GiftWorks Changes Pricing Policies

October 23, 2013       Mark Hrywna      

Nonprofits using older versions of GiftWorks donor management software have until March to decide whether to upgrade and shift to a subscription-based fee, a move that’s raised the hackles of some organizations.

Lancaster, Pa.-based GiftWorks was acquired by FrontStream Payments this past August. The firm also acquired Toronto, Ontario-based Artez Interactive. FrontStream, in Reston, Va., is backed by a group of investors led by a New York private equity firm.

FrontStream President & CEO Nina Vellayan said the market has been shifting away from a licensed-based pricing model to a subscription-based Software as a Service (SaaS) model.

“From our perspective, we believe we have the right toolset to support any size nonprofit. As we were doing the analysis, our goal was to keep pricing competitive,” Vellayan said. GiftWorks has always been a lowest-cost provider to the market and that will continue even with the shift in pricing, she said.

Customers have been “somewhat verbal” in their feedback. FrontStream has hosted two webinars with as many as 1,600 combined registrants to explain the changes and direction in which the firm is going. Customers made clear that they could not make a buying decision in 30 days so the change was made to six months, she said.

A Sept. 9 notice email from FrontStream first alerted customers that the 2006, 2008, 2010 and 2011 versions of Gift Works would be retired by Oct. 15. Access to all versions was extended until March 31, 2014 after customer feedback.

Vellayan said it’s a “small subset of our client base” that’s affected by the change but declined to provide a specific number. The majority of GiftWorks’ 10,000-plus clients already are on supported versions (2012 and later).

Supporting the current version and two versions back of the product is pretty standard, Vellayan said, adding that the reason most companies do that is because of the potential for compatibility issues with software.

“From a monthly basis perspective, we tried to keep it as simple as we could. We don’t charge for donor migration or training, simply pay monthly, and everyone in a nonprofit has access,” Vellayan said.

Nonprofits that upgrade from the $549 GiftWorks Standard have several options. If users upgrade by Dec. 31, they pay a one-time setup fee of $349 and begin paying a monthly fee starting at $39.99 for GiftWorks Standard or Premium, with an unlimited number of donor records. The monthly fee increases to $59.99 with four user licenses, $79.99 for seven users, and 10 or more would be $99.99. After one year, users then would be transitioned to the standard pricing model, which starts at $90 per month and up to 1,000 records.

If users upgrade by March 31, 2014, they would pay not setup fee and begin paying the Gift Works Standard or Premium monthly fee of $90 with an unlimited number of records. After a year, they also would be transitioned to the standard pricing model.

Users who choose multiple services, such as Gift Works along with integrated tools by FirstGiving or any other FrontStream service, would pay $90 per month for the Standard or Premium editions of their current software for the life of the account.

To Dave Rosenberg, that still means unanticipated expenses for a charity that could be using those funds on its mission. “What they’re forcing every nonprofit to do is divert funds from our mission to improve their bottom line, basically. I don’t think that’s appropriate. I don’t think they sold the product making that representation,” he said.

A former board member of the Fort Collins Symphony, Rosenberg continues to volunteer for the organization when it comes to IT but made clear that his views were his own, and not those of the symphony. “I’ve never seen anyone go out and disable a stand-alone product and force people to go to a new version,” he said.

Rosenberg estimates that a change could present unanticipated expenses of more than $1,000 for a nonprofit whether they upgrade with Gift Works or shift to another product, which would entail extensive data conversion, on top of buying a new product.

Rosenberg is investigating the potential for legal action, claiming that the End User License Agreement (EULA) for their 2010 version makes no mention of a time limit or service fees. From a legal standpoint, Vellayan doesn’t think there’s merit to any lawsuit, based on the terms and conditions of the Gift Works platform.

“I’m not asking them to support it all. It’s perfectly reasonable to drop support of old products,” Rosenberg said. “But companies do not go out and disable the old product so you can’t use it anymore. When Apple comes out with a new iPad, they don’t go to every old iPad out there and put a bullet into it. They make the new iPad compelling enough so people buy it,” he said. “There’s a huge difference between not supporting a product and destroying it.”

The excuse that older versions might run into compatibility issues is “a risk I’m willing to take,” Rosenberg said, but his primary issue is shutting down the old versions.

Vellayan said there were some concessions to support nonprofits on the smaller end of the scale, adding that if an organization agrees to use another of the free services offered through FrontStream or FirstGiving, they could lock in for $90 monthly for life, regardless of the number of records. “It’s so feature rich that we truly believe if nonprofits do it, they’ll benefit from it greatly once they use it,” she said. “We’re listening to the market, as we approach that date, we’ll see, our goal is to support that nonprofits.”