by John M. Covaleski
Austin, Texas - Fundraising software, which helps nonprofit organizations raise money for operations and keep track of their donors and other key constituents, is becoming a new product for resellers and consultants accustomed to dealing with nonprofits’ fund accounting software.
This is significant for accounting professionals, since they account for the vast majority of fund accounting software resellers. Some fund accounting software vendors report that accountants make up as much as 80 percent of their sales channels.
Leading today’s fundraising movement, Best Software is recruiting resellers to handle a line of fundraising applications that it had acquired over the past year and added to its Austin-based Nonprofit and Government Division. Best created the division as an umbrella organization for products developed by the former Micro Information Products fund accounting vendor, which it acquired in 2001.
Best’s main nemesis in commercial market business software, Microsoft Business Solutions, has, through an affiliate, just gotten a new fundraising product of its own. The product has been-developed by Microsoft partner Serenic Software as an addition to a fund accounting application that Serenic builds as an integrated add-on to Microsoft’s Navision accounting software.
Entry-level product QuickBooks has also entered the fray, as its developer, Intuit Inc., includes a fundraising feature in the new QuickBooks Nonprofit edition. Also, B2P Commerce, a Chicago-based independent company that in early 2002 launched NonProfitBooks, which adds key nonprofit capability to the generic versions of QuickBooks, is now marketing an additional suite that includes fundraising management.
While Intuit manages a nationwide channel of QuickBooks consultants accounting professionals, B2P sells directly and through resellers/ consultants, including accountants.
Cougar Mountain Software, a channel-focused commercial market accounting software vendor, last year formed an alliance with fundraising software vendor Campagne Associates. The alliance links Campagne’s Giftmaker Pro with Cougar’s nonprofit fund accounting product, Fund Accounting Suite.
Meanwhile, Blackbaud, the Charleston, S.C.-based developer of the nonprofit sector’s best-known fundraising system, Raiser’s Edge, remains committed to a strategy of selling that product exclusively by a direct sales force, while its channel handles the company’s fund accounting line.
The only other developers of both fund accounting and fundraising software, Executive Data Systems Inc. of Alpharetta, Ga., and Araize Inc. of Cary, N.C., are not planning major changes in their operations. While those companies both boast that their fundraising packages natively integrate with their fund accounting, they are much less known than MIP or Blackbaud and, for the most part, their products are used by smaller nonprofits.
However, all the vendors share a great interest in accountants. Araize, EDS and Best’s nonprofit and government group each report that accountants make up 80 percent to 90 percent of their respective channels, while 50 percent of Blackbaud’s channel are either accountants or affiliated with accounting firms.
By contrast, accounting professionals generally account for only 30 percent or less of the reseller channels for the developers of commercial market business accounting software.
Best has the biggest fundraising reseller strategy. It plans to encourage resellers of MIP’s fund accounting software to add fundraising to their offerings, and is recruiting resellers of its commercial market business software products, such as the MAS accounting series, to also handle Best’s fund accounting and fundraising tools.
Best is also making training on its fundraising products available to the 12,000 members of its Best Software Accountants Network, which includes some of the accountants trained to advise customers and make recommendations on accounting software from Best’s small business and mid-market divisions, which include Peachtree and the MAS 90/200 lines. BSAN also includes users of Best’s CPASoftware line of practice management/tax compliance products.
“We are also selling fundraising direct, but we want to leverage the channel because we know that some organizations prefer working with a local reseller,” said Kent Hollrah, head of Best’s Nonprofit and Government Division, and former president of Micro Information Products. When Best acquired that company, MIP handled only fund accounting.
Hollrah noted that he joined MIP in 1997 to help the company move to channel selling from exclusively direct selling. He credits that transition with helping MIP more than double its traditional annual growth rate in the late 1990s (though Y2K-induced buying also helped somewhat). He hopes that the channel will produce similar results in fundraising products sales.
Best’s Nonprofit and Government Division expanded into fundraising in 2002 upon acquiring the former JSI Fundraising, a direct-selling developer of Millennium, a fundraiser tool designed for larger, more sophisticated end users, and Paradigm, used primarily by smaller organizations. Best has continued those products under the Best label, and has since beefed up further in fundraising by acquiring KTS Group Inc., a Toronto-based developer that supports more than 650 nonprofit organizations.
Hollrah also expects that channel sales in fundraising will make his unit more competitive with Blackbaud, which he called “nonprofit software’s $100-million gorilla.” He said, “We will be a major thorn in Blackbaud’s side.”
Charleston-based Blackbaud has no plans to make its Raiser’s Edge available for sale by its channel, despite some speculation that it was considering the move. With $120 million in annual sales, Blackbaud is the largest nonprofit/government specialist software developer, and its Raiser’s Edge, with 9,000 customers, is the market’s best-known fundraising product.
“We have been handling Raiser’s Edge for 20-plus years, and have strong expertise in it and the issues related to it,” said Blackbaud channel sales director Steve Dettor. “It’s a lot more intricate, and we feel we do a very good job servicing customers directly.”
He also said that withholding Raiser’s Edge from the channel has not hurt his reseller recruitment, noting that Blackbaud has increased its channel size to 40 partners in 46 locations, from 17 partners in 18 locations in September 2002. Approximately 50 percent of its resellers are accounting professionals.
To further enhance customer service, Blackbaud has formed a separate division for nonprofits that both raise money and sell tickets to fundraisers and other events.
Nonprofit market specialists, including Blackbaud’s competitors, concur that working with fundraising is a completely different proposition than fund accounting.
“There are challenges in fundraising software that you don’t find in fund accounting,” said Tim Mills-Groninger, associate executive director with the Chicago offices of IT Resource Center, which assists nonprofits in technology matters. In addition to different technologies, fundraising is also sold to a different group within nonprofits than the accounting operations that use fund accounting.
However, rival vendors are hopeful that Blackbaud’s commitment to direct sales of Raiser’s Edge will boost their own efforts to market fundraising.
“Blackbaud is a great competitor and has been very successful, but this creates an opportunity for us,” said Taylor Macdonald, the Best vice president in charge of the company’s overall reseller strategies. Roughly a third of Best’s fund accounting software resellers have signed up to handle the fundraising products and, separately, 20 to 30 resellers of Best’s commercial market solutions have added Best nonprofit products to their practices in the past year.
“If Blackbaud keeps ruffling its VARs’ feathers, some of those VARs will come to us,” said Jay Malik, chief executive of Denver-based Serenic Software.
As part of the additional product development authority it has gotten by being named to Microsoft’s Inner Circle of partners, Serenic has developed a fundraising module for use with Serenic Navigator, the nonprofit software it builds for Navision, one of Microsoft’s most powerful accounting and business management applications. Malik expects to begin marketing the fundraising tool through Navigator’s reseller channel in October.
Encore Business Solutions, of Winnipeg, Manitoba, another Microsoft Inner Circle member, develops a fund accounting solution that includes fundraising, and is designed for use with Microsoft’s Great Plains accounting application.
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