11%

11%

12%

13%

16%

20%

24%

27%

34%

0% 10% 20% 30% 40%

None of these

Legal

Employment

International

Housing

Faith-based

Civil Rights / Advocacy

Environmental

Arts / Culture

Public / Social Benefit

Youth

Health

Human Services

Education

Percentage of organizations (adds to more than 100%)

Programmatic Focus


The majority of the returned sample consists of smaller organizations and most lack even one dedicated IT staff member. Still, given that the vast majority of nonprofits are small, the sample is actually somewhat over-representative of large organizations.

25%

14%

14% 17%

10%

9%

11%

Annual Budget

Less than $500K

$500-999K

$1 - 1.9M

$2 - 4.9M

$5 - 9.9M

$10 - 24.9M

$25M and Over

5%

18%

17%

9% 7% 7%

5%

4%

10%

18%

Staff Size

No paid staff1-45-910-1415-1920-2930-3940-4950-99100 or more

56%

16%

15%

4% 5% 1% 3%

IT Staff Size

No dedicated IT staff

1

2-3

4-5

6-10

11-15

16 or more

2013 donor management systems use and … associates, llc 2308 mt. vernon ave, suite 713 alexandria,...

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