The work of community foundations is complex. They make grants, solicit donations, manage investments, act as fiscal custodians for donor-advised funds, award scholarships, and build relationships with nonprofits in their area.
This complex work requires software that can steward the many types of relationships, manage complex financial arrangements, and streamline grantmaking activities. Staff members need to track incoming gifts, outgoing grants and investment income for each of potentially hundreds of different funds, and to be able to see the balance of each more or less in real time.
Some foundations seek out software to meet their varied needs—CRM, donor management, finance and accounting, grants management, and reporting—in a single package. Others choose purpose-built systems for each of those areas of functionality. For either approach to work, the individual tools and modules need to integrate so that data can flow seamlessly and be accessed and updated wherever it’s needed.
Which approach is right for your community foundation? Both have their pros and cons. Here are some key issues to help frame your thinking about which system or systems are right for you.
Integration Type and Level
Vendors can take several different approaches when catering to the community foundation market. One is to provide an all-in-one tool that brings donor-, financial-, and grant-management capabilities together with CRM and reporting. Another is to focus on modules that focus on two or three of these functional areas and integrate with other platforms that fill in the gaps. Finally, some tools are purpose-built for a single essential area of community foundation management, but can connect (or integrate) with a wide range of other platforms to extend their functionality.
Each comes with benefits and trade-offs. An all-in-one solution can provide you with the tools that you need without having to manage multiple platforms and vendors, for example, but might not be as feature-rich in some areas, or may require you to adapt some of your business processes to fit the platform. Using multiple systems can allow you to select the individual tools that best meet your needs, but integration requires technical expertise (and added expense if you need to outsource the work) and staff time to learn and stay up to date with multiple systems.
Organization Size and Budget
The purchase price of software is an important consideration, but it’s not the only component of a platform’s cost—overall costs include implementation, customization, subscription, training, support, maintenance, and staff time.
What’s more, if you select a high-end system with a lot of features that don’t fit the way your organization does its work, you are paying for power you don’t need. Alternatively, lower-priced alternatives may require additional staff time to manage, or may cost more in implementation or consulting fees to get them to work with your other systems.
With an all-in-one system, you know that all elements will work together, and a single vendor will provide implementation, training, and support. But if your community foundation has the staffing and technical expertise to manage it, a modular approach to creating a platform may work for you—and may save you money. Generally, you can find vendors who provide specialized software at a lower price than comprehensive systems. With this approach you can more easily upgrade parts of your system if you grow or your needs change without having to upgrade the entire system.
Business Processes and Complexity
Much of the benefit of software platforms that serve the community foundation market lies in the automation of certain tasks. Some of this is very simple, such as assigning follow-up tasks to an approved grant or moving applications through the review process. Other pieces are complex, like managing investment allocations for pooled funds or managing a large volume of Donor Advised Funds (DAFs).
The Technology Association of Grantmakers (TAG) recently asked its community foundation members about their current technology stacks, and where they are headed. It found that smaller foundations, which usually have less-complicated or lower-volume programs, tended to gravitate toward all-in-one solutions that allow them to manage programs without added staff time. Mid-size foundations were more likely to select one “core” platform that addresses their biggest priorities to serve as the base for their technology and add on complementary or supportive products as needed. Finally, large foundations, which are more likely to have very complex business processes, lean toward enterprise-level CRM or finance packages and then to custom-built solutions or integrations to add functionality.
What are your foundation’s most challenging or resource-intensive business processes? Can they be streamlined or managed by a technology solution on the market? What processes are you willing to change and what cannot be changed? For many community foundations, the greatest complexities lie in fund or donor management. Others are challenged by grants management.
Before looking at software options it is helpful to conduct a business process audit or at least document your existing processes. That way, when talking to vendors you can ask how their software handles these types of processes, whether it would require an additional module or custom development, or where you would need to change the way you handle certain tasks.
Existing Technology Stack and Unmet Needs
What systems does your community foundation already have in place? Chances are you are already working with a set of tools to manage grants, finances, donor relationships, and programs. Which ones work best for your organization? Where are the pain points? If you have a tool or set of tools that work well, there may not be a benefit to a replacement that may or may not be a good fit.
Many community foundations that find themselves looking for a new solution are really only seeking better support for one or two areas of their work. If you are happy with your donor management tool, it is worth exploring options that may not have that functionality but that have a pre-existing integration with the software you are using. What this does is limit the disruption that migration to new software brings and reduces the amount of training necessary.
It is helpful to think about what you want the “core” of your system to be, and then align that with the software solution you choose. Every platform on the market has its strengths and weaknesses. Traditionally, fund management and finance platforms have been the core systems for community foundations because of the need to track frequent and complex financial transactions. Relationships with donors, grantees, board members, and community members are also important to many foundations, so CRMs that are deep and rich in constituent engagement and communication tools serve as core systems.
Staff Expertise and Technological Maturity
It is particularly important to keep your staff’s comfort level with technology in mind when looking for new systems. User experience and ease of important tasks, such as running reports, vary widely among platforms. Feature-rich solutions can be complex to navigate and may present an unnecessarily high learning curve for your staff. Similarly, platforms that rely heavily on integration may pose more challenges, as different systems can require staff to switch between tabs or windows, adjust to different layouts, and log in to multiple systems.
The number and type of integrations you use are also a factor. As we discussed in a previous section, there are several types of third-party software integrations: pre-built integrations; integrations that are facilitated via an iPaaS solution; and custom-built integrations that use APIs.
Many pre-built integrations are easy to set up and can be done by your staff, even with limited technical knowledge. However some do require technical expertise, vendor involvement, or the services of an implementation consultant. Similarly, iPaaS facilitated integrations can run the gamut from simple to complex, while custom-built API integrations almost always require software developer or vendor involvement.
Another issue is how technology fits into your current operations and where you are looking to grow. TAG’s 2020 report, The Strategic Role of Technology in Philanthropy, outlines four stages of technological maturity—Essentials, Enhancements, Elevation, and Transformation—and how a foundation’s technology tools reflect where they are in each stage. In the Essentials stage, a foundation relies on tools that provide a basic infrastructure that helps keep it afloat. Foundations in the Enhancements stage begin to expand outward, experimenting with integrations and starting to focus on systems that streamline their work. In the third stage, Elevation, foundations go beyond operations and start exploring technology that better engages and serves their constituents. The final stage, Transformation, expands that outward focus even more, moving from meeting constituent needs to anticipating them.
Community foundations in the Essentials stage need to make sure they have a strong set of tools for back office operations in place, and are not yet in a position where paying for software that provides them with advanced engagement tools makes sense. Organizations in the Enhancements stage should be looking at things like automation and workflow features to streamline operations. Finally, organizations with a strong technology foundation can look at systems that provide sophisticated donor engagement and portal tools.
There is no one software package that meets the needs of all foundations, and there are many excellent solutions in the marketplace. For overviews and detailed profiles of the systems most commonly used by community foundations, download the Landscape of Integrated Software for Community Foundations from Tech Impact's Technology Learning Center.