ERP Systems For Nonprofits

Narration: This is The ERP Advisor. (music) Today's episode: Introduction to ERP for Nonprofits.

Juliette: Shawn Windle is one of our speakers for today. Shawn is the Founder and Managing Principal of ERP Advisors Group based in Denver, Colorado. Shawn has over 20 years of experience in the enterprise software industry.

Carly Shube is our guest for today. Carly is a consultant at ERP Advisors Group and has brought her background in accounting to our team.

On today's call we will take a look at how to find the right ERP for your organization, by sharing what we have discovered from working with a variety of nonprofit organizations.

We work with so many different businesses and industries, and nonprofits seem to obviously have their own niche, with a wide range of needs for their software – some unique, some not.

With that Shawn, I’m going to ask you first. When we hear about nonprofit organizations, there can be a tendency to think about them as this monolithic generality. But we have discussed that there are many different types of nonprofit organizations. What can you tell us about this and as it relates to nonprofits and their ERP?

Shawn: I think that’s a great point and I think I've shared the secret before, so I look at the questions in advance for just like a millisecond and then like three seconds before the call I’m surprised by what’s being asked.

But this is a great question because I think we’ve seen this on some projects recently, Carly but … does not equal a nonprofit. There are health and human services nonprofits, there are associations, community foundations. There are nonprofits that are fee for service (FFS), or they're doing a lot of grant work, maybe even bilateral grant work with governments, we have those kinds of clients. And even a fiscal sponsor is another kind of nonprofit.

So, we really do try to get the nuggets, for folks that are listening, for these meetings, and this is a really big nugget for folks that are looking at software for their nonprofit organization, which is: Figure out who you are.

You probably already know it. Just because you're like “Oh yeah, we have”…

Without getting into some specifics, we've got international organizations that are offering services for really unbelievable things, improving health around the world in third world countries that nobody really spends the time to do. We have a nonprofit that that's all they do, which is amazing. I mean, I get a little choked up when I think about what our clients do, honestly, and the impact that they make.

Okay fine put all that out of the way, we’ve got to be businesslike here but, it really is like “Okay what our business processes that we operate?”

One of our clients that we're working with, this one I'm thinking of, they have a little piece of their business that makes an item, and then they sell that item. So, they're kind of a manufacturer. Wait, what? A nonprofit is a manufacturer? Yeah, they have a piece of their business that actually does have Bill of Materials and items and work orders. Do they need to implement some ginormous SAP instance? No, but they do want to be able to track that part of their business, at least eventually.

But that's a part of their organization. But a big part of their organization is receiving grants and then determining how to spend the money, expedite the money throughout the world on different programs that they have. So, they have a huge staff of people in lots of different countries. And so, what are those people doing? Well, we kind of need to know what they're doing. We need to know what their activities are against a specific grant.

So now they start sort of start to look like us, because they have projects, and they have people that are tracking their time to the projects. So now we have to have time tracking and we have to have expense tracking, because people incur expenses as part of what they're doing.

And then we may also — and I'll talk a lot about this later, but grantors — people that are giving our clients (nonprofits and that) money, they have some really strict reporting requirements. So that drives some of the requirements that our particular client has, around just how they track costs again that go towards grants.

That's not even associations or even some municipality work that we've done that’s sort of nonprofit, for public safety, for police and fire stations. We love working with those guys and it is just a pure joy to work with those folks.

Actually, one of our clients just had something happen here in Colorado recently. It was a major deal, and that pushed off an implementation we were working with them on, as they're sort of handling those situations.

That was a lot I just threw out, but what I’m trying to get to is: As a nonprofit, and I'm speaking to our nonprofit clients here, you're not like anybody else. You're just not.

There's maybe four or five or ten or something who say “Oh, we all do, community foundations”. Well, even within Community foundations we've seen variations of “Oh, we're really focused on scholarships” or “We're focused on granting out”, or “We're just focused on donor advised funds.” Well, some of our clients do all of that.

So, you really have to understand who you are — that's, the first thing — and what your business processes are, and how you go through executing the business.

But then there is that third component, which I love the most, which is: What really is the mission, what is the impact that we're willing to take the risk to actually do? Whether it's putting your life on the line, all the way to helping the lives of others that have just gotten forgotten on this planet. And really understanding that whole scene of who you really are, then you're in a position to start talking about software.

Now, I'm not talking about some conceptual high-level thing at all, but really just like, how do we really operate and what are our goals, and what are we really trying to accomplish here at the end of the day? With that in mind, then it starts to become more clear on what you need with software.

Juliette: Well, I think from the little I know, it seems that you do that with any business. It doesn't matter what industry, even if you are a nonprofit. I feel like the nonprofits are just under one big umbrella and it's not that simple.

Carly, you've been working with some nonprofits recently, what advice would you give someone who is looking at selecting an ERP for their organization?

Carly: That baseline does go back to knowing what type of nonprofit you are, but then also knowing, what's your goal for the software? For example, there's a lot of crossover between donor management and tracking – which, in the for-profit world, is called customer relationship management, the CRM.

The CRM also handles donor fundraising, all of that's kind of built in. But if you're really just looking for an online peer-to-peer, crowdfunding, donation platform, fundraising application – to vet those out and go “Okay, hey this other software is actually just a little bit more robust than what we need. We’re doing more we're doing one-off, donations we're not we're not talking to the same donors over and over again.” You wouldn't want to go down that road, because it would have just too much functionality than for what you're looking for, whereas a smaller fundraising-specific app would have those more specified needs that you have.

So that's one particular example, but there's different types of applications for the different needs that nonprofits need.

Juliette: And that goes back to knowing what you do and what you are.

Shawn: But I think that’s a great example because, like “Oh, we need grant management, or we need donor management, or we need fundraising software.” Okay, so you go online you type in “fundraising software” and it's cheap and I’ll buy it. But “oh my gosh, what did we just do?” Because there are so many variations in nonprofit donor management software that you really do have to get down to that next level of requirement, so it’s a great point.

Juliette: So, I don't think we can have this conversation without addressing the elephant in the room for many nonprofits. Blackbaud was seen as the industry standard for quite some time, but last year's data breach changed everything. What would you recommend for those who are questioning whether Blackbaud is right for them?

Shawn: Now this question, I did see beforehand. I was a little bit like, “How much do we get into this?” And as we're putting together this question and we're kind of thinking about what's most helpful to people listening to our podcasts, Blackbaud comes up all the time, just like you said.

We, again, don’t make a dime from anybody, nor do we have it out for anyone. Although there is one vendor that we had a really bad implementation with that I still am not quite over forgiving. I need to find the forgiveness in my heart, but I have not gotten there yet. But anyway, we won’t talk about SAP ByDesign right now. We’ll do that later.

Anyway, for fundraising, and not just fundraising, but for accounting, for grants, there's a whole slew of solutions that Blackbaud has basically acquired over the years. We just recently, Carly and I did an analysis of an upgrade from some of the Blackbaud legacy applications, [Raiser’s Edge] 7, up to their new product called NXT. And I can see where that solution still is a good solution for some nonprofits. It is, for sure, unequivocally.

Now, what has happened, though, over the years in the nonprofit space, which is very interesting — and we see this in other spaces of software enterprise software. I think, actually, Sean and I worked on a document earlier this year about how 2021 is really the micro verticals for ERP. This is the year, where you can be you know so focused down to whatever very teeny tiny, small industry it is and there's software for it. Same thing for nonprofit.

And that's been a good thing for the nonprofit industry because there's more competition against Blackbaud, and more really good competition. Because the cost of building a software solution and maintaining a solution and having a company around software, that’s a big risk and you got to have a lot of people and you’ve got to make sure that you know what you're doing with your upgrades and support. You don't just sell these things and say see you later. You’ve got to be around for an organization for years. Especially because they're relying on you for their mission critical purposes. You want to go to the bad place? Treat nonprofits badly. I'm sorry but you're just pulling in some bad mojo if you're doing that.

Blackbaud has sort of I think evolved, buying a lot of different apps, there's sort of a maintenance stream that goes with that. Now we see sort of these forced migrations into the next level of software. There's support that they're offering for some of their legacy apps, but that's definitely the desire — is to move to NXT. And what we've seen is that's a pretty major upgrade.

So, it may be a good opportunity to look in the market and just see what else is there. Especially because, like I said, there are so many different types of really niche solutions that are coming on, that are really getting more groundswell and support, and so there's just more options.

So, again I don't speak ill of any vendor except for the one. But with Blackbaud I would say, and we're seeing this across other areas of ERP frankly and other industries, but there are such other great solutions out there you’ve got to at least look.

And that that can add more time, more complexity, but I would tell you that even if you are going to just say “Yeah we'll just upgrade to Blackbaud”, I still would recommend that you again, just like Carly said, figure out what we need for the fundraising side of the house, figure out what we need for accounting, figure out what we need for service (fee for service), or the program management, or grant management — all that stuff.

Then go to Blackbaud and say “Here's what we're looking for, show me. Show it to me, don't just say, ‘oh yeah we'll do it, it'll be fine.’” Now, you know if you're fine on Blackbaud 7, with FE (Financial Edge) and RE (Raiser’s Edge) 7, then it is going to better on NXT because there is more of a of an internet, web sort of look to it — that kind of a front end.

On the back end, those databases are still a little separate. We’ve had some very unusual solutions that our clients have implemented to bring that together, which can be risky.

Anyway, just please take a look, don't just assume it makes sense, just look at it. Figure out what you need and look at it. I mean that's the theme of every single one of our calls, I think, but especially in this place.

Juliette: Can you customize a software for a nonprofit? Or is there more of a standard that works?

Shawn: That’s a great question. In customization for one of our clients, I told him I was going to get some shirts for the team that says, “No customization or you got to talk to the CEO” on the back and have a picture of him with his finger like, “No!” That would be a good picture too because he’s sort of a baller. He’s good. He’s really good. People will be like, “I don’t want that!”

Yes and no. There are some instances where, well, like we have a fiscal sponsor as a client right now. This is an organization and has many hundreds of projects underneath it. Basically, they do the back office for their projects. They share 501C3 certifications and other stuff. That model is a little bit different — fiscal sponsorship it's a little bit different than other models in the nonprofit world, or really any other model. It's a parent child relationship.

But we may need to make a customization and an app to support that model, but it’s okay. Because we'll talk to the vendor, make sure that the customization gets upgraded. When we take future upgrades, we want the customizations to come with and be supported.

Juliette: So, Carly you mentioned previously, about the unique needs of different nonprofits. Can you speak to the different unique challenges that nonprofits should consider when they're looking for a new ERP?

Carly: Yeah. First, you've established “What kind of nonprofit am I?” Because it's like saying “I'm a business”. That's not quite enough so first you go “Okay, I'm going to be a health and human service nonprofit.” So then when you're looking for an application, and kind of digging through, there's a lot of different challenges that can come up with that. Because there is a lot of innovation in the nonprofit application software world, because people want to help. It's quite amazing.

So, then you come across applications that are really cool and nifty and have all these gadgets and trinkets and bling and you're like “Wow! I'm going to go with this one.” But you really have to go “Okay, it looks really cool, but let's actually see if the functionality is there for what I as a health and human services nonprofit organization needs.

So, then you look at it and you dig a little bit deeper into the functionality and then you need to actually evaluate. There’s a lot of purchasing of smaller apps in the market. Just all together, but kind of a lot in the nonprofit because there is so much innovation. And you go okay, how established is this software? How many years has it been on the market? How many how many employees do they have? Is it a one-man shop, is it a two-man shop? Can they handle my 400 employees? As an organization, I have 400 employees, they have two. It that enough? Probably not.

These are questions you have to ask like for yourself. What if it gets bought by another application? Is it going to just go away, or is it going to be the platform? There's a lot of what I would call back-end questions around software that can be challenging when everything is so cool-looking.

So, don't go for the best, coolest and shiniest looking. Try and find that happy medium between what looks really awesome and what functions really awesome but is a kind of a little older-looking software. You're going to want to try and meld those two. Just like you don't always necessarily go with the cheapest software or the most expensive, there's usually a really nice happy medium. And by really looking and getting a little bit deeper into conversations with the vendor and their roadmap and the functionality, you can find those out.

Shawn: I think, Juliette – just to taper onto what you just said, Carly – from a nonprofit perspective, you need to do all that and, by the way, any dollars that you spend are going towards the mission. They're not going to those services. We have a client in Denver, the Denver Rescue Mission — a great client – and we're sitting there in meetings and we're billing our time at a nonprofit discounted rate, but I sit there like “Should they be spending money with me, or us, right now? Or should we be spending money on the software, or even on the next person who's coming in who's looking for a lunch?

So, the nonprofit challenge, with what you just said, I think it puts more onus on probably the people listening to this podcast. Because they're the lucky — or unlucky — souls who are like “Okay, we’ve got to make the decision.” Then the “we” becomes the “me” and you’re “voluntold”, and all that stuff.

And so, you have a person then that, again just like you said, it's like whoa. Like we, for a fundraising app recently, I think, you were telling me some of the calls are — and even our client is like “Man, this app is amazing!” It's got all this AI (artificial intelligence) and all these really amazing things, but there's like two people. It's like teeny tiny.

So, don't do that, don't. You're too big to take the risk on the small platform for right now. Even though it may be less expensive. We may need to go with a little more expensive product, hopefully, like you said Carly, not the most expensive. But we have to find the product that's right for the organization and being able to handle these core processes that the software does, actually does help us. To be able to do the mission-driven, the more outward-facing stuff that we really want to spend our time on.

But the better we can get the back office stabilized and help us grow that way, without adding a ton of people or adding more apps, it always pays for itself. But it is just like, speaking of the elephant in the room, everybody is sitting there like should we spend more money on helping out the five thousand people in Bangladesh that need better sanitation? Or do we get a Planning and Budgeting application? That’s a hard decision to make, you know?

But the Planning and Budgeting applications, actually — like we saw at Denver Rescue Mission — we had program managers that are running these incredible programs. Some of the best people we’ve met, and they have no idea what their budgets were. They have no idea how much their budget to actuals were. So, they're trying to plan out programs and they're like “It's so hard for me to get my existing reports, so if I had better visibility into what I’ve spent year to date, where I'm at, maybe I have multiple programs, and I can shift some dollars around. If I could see all that, I can make better decisions, more executive decisions that are for the greater good.”

And we said “Do it. We’re going to get a Planning and Budgeting application.” We got Adaptive, which normally our for-profit clients love. That Adaptive Planning has really set them up to be able to make better decisions about, again, where to deploy their money which, at a higher level, helps them to be more effective with the day to day. The, literally, in the streets decisions.

Carly: I was also going to say that, depending on the need, there are actually some pretty interesting options in software. That are not necessarily the traditional nonprofit software. That can actually be pretty helpful to the client. That do offer nonprofit rates.

NetSuite is one where we've kind of looked at it for a few different of our clients, different types of nonprofits and it's either been a good fit, and good pricing, or not a good fit. But you don't necessarily know that until you went down. For our Community Foundation it ended up just not having the unique needs that it needed. Although it’s a good application for our other nonprofit that does sanitation. That's a good one because they tend to operate more manufacturing, more projects based. Whereas the Community foundation is much more donor fundraising based and grant management.

So, there's always those little unique applications out there that you can leverage. vice versa, that may not be the first of mind, but it's not necessarily a bad choice. Could be very unique and then, of course, those smaller applications are actually really good applications for smaller organizations.

So, if you are a start-up nonprofit, go find those smaller ones that have all the cool stuff. Because that will help them build and be able to expand and the whole symbiotic relationship comes from that. But they do have their place, and they're very good applications and they're very good for the smaller organizations that need the smaller applications.

Shawn: That’s a great point.

Juliette: That leads me to my next question. Are there any specific applications that you have recently discovered, that work very well for the nonprofit's we've been working with?

Carly: NetSuite is one that is very traditionally thought of for the for-profit world but can be very nicely leveraged to the nonprofit world. Of course, depending on your specific needs. It all comes back down to knowing who you are and knowing what you need. But NetSuite is kind of a peripheral type of nonprofit type of solution.

Digging in, we found a whole bunch of applications that have really started to set themselves apart. I talked to this organization, they’re a fundraising app and they’re in New York and they have a really hip building. They’re what you think of when you think of a nonprofit software. And then there's been other applications that are more of an all-in-one solution, really geared more towards the foundations. Community Foundations tend to be a little bit of the almost forgotten nonprofits because there's so unique and they have very specific needs so there's not a ton [of solutions]. Well, we found there's a lot more solutions, and then we originally thought, about a dozen or so. There's a few out there that are really, really good. And then, when you start to talk to them, you want to find the personality matches.

That's a really important point because you're going to be hopefully dealing with these people for the next five to 10 years. I mean nobody wants to switch software often, it's not fun. So, you're going to be dealing with the same people for five or ten years. Okay, do we do we have the same, I don't know, energy flow? Did we all flow on the same length?

Juliette: Do they listen to you? Do you they hear you? I think that's the biggest thing.

Carly: Right. Do you feel heard when you talk to them? Does it feel like a like a working relationship/partnership? Do they really care about the nonprofits that they work for? That's always really important, in my opinion, in the nonprofit world because you can't do nonprofit work and not have a core appreciation for the work you're doing, and belief.

So that's kind of a little bit of a roundabout way of saying “Yes, there's some cool apps out there.”

There’s a lot more I’ve been discovering, and I think, just given the innovation in the market. there's going to continue to be a lot of really interesting, new up and coming ones that maybe — for our 50 million-plus nonprofits — would be too small today, but in three years? It's a changing market really quickly and they could be a really good option in three years.

Juliette: Shawn, would you like to add anything?

Shawn: Just a little name dropping, I guess. So, definitely NetSuite. I think we've done a lot with that product. For reasons that it works even on the for-profit side: Scalability, multiple functionalities, lots of other stuff, multinational stuff, multi-currency. But of course, most nonprofits have Salesforce. Salesforce has a really good nonprofit program, of course, that all the folks listening to this call know already. But that product can be leveraged with some of the AppExchange bolt-ons. We have a client that's using TaskRay, which is really more of a project management sort of function. But they're using some workflow automation and they're checking it out, making sure it's the right thing for the long term.

But Salesforce and the Salesforce ecosystem is a really good option, for sure. But there's Fluxx, there's Bramelkamp, there’s Foundant, and then Stellar Technologies was another one that was really good. Lots and lots of different kinds of products, for sure. I can't even think of all of them.

Honestly, we do this, too. Even last night I was doing some research for a client. I was online for an hour and a half. Just online, looking at different sources and places to just sort of cast the net of the apps that are out there in a certain category. And then, once you define the universe, where there's this many applications, then you can sort of start digging in and see who's got the most reviews or which vendors have more capital behind them, or which ones have a bigger employee base. We're seeing that with some of the fundraising apps right now. Like Classy is an app, they're in San Diego — as in “Keep it classy.”

Carly: They have a few hundred employees. Compared to some of the other names, which are really close, so I forget. But another fundraising APP that has a couple dozen – so, they're both very viable, but just very different bases.

Juliette: Well, let me ask you this, I know we've come across some clients and other businesses that rely on QuickBooks. Do any nonprofits rely on QuickBooks?

Shawn: They do. It's interesting, actually both Carly and I have an accounting background. And there's nonprofit accounting that nonprofits have to do, with restricted funds. “We got this grant in it and it can only be used for this purpose.”

But what's really happened – and I’d be curious to hear what other folks that say about this — but what I’ve observed is sort of a move more towards for-profit accounting even with our associations. Where they will be very project-centric, here's a grant and it's going to be used for this purpose, we’ll set up a project and, like I said earlier, track time, track expenses to that project.

QuickBooks can do it and it’s pretty good. Some of the nonprofit reports, I'm not sure out of the box it supports — I would be surprised if it didn't, frankly. But some of our clients that are in the billions of dollars still print out their financials and then lock them up in Excel. So, it's definitely an option, for sure. I think it's an option.

Juliette: And it's just something that maybe they can graduate to something else from there, because I know that's what we've helped some of our other clients do.

To kind of close out our call today, is there anything that you'd like to share with the people joining us today, or that are going to listen to our podcast? Just what you've learned and can pass along to the nonprofits listening, when they are considering a new ERP?

Carly: That’s a good question. This is kind of not related to that question, but I’m going to throw it out there anyway. Something that I've really discovered about our nonprofit clients is just how genuine and how much they care about what they do. Being able to support my nonprofit clients, helping them find the right ERP solution to be able to better empower their people to help people, the planet, animals has been a pleasure for me and a little bit heartwarming. I really get attached to our nonprofit clients, like really attached. I love them, they are so great.

Really, helping them — and this is like wow I really found out how I can help these nonprofits who help in a way that I have no idea. I don't know how to engineer sanitation stuff. I don't know, I flush the toilet and I run the water in the sink and wash my hands.

Juliette: How fortunate are we?

Carly: Right. It's just things that I don't know how to help other people with, and so, to be able to help them in a way that I know that I can help them has been a very happy, heartwarming experience for me.

Juliette: That’s awesome.

Shawn: That’s great. One last thing I would add is that Carly’s email address is carly@erpadvisorsgroup.com

Carly: I’m happy to help.

Shawn: The last thing I would say is we've said a lot of good things, I think, through the through the session, for sure. But at the end of the day, I do sort of coach and sort of lead our nonprofit clients to take the viewpoint that I said earlier. Which is, don’t think about this as dollar-for-dollar exchange between your mission and the software. If that is the case, don't do the investment. There's something missing.

But when our clients see, “Whoa, we could really empower our people here.” By having this information about their programs, like I said earlier. Or even on the fundraising side, “Being able to interact with our donors in a whole new realm than we can do today, they're going to give us more money because it's just easier.” Or on the back end of some organizations — where they're figuring out who to grant to — automating that grant review process, or scholarship review process, or whatever it is, you can be more effective.

I guess what I'm trying to say is, if you feel like the software is taking the money out of the program then then you don't have the right software. But if you look at the software and you're like, “Wow! this can really enable us to be more effective,” then make that investment. It sounds maybe kind of simple, as I say it, but I don't know if clients often do the due diligence long enough to know that, in their heart, they know that this is the right thing. Don't buy the software unless you know that. That's The last thing.

Juliette: Well, I think we've come to the end of our time today, so thank you for sharing your experience and your knowledge, I appreciate it.

Shawn: Thank you.

Carly: Thanks.