May 20, 2014

How #Cloud Computing Will Single-Handedly Save the Nonprofit Sector

This article was originally published in Technorati.com and is used here with permission.

There’s a lot to be excited about in the nonprofit sector today. New technologies are allowing charities to reach current and potential donors at a rate and ease never seen before.

Although charitable giving grew 4.9% in 2013, some metrics paint a cloudier picture of the sector’s overall health. Donor retention rates have dropped year-over-year over the past seven years—the entire span in which it’s been officially studied—landing at only 39%. That same metric dips into the 20s when considering first-time donors only. Online giving’s percentage of overall giving contracted from 7% in 2012 to 6.4% in 2013, and effective social media usage still lags behind the for-profit sector. Some sub-sectors of the nonprofit world are reporting annual employee turnover rates upwards of 100%.

While there’s no shortage of advice on how to deal with myriad problems plaguing nonprofits, there are few technological advancements that actually enable organizational growth and increased donor loyalty while reducing costs.

Software in particular has always been a thorn in the side of charities that struggle to implement critical infrastructure that most for-profit businesses take for granted. From basic office utilities to marketing automation to donor management software, costs and other technological barriers are keeping organizations who do social good years behind their corporate brethren.

Luckily, the age of cloud computing might also be a golden age for the third sector. Here’s why:

Higher Product Diversity

A corporate culture of acquisition among the leading technology providers in the nonprofit sector has led to frustration on the part of end users. With regard to donor databases and other CRMs, barely a handful of companies control a majority of the products available.

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Cloud computing has enabled a new generation of startups to enter the marketplace, leading to a higher diversity of products with new and exciting features. Nonprofits can now choose lightweight, innovative software that fits their needs, rather than having to settle for the status quo.

Because most SaaS (software as a service) products operate on a pay-as-you-go model (usually a monthly or yearly fee), nonprofits don’t have to shell out a huge amount of cash to get the software they need. Because software providers don’t have to worry about packaging, shipping, and merchant costs associated with a physical product, their costs overall are lower—and are able to pass that savings on to the customer and/or invest it in research and development.

It should be noted that there’s still a little work to be done here. Arbitrary tiered pricing structures based on number of constituents/records/emails found in most SaaS products encourage bad behaviors (think: artificially keeping your list size down to avoid being bumped into the next tier). It will be interesting to see how long this format endures.

Increased Accessibility

With software hosted on the cloud, any employee at the organization can access it, as opposed to installed software that only resides on one machine. Licensing restrictions are typically lax, and it’s not uncommon to find programs that offer unlimited user profiles.

This level of accessibility is particularly key for nonprofits, especially in the case of donor management software. Typically, the one person in charge of administering the donor database is not a fundraiser and would rather be doing something else. Ideally, all fundraisers within the organization should be using the CRM regularly, if not daily. Cloud-based software facilitates this.

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Universal Versioning

With locally-installed software, versioning is a big issue. For example, one nonprofit may have version 2.0, while another who purchases a few days later gets 3.0, locking the first organization out of the latest and greatest. A simple update may render the software useless if the user’s computer isn’t also upgraded to keep up.

When all users and customers are using one version of the product, all users have access to the same (basic) features, allowing for more feedback and bug reporting—which in turn expedites software improvement. Furthermore, support teams no longer have to decipher which version is being used and tailor their instructions to it. Updates happen in the background and are the responsibility of the provider, not the user. All you need is a connection to the web!

This, coupled with increased accessibility, is cutting down on employee frustration among those who manage critical IT infrastructure like a CRM or donor database.

Data Security

While it’s true that, by using a cloud-based SaaS, you are putting your data into the hands of a third party, that data is more secure than it would be if it were living on one physical machine in the nonprofit’s office – or worse – still being held on paper documents or notecards. While the possibilities of hacking or other security breaches do exist, they pale in comparison to the dangers of an office fire, flooding, theft or accidental misplacement.

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Insights and Analytics Through Integrations

With locally installed software, it’s difficult to get two or more programs to play nicely with each other. Through APIs (application programming interfaces), cloud-based software programs can easily integrate, allowing for enhanced functionality and additional insights. For example, a social media monitoring program could interface directly with a nonprofit’s donor database, allowing for additional donor interactions to be logged and stored.

Cloud computing has revolutionized many industries, but its greatest impact may be on the nonprofit sector in the form of reduced overhead and increased productivity. Do you work at a nonprofit? What cloud-based software have you implemented in the last few years?

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Steve Shattuck