Trends in Nonprofit Software Buying

Do nonprofits really need software? How does software help nonprofits anyway? Well, I can think of a few off the top of my head: improve communication, manage donor relations, streamline processes to mention but a few. There are more advantages of course but the bottom line is; software helps nonprofits to focus more on achieving their missions. So, when buying new software, what should your nonprofit take into account? A recent research study conducted by Software Advice, a company that assists small nonprofit organizations choosing software solutions, gives us some insight into what really affects the nonprofit software buying decisions. In 2013, Software Advice analyzed 2,313 interactions with nonprofits that were evaluating new software. The findings of this research form the basis of this blog post.

1. 51% of software buyers want to improve efficiency

There are many facets to improving organizational efficiency but I believe that the most important ones are to seek ways to reduce wastage of resources and improve communication.

49% of buyers currently use manual methods (spreadsheets, paper and pen)

Reducing the amount of paper we use is not only environmentally friendly, it is cost friendly too. Some statistics to propel you to use less paper are:

• The average office worker uses 10,000 sheets of copy paper each year and wastes about 1,410 of these pages. (Source)

• With the average cost of each wasted page being about six cents, a company with 500 employees could be spending $42,000 per year on wasted prints (Source). If this calculation is applied to a nonprofit with 10 employees, the cost would be around $846.

• It costs $20 to file a document, $120 to find a misfiled document, and $220 to reproduce a lost document. (Source)

• 7.5 percent of all documents get lost; 3 percent of the remainder gets misfiled.

• The average document is photocopied 19 times. (Source)

• Professionals spend 5-15% of their time reading information, but up to 50% of their time looking for the right information. (Source)

• Miscommunication can cost an organization 25% to 40% of its annual budget, estimates private investment firm Manchester Companies. (Source)

• It's estimated that 14% of each workweek is wasted as a result of poor communication. (source)

Based on the numbers above, the costs multiply quickly and for nonprofits, it is too big a risk to take.

There are different types of software that help nonprofits to improve their organizational efficiency but some of the tried and tested ones that we use at Webserves are in a previous post on bridging the internal communication gap.

2. 49% of buyers prefer web-based applications to on-premise

While both forms of deployment have their advantages and disadvantages, Web based applications are more suited for organizations that don’t have the infrastructure and resources to operate and maintain the software.

Take Software as a Service (SaaS), for example. SaaS is a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over a network, typically the Internet. (source)

 

Blackbaud released a white paper on the advantages of SaaS which are summarized below:

 

• Little upfront investment: Rather than a huge initial investment, a monthly fee is charged for use of the software. This reduces the financial strain on nonprofits since the cost is spread out over a span of months.

• Reliable cost forecasting: SaaS costs are generally fixed and as such there are no sudden increases in costs. This enables nonprofits to accurately forecast their software costs.

• No extras needed: With SaaS, the maintenance and software upgrades are usually built into the monthly cost. The nonprofit does not need to hire support staff or buy expensive hardware; all this is the responsibility of the SaaS service provider.

• Up-to-date technology: The SaaS service provider is responsible for offering ongoing technology advancements so the nonprofit does not have to research on how to get the latest technology by itself.

• Security and reliability: Data stored with the SaaS provider is more secure than data stored at the nonprofit. Plus, the data is backed up and additional services like virus protection and data encryption are added security features provided by the SaaS provider.

• Remote access: The fact that SaaS is accessed over the internet makes it accessible anywhere there is an internet connection and not just confined to the office.

• Scalability: For growing nonprofits, SaaS offers the ability to easily add functionality and applications available online to a nonprofit in a quick and cost-effective manner.

All in all, an analogy from Blackbaud sums up the need for SaaS;

"People in need of phone service, water, electricity, or cable aren’t responsible for the entire infrastructure needed to deliver those services; they just order monthly service and pay for what they use. Similarly, software as a service puts comprehensive software functionality within the reach of nonprofits."

 

3. 52% of Buyers prefer best-of-breed applications

According to PC Magazine, Purchasing best-of-Breed applications refers to buying applications from different vendors in order to obtain the best-of-breed for each application area; for example, a human resources package from one vendor and an accounting package from another.

Having this kind of a model in place ensures that the nonprofit gets the best software.

4. 52% of Buyers request fundraising management most often

Donor information is not just about collecting contact details; it’s about building long-lasting relationships.

Donors should receive frequent information on how their donation is being used, personalized emails (for example on their birthdays) and in general, how the nonprofit is faring on. All this can be done using a good fundraising management system that will help nonprofits understand each of their donors, segment, analyze and communicate to them.

 

5. 56% of buyers were small nonprofits with less than 10 employees

The size of the organization influences decisions like the cost of training the employees. In addition, nonprofits usually have volunteers donating their time to the service of the organization. In some cases, there is a high volunteer turnover rate and in such cases, the nonprofit should consider the recurring cost of training new volunteers

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6. 91% of buyers reported an annual revenue of less than $5 million; 69% reported less than $1 million.

As we know, nonprofits have to work with limited resources and deciding on how much to spend on new software is greatly influenced by the budget

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7. 37% of buyers work in the human services sector

 

The results of the study cement the fact that nonprofits are increasingly recognizing the need for software and are seriously considering the factors that shape their software buying decisions. What other factors did you consider when buying new software?

~Ramya