We have documented for several years the growing use of third-party applications by associations to extend and enhance the functionality of association management systems (AMS).
Now from our latest Lehman Reports Donor Management Systems study, we have examined the use of these types of applications in the broader nonprofit market. Here’s what we’ve found.
As with associations, nonprofit organizations are also using a range of capabilities to engage with donors and constituents and to provide information and services. While donor management systems (DMS) may offer some of these capabilities, many nonprofits are turning to third-party applications to augment those capabilities. Our findings clearly show many nonprofits contracting with third-party providers. In fact, with the exception of fundraising capabilities, these nonprofits are at least as likely to use a third-party application for each of the other capabilities covered in the study as they are to use the capabilities resident within their DMS. Nearly 60% of nonprofits contract for email marketing capabilities; just 20% rely solely on the email capabilities found within their DMS. This extensive use of third-party applications presents a challenge, since behavior data resides largely within those applications.
For most nonprofits, the DMS is the primary database of donor information and is the hub for third-party applications. These applications require donor information resident within the DMS such as demographics and contact information. In turn, the donor record needs to update to reflect activity that takes place within the external application. For example, a third-party email system accesses segmentation and email addresses in the DMS, then writes back information about the individual donor when they open the email and click on embedded links. The capability of the DMS to support full integration with third-party applications is therefore a critical purchase decision factor. Based on our findings from our studies in the association market, most organizations probably have not integrated these applications with their DMS.
In some cases the DMS does not fully support these types of integration, or would require expensive customization services to do so. In others, the organization simply has not made the investment develop the integrations.