The Fundraising Office Of The Future

Everyone has been waiting for the future promised by Hanna Barbera, where George Jetson’s morning coffee is just a push-button away and Rosie the Robot helps out with Elroy’s homework.

That day is not too far away for the fundraising office. Many of the tools are now available for the 21 st century fundraising office, from databases to accounting applications that don’t require software to be on your computer to wealth matching services.

The issue is how nonprofit executives will use this wealth of technology. The fundraising office of the future was the topic of this installment of Executive Session, held during the recent Association of Fund Raising Professionals annual conference in Baltimore.

Around the table at this edition of Executive Session were: Craig Ahlquist, Campagne Associates, Manchester, N.H.; Jay Love, CEO, eTapestry, Indianapolis, Ind.; Andrew Mosawi, director of nonprofit services, International Automated Transactions Service (IATS), Vancouver, BC, Canada; Lisa Shulock executive director, NPower Pennsylvania, Philadelphia; and Debbie S. Snyder, vice president, directed giving, Kintera, in San Diego. The session was moderated by Paul Clolery, vice president and editorial director at NPT Publishing Group, parent company of The NonProfit Times.

Paul Clolery: I’ve always been curious, at what point does a nonprofit start needing to go to the higher end of technology. Everybody at this point has computers in their offices. Everybody’s got some sort of software. Is there a financial high water mark where it clicks, “okay, now we have to really play the game?”

Andrew Mosawi: One observation I would make, and I come at this from an angle of operational effectiveness and using technology to improve internal processes, the focus on technology is being driven in part through e-philanthropy. That is, organizations that have looked at using the Internet to improve and enhance fundraising.

And, as a result, they’ve looked at how they can integrate systems. If we have these great online systems now, we should really find better ways to manage the information so we need a better database. We need better integration with our direct mail programs, for example.

To answer your question, is there a dollar figure? I’m sure there is. But what we found is that organizations, even small organizations, are looking at technology to increase their exposure and improve their effectivenes..

Mr. Clolery: Jay, Andrew just was talking about how online giving may be pushing this. What was the impetus previous to the online giving?

Jay Love: Prior to the online giving, the first impetus for technology with nonprofits revolved around having some sort of a computer or a PC to store their word processing documents and to be able to communicate. Next came the database they needed to store the records of all their financial transactions and hopefully some of the past communications.

Here recently, though, even prior to the online donations that Andrew is talking about, the fact that they wanted to have an email presence drove more technology. All of a sudden folks had to move from just a single dial-up in a 10-person office or a five-person office to something better. They required more of an Internet presence so email could be more useful to them.

Lisa Shulock: I haven’t seen as much of the phenomenon that Andrew was talking about in terms of the online giving driving better systems. A lot of the small to mid-size organizations are spending well less than 1 percent of their total budget on technology. We know that in the corporate model, technology investment should be 3 to 5 percent of your overall budget.

So, actual dollars are very finite and their technology investments have to be extremely cautious.

What we find is that most organizations are still in their home-grown Excel spreadsheets, Access databases, multiple of the above, and they’re getting more and more frustrated. They can’t continue to handle the volume of information.

In the donor management space in the past three to five years there’s just been a proliferation of potential package solutions that they’re really starting to try to look at. One of the things that NPower and organizations like ours do is try to help them sort through the morass of how to select an eTapestry versus a Kintera versus a Raiser’s Edge and to know which one is right for an organization.

Craig Ahlquist: I think there are three things with regard to why nonprofit managers feel the pressure to keep track of information better. One, you are seeing Sarbanes-Oxley starting to creep into the nonprofit sector. California, Massachusetts and New York all have legislation in progress targeted at nonprofits for compliance. Soon they will have to have audited financials to put forth. I think a lot of them are seeing that coming and deciding that they better start getting better control of systems and data.

Second, the Independent Sector a couple of years ago released a report. They’re afraid of a digital divide, and I think the smaller organizations are starting to feel that. They see the tsunami and organizations that get tens of millions of dollars online and that they’re missing out. I think they’re feeling the pressure of “wow, if we don’t get into the game pretty soon, the tide may go by us.”

And the third, I think, is just being more accountable to donors in general. There have been some not so positive things that have happened within some nonprofits and unfortunately the ripple effect is way larger than it should have been. The reality is, I think, they’re all feeling like even though their budget’s $25,000 a year, they still need to have some degree of accountability to the donors.

Mr. Love: Especially when they hear that the accountability to the donors leads to bigger gifts down the road.

Debbie Snyder: I think donors became more sophisticated about technology and are now demanding that the nonprofits come alongside them. I think people have gotten very used to e-commerce in every area of their lives.

When it comes to donating money, they want that same convenience and that same transparency. As Craig mentioned, there’s more demand for transparency. People want to be able to see a clear trail between when they give their money and the outcomes. Technology does enable that in terms of shortening that time line so that donors can see the impact of their gift.

The tsunami is a great example. People could almost see immediate results from making a donation online. All of a sudden all of this money is flowing to the people who need it the most. So I think it’s been the donors really pressuring the nonprofits to adopt technologies.

Ms. Shulock: We’ve had many requests for information and recommendations for online giving because donors are asking for it. That’s definitely more the direction that we hear it coming from.

Mr. Ahlquist: How much of it do you think is competition within the nonprofit sector? One large organization is always trying to look for an advantage over another large organization. They start looking at technology as a way to gain a competitive advantage. There are always those leading edge folks willing to try new things because they think it gives them the advantage.

Ms. Shulock: That’s probably true at the high end. I definitely don’t see that in the majority of organizations.

Mr. Ahlquist: No, it just trickles down eventually, though it starts with the big boys.

Mr. Love: Don’t you think for the small organizations there is a fair amount of apprehension because some of them have been burned before? Sometimes they go down the road with a technology vendor and all of a sudden there are hidden costs and too many surprises. Many of them just don’t have the budget to sustain that.

Some 94 percent of the nonprofit marketplace is less than $1 million in annual budget. Most people forget that 94 percent of the 501(c)(3)s fall into that category. They really cannot invest too much of an up-front fee. It has to be something where they perhaps have a small transaction fee only.

Mr. Clolery: Nonprofits are slow to make the transition to different software. Once you’ve got it in place, it stays there. Many groups don’t have the money to make the transitions. How is this going to change? Is technology going to get cheaper or is this just a way of life?

Ms. Shulock: A couple of things are going to happen. Technology is getting cheaper. There are 200-and-something vendors downstairs selling fundraising solutions. It is incredible to have that kind of choice available. There generally isn’t a big enough marketplace to support a lot of commercial vendors. So, the fact that it’s growing is great.

If you look at other nonprofit technology needs, there is much more of a dearth. There are many fewer choices and options and they’re still looking at a lot of custom-built, custom-designed solutions because there isn’t a profitable market for vendors to come in and provide solutions.

I think we’re going to continue to find that there is going to be this digital divide between the small and the large nonprofits, between all nonprofits and the commercial sector. With organizations like NPower and others doing technology assistance, we’re hoping to narrow that gap. In my view, the biggest piece is executive education, getting boards of directors, other senior leaders of organizations to understand that strategic technology implementation may give them that competitive edge and help them with their mission.

Mr. Ahlquist: Most of us here provide mission- critical applications and you don’t change those things very often. But as we start to get data that is more interchangeable, such as XML, some systems could become more easily swapped because the data is interchangeable.

Mr. Love: Don’t you think much of the change, if it does occur, is because the technology vendor is no longer around?

Mr. Ahlquist: Jay and I can speak to this because we’ve been doing this awhile. It did happen about five years ago. There was a bunch of vendors that came into this space. Everyone thought that the donate-now button was going to be a cash register. There were tons of donate-now companies and a lot of them are gone.

Mr. Love: At one point, Craig, I had 78 different business cards of people who were going to do online donations and were going to rule the world. I probably reviewed 50 of their business plans. What was amazing to me was that some of them had built organizations with 100-plus people without a single person coming from the nonprofit world. They also did not have a single person serving on a nonprofit board in any capacity.

Mr. Clolery: There’s the trust factor for the nonprofit and their technology vendor but there’s also a trust factor between the donor, the technology factor, and the nonprofit. Let’s talk about privacy a little bit. How is technology going to not only help the nonprofit learn about their donors but also help to protect donors to a level that they’re comfortable?

Ms. Snyder: Security is key to any e-commerce, including donating to nonprofits. I think all of us that are in that space are very cognizant of that and have controls built into the process.

Nonprofits want more and more information about their donors. Obviously, they want to build up constituent databases and understand their donors. The donors many times want to make a donation but control how much information the nonprofit has about them.

The key is that nonprofits have to develop programs that make it advantageous for the donors to give their information. In other words, nonprofits have to woo the donors into wanting to be a part of their community and move from being just an episodic donor to someone who wants to support this cause on an ongoing basis.

Mr. Clolery: So, I’m wandering through the Web site of Organization X and I click on something. Then I click on something else. Next, I fill out an email information form. Does the fact that I’ve filled out an email slot on the Web site give the organization permission to then send me an email that says “because you clicked on X, you might be interested in Y? Is that knowing too much or is that okay?

Mr. Love: Oh, I think it’s okay to send the email as long as they give you the ability to opt out at any time. They must insure compliance with all the standards for the appropriate use of the email. I actually find email much less intrusive than getting a parade of letters into my mailbox at home. Although, people are so used to getting mail that nobody complains.

However, there is something intrinsic about the fact that your email box is quite sacred. I think you’ve got to be careful about complying with the CAN-SPAM Act and about providing the opt-out.

Mr. Ahlquist: Senior executives at nonprofits have a question that they’re going to have to answer in the future. When are they going to use this information? Here’s a scenario to consider: It’s very likely that I will go to a nonprofit’s Web site and fill out a form. That form will go to the organization, and it will get instant Wealth ID screening so they’ll know whether or not I’m someone of means. They will have tracked which programs, services and pages on the Web site I was checking out and maybe thought of interest. I might have even said that on the form.

So now the organization, upon getting that new name, gets tons of information along with it. Are they going to use it or are they not? At what point do they reach out to the donor and say “gee, we thought you were interested in this, that, or the other thing.”

Mr. Love: If we’re truly talking about small nonprofits, the $5 million and below, if you only have 10-20 transactions that occur a week, pick up the phone and call the people and thank them.

With the small to medium-sized nonprofits, the number of transactions that come through are the type that they can be very personable with their thank you if they wanted.

Mr. Clolery: We are in a 24-hour news cycle. We’ve got information coming out of everywhere, high-profile divorces, high-profile corporate buyouts. At what point is information off-limits? Give me an example of a piece of information that is readily available that you would never ever use in a solicitation.

Mr. Love: Larger nonprofits are involved with some pretty major gift asks. I would never allude specifically to a certain number of shares of stock.

Ms. Shulock: If we’re talking small to mid-sized organizations, they don’t have the staff capacity to be mining that. The thing about all the new systems that we’re seeing is they have to make the development officer’s job easier. They can’t make it harder because there’s no capacity for harder and more work. It has to make it easier.

And so one of the things that I would see in development of technology that’s supporting these organizations is you want to have some intelligent systems. When you get relevant information then maybe an email comes to you or you get some kind of an alert, as opposed to having to go through tons and tons of data. We’re getting overwhelmed with information and data, and we can’t keep up with all that.

The good systems are going to be able to bring the important information to the top and leave the rest of it behind, and you can access it if you need to. It’s somewhere in that person’s file but not necessarily something that you’re going to have to go through every single time.

Mr. Love: The good systems are going to be easy enough for the executive directors to use themselves. Such systems are few and far between at the present time.

Mr. Clolery: This gives us a nice transition to the fundraising office of the future. We’ve got remote access. We’ve got PDAs. We’ve got every machine that goes ping that you could possibly imagine. That doesn’t help the fact that in many cases the CEO doesn’t want to fundraise.

At some point will the technology help the senior members of the staff to understand and get more integrated into the fundraising process?

Ms. Snyder: I would argue that it already does. I think technology already does help with the management of data. CRM (constituent relationship management) systems help nonprofits better understand the different parameters about their particular donors and help them assimilate data to get a more appropriate and complete profile of the donors so they can make strategic asks.

Mr. Love: Well, I’m sure, as Lisa can attest, the typical nonprofit is still fighting with 14 Excel spreadsheets. The office of the future then might be to move all data into a single database versus being able to access it from their telephone or something of that nature. If you’re staying in the small to medium-sized group, I think the one key asset is going to be if systems are quite a bit easier to use.

Fundraising is fundraising and I think some of the CEOs and board members to whom you’re alluding to, just don’t want to get into building relationships with people outside the board. Obviously, they shouldn’t be on that board in some cases, but that’s the nature of the beast.

Mr. Ahlquist: I think it’s two separate issues. There are many board members who have all the information they need right now to go make the ask; they just refuse to do it. I think there are two separate issues there.

Ms. Shulock: If I think about the boards that I served on or staffed 10 or more years ago, one of the main things they did to help with fundraising is they would get together and have mailing parties. You get the pizza, you make a commitment to one evening and the letters are already printed and every board member is writing their personal notes – “Dear Paul, hope you can join us. It’s going to be a great time.”

When we leave that paper system behind, which we are doing, how do we get those people physically together? How do they feel like they’re contributing? What’s the replacement for that getting together around the board table and writing those handwritten notes?

Mr. Love: I’m not sure that has to go away. On some of the boards that I’m on, the first thing we see at a board meeting is a list of the names of some people that we know. Our job is to write the thank-you notes. Even if it was solicited in an electronic manner, we write totally from top to bottom a handwritten thank-you note. I don’t think technology will ever replace such notes.

Mr. Mosawi: It could replace it but it shouldn’t because at the end of the day it’s about relationships: it’s not about technology. If you look at the successful organizations that are really utilizing technology, they’re using it in concert with traditional fundraising methods.

Mr. Love: If you’re going to use, for instance, an email technology why not have one person from the board send a single email to one person? It could be very personalized and written as they see fit.

Mr. Ahlquist: I guess the challenge is when to use and when not to use the technology. Now we can do a viral campaign online, which is great for getting new donors. But, what do you do after that?

It still gets down to building the relationship. It’s a mix of technology and personal touch. I don’t know if any of us can predict if the personal touch will ever go away, but it doesn’t feel like it’s going away any time soon. I sit on three different nonprofit boards, and I’m also a donor to a bunch of organizations, and it isn’t changing in the world that I’m living in right now.

Mr. Clolery: Pushing data to constituents, registering online, giving online, renewing online. Are we ever going to get to the paperless nonprofit office or is it all being pushed online at this point?

Mr. Love: I think maybe the 80-20 role comes into play there. If you can handle 80 percent of them in that automatic means, then you can take that 20 percent which is going to provide the majority of funding, in a very personalized manner. Membership processing, registering for events, even if you’re a major donor and you’re registering to attend a gala and an auction, you’re going to do it the same way as somebody who’s just coming for the first time.

For the small nonprofit, the nice thing about that is the funding for that event comes in ahead of time if they’re registering via a credit card transaction versus trying to collect it at the day of the event or afterwards. They can now say 95 percent of the money is in the bank prior to the event taking place.

Mr. Mosawi: And from a donor’s perspective, and having done those events myself, it’s just an easier way for me to contribute. It’s a win-win because for the nonprofit it’s much more streamlined. It’s a much more effective way of raising funds, especially for large events. You look at events like the Weekend to End Breast Cancer across North America and Europe now raising a tremendous amount of money online. They really don’t have many offline functions. It’s all online.

Mr. Clolery: I’m the CEO of a nonprofit that raises $3.5 million a year. You just scared the daylights out of me. You just said “back office, integrated systems.”

Mr. Love: We’re going to get down to reality real fast here.

Mr. Clolery: Talking about the one or three people in the office, who is that back office?

Ms. Shulock: Integration, I think, is probably one of the single biggest challenges that we have. If I look on this list of the development office of the future, it’s not just a nonprofit phenomenon. It’s a phenomenon across society and that’s the part that’s absolutely the hardest. When you talk about proprietary systems it only complicates things.

We talked earlier that people don’t want to move from one system to another because of the incredible difficulty and down time associated with the data transfer. That’s the number one problem and there isn’t any easy solution right now, unless we start looking at much better bridges between different data systems.

Mr. Clolery: When you say better bridges between data systems, what are your people asking for?

Ms. Shulock: Without getting into any particular vendors, let’s make an assumption that they’ve got a well organized donor management system, which is a big assumption. They also have a big volunteer base. Many of their donors and their volunteers are the same people. Do you think that the data about those people is in the same system? That’s very rarely the case.

And then they run events and some of those donors and some of those volunteers also happen to go to the events or donate services to those events. And yet you have other systems that are managing their events.

And so they’re looking at I’ve got Paul as a donor. Paul comes in once a month to do whatever he does and he came to the event we had. And yet we’ve got Paul listed in three different databases, at a minimum, with your contact information. And what if you moved? You just bought and sold a new house.

And you recently came to an event and you put your new address in. And then we see two places where you got your old address and one place where you got your new address. How do we know which is the correct address? We don’t know unless you’ve got somebody who’s really on the ball and you actually are able to date when an entry was made. But that’s even bigger than my first assumption about having decent donor management systems. So you need to look at bringing those three together and that means havoc basically in that organization. And the volunteer manager loves their system. They don’t want to move to something else.

Ms. Shulock: Absolutely. What it’s also about is the generational change of leadership. As organizations start being led by people who’ve grown up with technology they’re going to start to place more emphasis on it.

Mr. Mosawi: So do you think that there would be shift in the skill set for leadership in the nonprofit community that is more biased towards technology and the use of technology to take the organization to the next level?

Mr. Ahlquist: There’s going to be a shift but only because the generational shift is bringing that with it. The young leaders of today are using PDAs. They’ve been using email. They’re comfortable with the computer. All of that is second nature to them. They might need to be taught the other things about fundraising and running a nonprofit.

The guard that’s in place now understands how to run a nonprofit. They don’t understand the technology piece of it. So there’s going to be, I think, this fundamental shift coming soon.

Mr. Clolery: With technology planning, the computers that people have in their offices today will support most software. You don’t have to buy a new computer every 18 months any more. Is that going to help the technology office of the future in that the hardware’s going to be in place and now the implementation tools are coming into effect?

Mr. Love: A lot of it is the hardware, particularly the central file server, doesn’t have to be at the nonprofit any more. There’s more and more of it being managed with using ASP providers. Now all they have to do is worry about the workstations being up to date.

Ms. Shulock: Connectivity, which is still a big issue.

Mr. Ahlquist: And the reality is hardware has been way ahead of software for a decade. The processing power within a PC is drastically underutilized. It’s the applications that are always catching up to the hardware and that’s still true today.

Mr. Clolery: So, quickly around the table. What are your best-case scenarios for the development office of the future in your particular specialties?

Mr. Love: I think the office of the future will be reached when the technology becomes so easy that we take it for granted. If you asked the car manufacturers in the early 1900s what the automobile of the future was going to be, I hope the answer would have been just that. Back then, you had to be a mechanic, you had to be strong enough to turn a crank, all of those things added up to the fact that very few people could drive an automobile let alone afford it. Now most of the population takes it for granted. I think the true case of the technology of the future will be when it’s so easy and so taken for granted that everybody is using it.

Ms. Shulock: I think that’s exactly right, when technology becomes transparent, when we look at organizations and when the infrastructure to support their application, their use of technology, is not getting in the way, but instead of hindering it’s actually facilitating and helping. And I think a lot of the components of the office that Craig has talked about will be there in varying levels. We’re going to continue to see a technology divide between for-profit, nonprofit, and within the nonprofit world, small and large, but where you have inspired leadership is where you’re going to see some of the leading-edge activity.

Ms. Snyder: It will be when we can take a holistic view of the organization and its goals, and then sit down and map a technology strategy against the overall strategic goals. It’s using technology as an enabler to get that organization to meet goals. It’s the backbone, and then that drives the operational objectives.

Mr. Mosawi: I’d agree with what both Lisa and Debbie said. I also think that it’s about having buy-in. It’s having the board level buy-in. It’s having the staff buy-in. It’s having everyone understanding that that the technology plan is integral to the direction and the mission, of the organization. It’s integrated into everything else that they do whether it’s accounting software, online donations, credit card processing. It is actually fundamental to the success of that organization.

Mr. Ahlquist: I’ll agree with Jay that it needs to be easy to use. I think things will be more process-driven with best practices interwoven in so a very small organization won’t need to understand the fundamentals. The system will teach them the fundamentals, and all at an affordable price because, again, the smaller organizations are out of their element still with regard to being able to do this.