Nonprofit Software
BuyerView | 2014

Software Advice talks to thousands of nonprofit software buyers each year, which provides us with unparalleled insight into what influences technology buying decisions. We recently analyzed 2,313 interactions with nonprofits evaluating new software that occurred between January 1 and December 31, 2013. Here are the most important findings.

Key Findings:

  1. Most buyers (51 percent) are evaluating nonprofit software to improve efficiency.
  3. Among buyers with a preference, the majority (96 percent) prefer Web-based systems.
  5. Fundraising and donor management is the most requested application by buyers.

To provide further insights on the data, I shared our results with nonprofit technology consultant David Forrester, director of technology for 501 Commons. Forrester’s thoughts on the data are included in the report below.

David Forrester

David Forrester, 501 Commons

“A lot of things are driving the continued use of manual methods. A major one is smaller organization size, leaner budgets, and lower level of access to tech-savvy staff than in other sectors. Nonprofits tend to focus as little time, energy, and resources on technology as possible in order to maximize focus on delivering on their mission. But the inefficiencies of manual methods—especially with regard to reporting back to funders—are catching up with organizations, so they’re looking to improve.”


Buyers Seek Software to Improve Organizational Efficiency

The most frequently cited reason for evaluating new software was to improve efficiency (51 percent). Other reasons included needing more robust features (15 percent) and better integration with other systems being used (10 percent).

  • Top Reasons for Evaluating New Software

    Reasons Evaluating Software
  • Buyers’ Current Method for Managing Processes

    Current Method

Furthermore, almost half (49 percent) of buyers currently use manual recordkeeping methods, such as spreadsheets, pen and paper and Quickbooks to track data. Manual data management and task tracking can be tedious, even for nonprofits with a small number of records to maintain, so it’s not surprising that buyers want software to streamline regular business functions.

Buyers looking to improve efficiency often said things like, “we use 40 spreadsheets and things are getting overwhelming,” “we need to streamline our fundraising efforts” and “things get lost easily, so we need to get more organized.”

Most Buyers Prefer Web-based Deployment

Among the companies in our sample, 49 percent of buyers reported no preference either way for a Web-based or on-premise software deployment model.

Deployment Preference

Deployment Preference

Of those with a preference, Web-based applications were requested significantly more often than on-premise solutions—96 percent versus 2 percent. This ratio aligns with our findings in other software markets, such as CRM software, where a Web-based deployment model is the leading choice among buyers.

“It’s not surprising that staff at nonprofits that state a preference would prefer a Web-based solution—most nonprofits don’t have a lot of in-house technical staff to support the care and feeding of something on-premises,” Forrester says. It’s interesting to see that despite this, about half of your respondents had no preference. This, too, is symptomatic of the lean staffing and tight budgets that so many nonprofits operate with.”

Fundraising Management Is the Most Desired Application

Buyers in our sample were almost evenly split when it came to integration requirements: 52 percent sought a best-of-breed system, while 48 percent preferred an integrated suite.

  • Buyers' Integration Requirements

    Integration Requirements
  • Top-Requested Applications (All Buyers)

    All Requested Applications
  • Top-Requested Applications (Best-of-Breed Buyers)

  • Top-Requested Applications (Integrated Suite Buyers)

Fundraising management was the most-requested application across all buyers (52 percent). A significant majority of buyers evaluating best-of-breed applications sought a fundraising management solution (79 percent), while a smaller, but still substantial number of integrated suite buyers (40 percent) wanted to purchase a fundraising management application.

Nearly a quarter of all nonprofit software buyers requested a nonprofit CRM application to manage constituents. Drilling down further, 33 percent of integrated suite buyers sought a nonprofit CRM application, compared to just 4 percent of best-of-breed buyers.

Most Companies Sampled Are Small Organizations

The majority of buyers included in our analysis (56 percent) have 10 or less employees, and 69 percent generate less than $1 million in annual revenue. This may explain the higher preference for Web-based systems, which typically have lower entry costs.

Of nonprofits that preferred a Web-based deployment model, 80 percent earned less than $1 million in annual revenue. Meanwhile, 49 percent of nonprofits who preferred on-premise deployment earned less than $1 million in annual revenue.

  • Employee Count of Buyer's Organizations

    Employee Count
  • Annual Revenue of Nonprofits Evaluating Software

    All Revenue
  • Annual Revenue of Buyers Requesting Web-based Deployment

    Revenue Web-based
  • Annual Revenue of Buyers Requesting On-premise Deployment

    Revenue On-premise

Of nonprofits that preferred a Web-based deployment model, 80 percent earned less than $1 million in annual revenue. Meanwhile, 49 percent of nonprofits who preferred on-premise deployment earned less than $1 million in annual revenue.

According to Forrester, the findings highlighted here reflect a bigger trend he is seeing in the nonprofit market. “More and more nonprofits are turning to more sophisticated methods for managing their work and their data,” he says. “Cloud solutions are having a democratizing effect on nonprofits—now size doesn’t matter as much as before. And some of the smallest nonprofits are actually the ones that have been early adopters of these technologies.”

Human Services Is the Most Active Buyer Segment

Of the nonprofit buyers sampled, 37 percent work in the human services sector, making it the most-represented industry. This is followed by faith-based ministries (15 percent) and arts and cultural organizations (13 percent).

Top Industries Among Prospective Buyers

Buyer Sectors

If you have comments or would like to further discuss this report, feel free to contact me at

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