Monday, May 5, 2008

DonorPerfect getting nervous about the cloud...

[note: I run NetSuite Giving]

I read this little tidbit in the Techsoup forums and began to think about all the various implications for the traditional charity software vendors.

SalesForce is also a good example of where 'Free' doesn't mean it's the best choice. I'm glad to see you've seen what others have seen in its limitations as a fundraising system.
This quote from a DonorPerfect vice president is fascinating. My thoughts:
  1. DonorPerfect is clearly feeling the pinch of a free option for the bottom of the market. My impression of DonorPerfect is it plays just above Mission Works, below Raiser's Edge, and head-to-head with etapestry. They probably all are feeling the same pinch.
  2. There are real and significant limitations to a cloud-based, business-focused solution like Salesforce. Primarily, the solutions are not "productized" ... they require consulting and generally a lot of work to get running. A good illustration is the case of a LYBUNT report (donors that gave last year but not yet this year). In a cloud-based solution you plan the data model, implement the fields, build the report and it works great 40 hours latter. With a purpose built solution, you click the LYBUNT button.
  3. Productization of cloud based solutions will eliminate many of these vendors. If NetSuite releases a fundraising bundle (which includes the datamodel, fields and reports) with a LYBUNT button, many of the limitations of the cloud based solutions evaporate quickly.
  4. There is not much clarity on whether fundraising software is transactional (i.e. really an ERP rather than a CRM problem). Solutions like DonorPerfect straddle the ERP/CRM line and Raisers Edge/Financial Edge seem to cover both sides.
If this four point story does come true, then vendors like DonorPerfect will be in serious trouble. They can't match the R&D spend of the big boys, but they still have ultra-valuable expertise... sales, marketing and domain skills. If others offer cloud-based solutions on top of Salesforce and NetSuite, they are likely not to be able to compete because their cost structures are too bloated. They need to disaggregate their business and focus on the high margin stuff.

What does that mean in practical terms? Basically DonorPerfect needs to join someone's ecology. They could take their domain expertise and build a solution on top of something like NetSuite Business Operating System.

They then become a sales, marketing and support shop with a small R&D line item. They are able to deliver far more functionality to customers and potentially more flexibility on price, yet still run a high margin business.

I sometimes wonder if there isn't a project running to rebuild etapestry on the Blackbaud Infinity platform. That would be the ultimate proof of concept for Blackbaud becoming an ecology player like Salesforce or NetSuite, except focused in the public/ charity sector. Blackbaud has an escape route, I suspect DonorPerfect does not.


Jon Biedermann said...

Hi David,

I'm the person you are referring to from DonorPerfect.

I wouldn't say we are nervous about 'the cloud'- it's just another implementation of a free or almost free solution that has appeared over the years in various forms (most recently as the now defunct eBase).

I would say that non profits should pay more attention to reality than just hype. If you look at any of these recent solutions, with whatever skin they are using, you will quickly find they lack even the most basic functionality.

Want to track soft credits? No go. What about split gifts? Nada. How about pledge payments that pay off a pledge from a different donor's record? Nope.

And yes, how about a simple LYBUNT report? Or a Recency by Frequency analysis based on common RFM criteria? What about an Honor Roll report based on different gift ranges? Not there.

Even a simple end of year statement, with multiple lines for each gift made during the year, is practically impossible to generate without custom programming.

DonorPerfect is actually growing faster than ever- over 40%/year. We're the second largest fundraising software company in terms of customers (7500+), and the third largest in unique visitors/month (check out Google Analytics).

We're also one of the few companies with 20+ years experience. Also, I know it's amazing, but we have zero debt, actually making a profit, and no venture capitalist vultures circling from above (not that there's anything wrong with that... ;) ).

We're proud to offer an independent and affordable solution to thousands of non profits, and we're not afraid of letting people know about it (hence the posts here and elsewhere...).

I would encourage you or your readers to contact us and see the latest we have to offer, such as Open API's, Completely Customizable Online Giving Forms, and Social Network Fundraising Pages- I think you would be pleasantly surprised.

Let me know,


Jon Biedermann
Vice President
DonorPerfect Fundraising Software
jonb (at)

David Geilhufe said...

You and I, I think, actually agree.

My point is not that DonorPerfect is somehow a weak company... you have incredible strengths.

My point is that DonorPerfect's strength is not creating a technical infrastructure for customizable CMS pages, but using someone else's infrastructure to create customizable online giving pages.

I still think that leveraging DonorPerfect's impressive 20-year track record and expansive domain knowledge to build on top of other platforms is the thing that makes DonorPerfect a powerhouse in 10 to 15 years.

Watch Convio's product. You'll have a hell of a time out-engineering a multi-billion dollar company plus the domain expertise of Convio.

Jon Biedermann said...


On vacation, so it took a while.

Who's the multi-billion dollar company you talk about? It's not Salesforce, they do less than 800 MM/year. It's not Convio, either.

The Salesforce platform, while definitely impressive for the business world, is still just that- a platform. It's the updated equivalent of Microsoft Access, FileMaker Pro, or .NET, with the difference they have added a hosting solution behind it, which is neither cheap nor perfected.

Yes, it's nice you don't have to reinvent the wheel for certain tasks (like record management, and document attachment). However, non-profits have such specific data requirements that require fundamental changes at the lowest level of the database model that it makes it impractical or impossible (check out Ebase from years ago, or Google the story about a NY nonprofit spending $1 million just to build a batch entry module before abandoning the project).

Then, on top of it all, you're dependent on an independent organization/provider that if it goes down (and salesforce does), then what do you do? Play the blame game?

All I am asking is to take a closer look at these 'open' or 'free' products. I spent over 20 hours going through these products in the last 4 months and it's rather shocking- please download a non-profit template and see for yourself. Try to incorporate any of the features I described in my previous post. Try to run a query that shows the Lifetime Giving average for your major donors. If you can do it, please let me know because I couldn't find it.

There's a reason they are that way- you get what you pay for, and you have to pay A LOT to customize the rest.

Yes, we (DonorPerfect and other legacy companies (ahem, Blackbaud)) are not perfect and we all have some flaws as well. But the non-profit world is our ONLY business, and we understand both the business *and* technical issues that are unique to our mutual customers.