Improving Performance with Information and Insight
Published by Lehman Associates


Findings and Highlights on Nonprofit Technology

Automation – Going Beyond Efficiency

It seems everyone is talking about automation. In fact, we just did a webinar on Automating Engagement with Higher Logic and their newly acquired services, Informz and Real Magnet.

Digital channels provide exciting opportunities to create more personalized experiences for members and donors, but staff overhead can increase exponentially to make that all work. Automation offers to expand the breath of those personalized interactions while at the same time increasing staff productivity and effectiveness.

The first thing to keep in mind is that the concept of automation itself isn’t anything new. Organizations have been pursuing workflow automation for years, leveraging technology adoption to increase productivity and efficiency. It is equally important to understand that higher stages of automation are not simply extensions of that previous work, but rather represent a major jump in how we think about those processes. That is, while the first stage of automation is to automate a fixed process or workflow, we are now using dynamic elements to modify the process in real-time and do that automatically. The promise is to provide a more personalized experience for the member and donor while increasing the marketing and communications effectiveness of the process for the organization.

We see this as an extension of the shift towards the use of technology for transformation. This reflects a change in thinking about technology that we’ve been presenting and writing about for several years. Adoption of technology to date has been largely focused on improvement of that which we do today to gain efficiencies and productivity. Today, leading organizations in both the commercial and nonprofit sectors are working to leverage technology as a strategic asset to enable them to do things they have never been able to do before. In the process, it transforms how they work and how they engage with customers, members and donors. Technology as a Strategic Asset

Automation certainly plays an important supporting role in process  improvement. It plays a leading role in the use of technology for transformation, going beyond productivity to change how we engage with constituents and how we do business as organizations. Automation is a concept, not a particular technology and changes substantially as it moves from an improvement tool to one for transformation.

We see three stages of automation and will detail that in our next post.


Donor Management Software Products Outperform Custom Solutions

Most nonprofits make use of technology  to manage donor information, fundraise and collect donations, and track results. However, the technology used varies dramatically, from simple spreadsheets, to robust, all-encompassing, donor management products.

According to data reported in the 2016 Lehman Reports™ study of Donor Management Systems, nonprofit organizations using custom systems and office applications are only about half as satisfied with their solutions, when compared to those using Donor Management Software (DMS) products.

Average satisfaction levels for donor management products are 6.1 on a 10-point scale, modest but unchanged from 2014. In contrast, satisfaction ratings for custom systems and office database applications are just half of that at 3.7 and 3.0, respectively.

These satisfaction ratings are reflected in success metrics.  Only 48% of organizations using custom and office database solutions report year-over-year contribution increases, compared to 58% of organizations that are using a DMS product. The rate is even worse for organizations with no solution at all.

Contributions Chart

What’s Behind the Numbers

What accounts for such dramatic differences in satisfaction numbers? Several possibilities come to mind.

First, staying abreast of technological change is a challenge for everyone, but it’s nearly impossible for part-time developers to keep pace. If you’re organization is trying to cement bits and pieces of a solution together, you’re likely missing out on the latest technologies and new feature advances available in the leading software product.

Keep in mind, too, that technological change is exponential. So, “keeping up with the Joneses” is likely to get harder and harder with every passing year.

Second, the online fundraising capabilities that are in greatest demand likely are the very capabilities that are not available in an office database and that are hardest for small, or part-time custom shops to develop. It is challenging even for large product providers who can invest significantly in ongoing development. Going it alone can be a very difficult endeavor.

Finally, it is increasingly important that applications share data to support fundraising and donor engagement, and much of that takes place across online applications. Local databases and most custom systems are simply not up to the task.

What to Do

The simple answer is to consider moving from a local database application or custom system to one of the available donor management products. By doing so, you will gain immediate benefits and will be investing in your own future. Software companies have a great incentive to continue to incorporate new technologies and capabilities in order to compete successfully in the market. Additionally, advanced online capabilities give software companies the greatest competitive edge, so it’s likely that those developments are a high priority.

Plus, you’ll be in very good company.

There is a very clear trend away from home-grown systems toward DMS products, in the market today, with only about 35% of non-profits planning to stay with their home-grown systems.

DMS Retain

Nonprofit Use of Third-party Apps

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.

DMS Third-party

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.

Models for Technology as a Strategic Asset

For the past several years, I’ve been writing about how technology is transforming organizations.

To date, the primary use of technology has been to increase the efficiency and productivity of existing work. While productivity will always be important, technology is now also transforming how we work and how we engage with our constituents. Technology is now more than a supporting toolset. It has become a strategic asset that can help nonprofits accomplish their goals and fulfill their missions.

We have now identified four models of the ways we apply technology that directly or indirectly result in transformation:

    • Enabling – Technology makes it possible for organizations to pursue strategies that would otherwise be too labor-intensive or not cost-effective.
      Micro-strategies such as micro-lending and micro-volunteering
      Personal fundraising
    • Substitution Technology replaces existing non-digital approaches.
      Webinars and video conferencing
    • Disruption – Technology introduces new models that fundamentally change the dynamics of communication, content, relationships, and commerce.
      Apps that displace email and phone communications
      The sharing economy, which displaces traditional providers
    • Data byproducts – When the data generated as a byproduct of technology represents an asset beyond its original purpose.
      Google search term analysis used to predict flu outbreaks
      Collective fitness band data used to target health initiatives and measure outcomes
      Cell tower and GPS connections data generating real-time traffic congestion maps

All of these models are in play, to one degree or another, in most nonprofits, and will, over time, have significant impacts on how nonprofits raise funds, design and implement programs, engage with donors and other constituents, and measure impact and success.

Intelligence and a Strategy Mindset

Intelligence – the new differentiator

Intelligence is a new core asset for nonprofits, and part-and-parcel to the use of technology as a strategic asset. Intelligence is the engine that drives advanced applications like marketing automation. When organizations have a deeper understanding of their constituents, they’re able to engage them in more meaningful ways through personalization, targeted communication and content, and more direct involvement in organization initiatives. That in turn builds stronger relationships, leading to greater success in fundraising and other programs.

The building blocks of intelligence are data and analytics. Of particular importance are data on donor behavior, such as knowing which emails an individual donor reads and responds to, what website content she views, and whether she participates in advocacy and other programs. Many nonprofits already use data overlays such as political indicators and use of social media to enrich donor profiles. The emerging Internet of Things offers the potential to greatly expand our knowledge of donors and constituents, as well as to help refine and measure the outcomes of programs. more

Data-driven systems such as marketing automation use donor demographics and behavior data to tailor content and messaging to help the organization engage donors. The next wave of analysis—predictive analytics—will go further, looking forward to predict behavior and understand the dynamics of the environments in which the nonprofit operates. This will enable organizations to refine program strategies to better achieve desired outcomes as well as engage donors in more meaningful ways.

A mark of successful organizations will be their commitment to rich data and analytics.

Strategy Mindset

Our research also shows that a strategy mindset within organizations correlates with greater success. A greater focus on strategy and outcomes enables organizations to take full advantage of the expanded role of technology, and to remain flexible to embrace new approaches as they emerge. More than 60% of nonprofits that have a formal and written engagement strategy also experienced a year-over-year growth in fundraising. In contrast, only one-quarter of those who have no plans to develop an engagement strategy plan experienced increases.



Today’s donor management systems are much more than simply a means to store donor information and provide basic fundraising and communications capabilities. They are the organization’s hub for specialized applications and the focal point for intelligence about donors and constituents.

To fulfill this role, your DMS needs to work well with other applications and support bi-directional data flows, interface with advanced analytics systems for needs beyond standard reporting capabilities, and be flexible enough to accommodate new models and applications as they emerge in the months and years ahead.

A Lack of Integration Undermines Effective Communications and Marketing

Personalized communication requires knowledge of the donor or member (or prospects). Whether using an in-house or contracted email marketing system or a more robust marketing automation solution, the successful marketer or fundraiser levels this knowledge to deliver appropriate and timely content. In turn the use of this personalized communication can bring about higher rates of conversion, greater levels of engagement, and increased donations. The source of this information for most organizations are the individual profiles within the member or donor management system.

A critical component of the 360 degree view of the member or donor is the set of interactions that individual has had with the organization such as response to previous email, website use, participation in events and conferences, social media interactions, and advocacy actions. Increasingly these interactions take place within third-party applications, generally online and outside of the member or donor management system.

360 ViewIntegration between these applications and the central member or donor management system is critical. The third-party applications require information about the individual such as member or donor status and email address, and in turn, the management system needs information about participation so it can be added to the member or donor profile.

Based on findings from the Lehman Reports studies, this required level of integration is largely lacking, severely limiting those organizations from making effective use of personalized communications. For six of eight third-party applications frequently used by associations, fewer than one-half are integrated with that association’s member management system. Research on donor management systems suggests a similar pattern for those nonprofits.


Associations and other nonprofits need to move quickly to integration these applications. Doing so will insure a more complete member or donor record that will in turn translate to more effective communication, marketing, and fundraising programs.

Changing role of IT

The role of IT in organizations is changing – and that’s a good thing. Most organizations are moving away from in-house servers migrating to online applications and hosted services. Associations and charitable organizations are using an array of third-party applications such as private communities, email marketing and marketing automation, elearning / learning management functions, fundraising, advocacy and event management. Some or all of these are integrated with the organization’s association management or donor management systems. Lehman Reports studies have documented that the resulting technology complexity represents a challenge for both the IT function and end users in the organization.

In this context, the role of IT shifts from being the operator of technology to the manager of external service providers and applications to provide an effective and integrated technology ecosystem. This is a higher level function and one that requires a combination of strong technical knowledge and management skills.

Beyond the management of the technology ecosystem, IT plays an increasingly important role as the focal point of knowledge and expertise to help staff gain maximum benefits for the organization from its investment in technology. This is not just training and support on “how” to use an application, though that is certainly a part. Rather it is IT working with departments and staff to understand goals and challenges, and then help them apply technology to address them. This brings IT out of the administrative support closet and into the mainstream of the organization,  focusing on mission, long terms goals, and effective programs and services. Interactions shift from fixing technical problems to helping professional staff understand and leverage technology resources to be more successful.

IT staff should welcome these changes as offering greater opportunities and a more visible role in the success of the organization. To be successful in these new roles, however, many will need to be proactive to increase their management and communications skills.

Conversion of email lists to communities? Maybe not

A conventional wisdom has been for associations and other nonprofits to migrate current email list groups to community platforms. In our consulting as a part-time CIO, we’ve done this ourselves. We might have been wrong. Direct experience and observing the experiences of others suggests that when migrated to richer community platforms, these existing email list groups tend to keep functioning just as they did before. That is, they use the community platform as an email hub, perhaps augmented by file libraries, but still essentially email lists. Why would that happen and how might we approach this differently?

There are many apparent similarities between email lists and communities. For both, a core function is discussion. Topics are introduced, questions are asked, information is requested, and other participants respond. Users receive email updates of new postings in either real time or as a digest. Community platforms add new functions such as libraries, profiles, and discussion home pages that make it easy to find and read discussion threads. Some email list applications provide some of these features as well.

Upon closer examination, however, there are fundamental differences between an email list and a community.

Email lists tend to be formed around content while communities are formed around people. Content discussions in email lists can and do result in fostering relationships, particularly among frequent posters. Those relationships are a byproduct of the content discussion. Communities in contrast are formed around people and the interactions among those people may lead to content-oriented conversations. Content discussions are a byproduct of the relationships of the people. For example, in the personal arena, Facebook builds on personal relationships, modeled on the concept of friends. People share personal experiences and opinions that sometimes lead to more expansive content discussions. LinkedIn is also about relationships, modeled on the concept of professional contacts.

In contrast, many listservs – perhaps most, are topical. People join the list because they are interested in the topic and expect the topic to be the prime focus of discussions. Evidence of this are comments on lists about conversations drifting off-topic, something that never comes up in personal communities.

Organizations are drawn to the community model because it offers an opportunity for deeper relationships with members or donors. However, the migration of lists into community platforms may actually inhibit that goal by trying to transition a content-oriented group to a person-oriented community. Perhaps it would be better to keep these two functions separated, at least initially.

What are alternatives? From my vantage point, the development of models for professional or organizational communities is still in its infancy. One leading provider suggests establishing a new community of all members to help get the community ball rolling. Another possibility would be to create one or more new communities based on personal (or organizational) characteristics such as location, career stage, or volunteer activities. For most associations, chapters, regional and state affiliates have always had a vibrant local community, for example. Over time these communities of people might begin to absorb the content-oriented listservs.

Is social media marketing dead?

Has the promise of social media as a marketing channel been oversold? Has the world changed such that even if some of the opportunities for social media marketing were true several years ago, those conditions no longer exist? Blog posts from two digital media analysts think so. The first by Augie Ray believes it is time to “burn down” the current model and rebuild. The second by Josh Bernoff, formerly with Forrester and co-author of the 2008 book Groundswell, references Ray’s post but goes on to argue that social media marketing is simply dead. In the early days, participation by brands in social media was novel and interesting. Today, it is just another form of media advertising and not a particularly good one as compared to other forms of advertising.

Burn It Down, Start From Scratch And Build a Social Media Strategy That Works – Augie Ray

Augie Ray, Can we admit now that social media marketing is dead? – Josh Bernoff

Some points cited include:

  • Social media does not deliver purchases
  • Social delivers poor conversions
  • B2B buyers rate social media posts among the least important for establishing credibility and just 15% of consumer buyers trust posts by companies and brands
  • Example – Coca-Cola sells 1.8B drinks a day, but in a week saw just 37K people like, comment, check-in, share or mention the brand on Facebook

How does this translate to associations and other nonprofits? I would say the jury is still out. Members and customers are very different, despite recent moves by some to view members as customers. Customers primarily have a relationship with a product or service that is then coupled to a lesser or greater degree to the company. Members primarily have a relationship with an organization that is then coupled to a greater or lesser degree with the products and services that organization provides. (More on that topic in another post.)

To the extent that an association (brand) can engage members and other constituents around topics and content, that certainly has the potential to increase the strength of the relationship with the organization (engagement) and helps the organization strengthen it’s positioning as a source of value for those members. This would also be true for many other types of nonprofits. Note that this is engagement around content rather than the organization itself. That may translate to a positive brand impression for the organization, but it is indirect.

However, the data from the commercial sector suggests that social media may not be an attractive marketing channel for nonprofit conferences and services, at least as compared to other channels such as email marketing, and especially when combined with marketing automation tools to target and personalize those communications.

Engagement – real or the flavor of the day?

Two years ago, you couldn’t pick up a magazine or read through nonprofit discussion groups without encountering CRM. It was everywhere and not a few people suggested that CRM would now replace existing application such as association management systems (AMS) and donor management systems (DMS). Several AMS providers branded around CRM and then social CRM. While CRM as both a strategy and set of application tools remains important, its prevalence in conference sessions and articles has diminished.

Today it is all about engagement. Online discussions, conference sessions, blogs and articles are awash with the term. The new version of one major association application, formerly described as an AMS, has been re-branded as an engagement management system 0r EMS. A leading private community application wonders out loud whether they are really an engagement platform.

Is engagement the new flavor of the day, or something more? While there is no question it is currently a buzz word attached to nearly everything, it – or something like it – is likely to have more staying power than CRM. Why?

Work with associations and findings the our industry studies point to a greater focus on outcomes. As noted in earlier posts, this is part of a shift towards viewing technology as a strategic asset, not simply a productivity tool set. Following is a slide used in several presentations over the past two years. We see a progression of focus from the data (the member database) to applications to leverage that data (such as CRM) to outcomes like engagement.

Outcomes Orientation

When you think about, housing the data and using applications to leverage that data focus more on the question of “how” than the question of “what.” They represents tools that may be employed to help achieve organization mission and goals. Engagement on the other hand reflects the relationship with members and other constituents. Those relationships are frequently front and center to the goals of the organization. Another way to think about this is substitution. New and better ways to manage and leverage data can be readily adopted without altering the core goals and mission of the organization. Approaches to engagement scoring may also change, but the critical role those relationships play in the organization will not change – or at least would change only with significant changes to teh mission and goals of the organization.

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