CSR SaaS just took another big leap forward as an industry. I hope you took note, because a lot is happening within CSR that is going to impact all of us for the next ten years. The industry continues to grow up. And the story keeps getting better.
CSR SaaS has been a niche industry for a long time. Maturity has been a long time coming. But it’s here. So, let’s talk about what happened, why it is so important, and most importantly, how you and your CSR programs and fundraising plans can take advantage of it.
Capital Drives Progress
When an industry begins taking on sufficient capital, that capital will force lots of change. For some folks in the industry, change will feel like de-stabilization and uncertainty. And sometimes, change is de-stabilizing. Take the CSR SaaS example of JK Group being acquired by a private equity firm in 2010. New ownership failed to understand the nature of the market and how its lack of maturity impacted customer expectations. Six years later, Cybergrants was absorbing what was left of JK.
But such stories do not define the maturity cycle of an entire industry. More often than not, capital drives more than change …
Capital drives progress.
The past 5 to 7 years has been a period of rapid progress in the industry. Why? Because CSR SaaS software has attracted a lot of capital. CyberGrants, YourCause, Good Done Great, FrontStream, Blackbaud, Salesforce have all brought significant sums of investment to the industry. As a result, the CSR SaaS industry has benefitted from:
- Better software design and user experience
- New feature development
- Integration across technology platforms and vendors
- Expanded options to give globally
- More secure data infrastructures
- More transparent transaction processing
- Improved reporting and analytics
There’s more to the list, but hopefully you get the picture.
Think of it this way. Capital fuels growth. Growth fuels competition. Competition forces innovation and product differentiation. And that is good for all industry stakeholders – companies, employee-donors, nonprofits and NGOs, and all sorts of partners to the industry.
The industry has come a loooooong way since I first jumped into it in the late 1990s building United Way’s first scalable online giving system. The early CSR SaaS companies – KindMark, CreateHope, 4Charity, CharitableWay – are names on tombstones in a startup company graveyard. But the ideas live on in better companies, newer investments, and superior innovation.
Blackbaud buys YourCause
So what is the “big leap” that I referred to? Last month, Blackbaud announced the acquisition of YourCause. “What is it about a single acquisition that is so important?” you ask. Let’s peal back the layers a bit and see.
Blackbaud is the leading provider of software to the nonprofit industry. In fact, Blackbaud no longer talks about themselves in terms of simply CRM and fundraising software. They present themselves to the marketplace this way: Blackbaud is the world’s leading cloud software company powering social good. That reference to “social good” is important.
Today’s CSR SaaS software is evolving – rapidly – in three important directions:
- In one direction, it is expanding into employee engagement – the business of reaching, recruiting and retaining talent. That’s good for corporate America.
- In another, CSR SaaS is exploding from its US and European roots to a global footprint reaching hundreds of thousands of global organizations doing good, sometimes in the most remote parts of the world. Good for donors, good for neighbors in need everywhere.
- And third, CSR SaaS providers are building “marketplaces” where all stakeholders of a giving transaction can do more than just exchange something of value – they can interact with each other for the common good. Good for everyone.
That third direction is why Blackbaud is so important to CSR. Blackbaud brings the necessary software, tools, and experience to execute on a giving marketplace vision – a marketplace for social good. Creating a new “marketplace for giving”, by the way, is also the vision driving the Salesforce-United Way partnership that has launched Salesforce Philanthropy Cloud.
Blackbaud is also important to the story of CSR SaaS market maturity in another way. It represents a lot of consolidation of smaller CSR players. Reaching back to 2015, Good Done Great acquired AmeriGives, then WPG Solutions in 2016. In 2017, YourCause acquired Good Done Great, then Profits4Purpose. And just last month, Blackbaud acquired YourCause, adding to a line of business that had previously acquired AngelPoints and MicroEdge. In other words …
Blackbaud’s acquisition of YourCause represents the consolidation of 7 CSR companies with hundreds of customers reaching millions of potential donors giving hundreds of millions of dollars and tens of thousands of hours of volunteer time.
Change in the leader board
A year ago, I wrote about how the CSR SaaS industry is maturing, suggesting that more change is coming. At the time, the leaders in CSR SaaS – as measured by number of customers and volume of giving transactions – were Benevity, CyberGrants and YourCause. But I also noted the impending launch of the Salesforce-United Way initiative, and suggested that tomorrow’s vendors of choice will be different from yesterday’s. That latter intuition is becoming true.
Today, the CSR SaaS leader board should be looked at differently. Not measured in terms of who has the most customers and donors today, but rather who is investing the capital with a vision to meet the needs of a growing industry in the near future. And for my money, “meeting the needs of a growing industry” has to include two unmet or underserved needs:
- The giving marketplace – we are long overdue here. If business professionals gather and self-organized on platforms like LinkedIn, if friends and family do the same over Facebook and Instagram, then all charity stakeholders need online communities – or marketplaces – where they can gather, self-organize, collaborate, exchange and share.
- Small and mid-sized businesses – the SMB market – need the sort of scalable, inexpensive solutions that can only come from market maturity.
And speaking of the mid-market, let’s be honest about something …
How many more CSR SaaS platforms do we really need to serve the Fortune 500 or Global 1000?
Think about it. In the U.S. alone, there are roughly 120 million workers in SMBs who are rarely engaged by CSR SaaS software platforms. This has to change. It’s not like SMBs won’t use good technology like payroll systems, benefits automation, communications software, desktop solutions, and more. Why can’t we reach the average SMB employee with an inexpensive workplace giving or CSR solution? Benefits and payroll providers, are you hearing this?
So today’s CSR SaaS leader board isn’t yesterday’s list. When we think about the top of the board, we have – in some order – Benevity, Blackbaud, and Salesforce-United Way. That’s not a critique of any of the vendors left off that short list. Rather it is a wake up call to everyone in the industry. Our world is changing.
Somebody is missing from the leader board
While CSR software is inherently “corporate” software, it is also fundraising software. It is software for social good. So if we take a step back and consider the list of software providers to the nonprofit and fundraising space, who are the largest and best known brands?
For starters, Blackbaud and Salesforce each have tens of thousands of nonprofit customers. Businesses that began with a focus on CRM and donor management have long since expanded to fundraising, accounting, finance, digital marketing and related business needs. So is it any surprise that Blackbaud and Salesforce now perch above the CSR SaaS space, ready to make their mark on a once over-looked industry?
But at the top of a “brand awareness” list for nonprofit software, we have one more name to mention. Microsoft.
Turns out, Microsoft is getting very serious about the nonprofit sector. In October of last year, Microsoft announced its second shared initiative with Blackbaud, co-launching a cloud-based resource management solution for nonprofits named, appropriately, Nonprofit Resource Management (NRM). Then in December, Microsoft selected StratusLIVE as a key partner in two major initiatives targeting the nonprofit space: the Common Data Model and Dynamics 365 Nonprofit Accelerator. In short, StratusLIVE is the first CSR SaaS platform that utilizes Microsoft Dynamics 365 at its core. And StratusLIVE targets the under-served mid-market that I referenced above.
Will Microsoft grab a spot at the top of the CSR SaaS leader board? Only time will tell. I would not count them out. More change to our industry is coming.
How you can take advantage of so much change
So the industry is changing – so what? What does that mean for the average CSR professional, or the fundraising director responsible for corporate workplace giving? For starters, change means opportunity … and the opportunities are yours to grab onto.
- Make some calls. All of the CSR SaaS providers mentioned in this article are marketing like crazy right now. They have new and different stories to tell, and they want to tell them. If you haven’t kept abreast of the change, now is a good time to reach out and set up some calls for your team. Maybe you are a large company planning ahead for a new year of CSR program activity. Or you are an SMB looking for your first software purchase. Or even a nonprofit that needs to grow workplace giving. Time to make some calls.
- Ask about product roadmaps. Once you make those calls and set up those demos, don’t just examine product features meeting your current needs. Ask the vendors to explain their product roadmaps. For vendors on the path to a giving marketplace, have them explain the vision. How do companies like yours fit in? Will the experience be better for donors and charities? How can participation in a giving marketplace help your CSR strategy succeed?
- SMBs get serious about CSR. If you have been shying away from CSR expenditures because traditional CSR SaaS providers have been too expensive, it is time for a change in attitude. Talk to the vendors. They should be offering inexpensive solutions that scale to your needs, or in time they may become nothing more than niche providers. If necessary, pool your efforts with like-minded companies. Get your local Chamber of Commerce involved. Your company will become a better company through CSR activities. And our communities need you.
- Nonprofits need CSR fundraising strategies. There was a time when most charities relied upon United Way to represent them in the workplace. Those days have passed by. And as a result, many charities do not focus the necessary attention on reaching donors through the workplace. This is a mistake. Fundraisers – you need to make the same calls as your CSR professional counterparts. Talk to the vendors. Ask them to explain how you can take advantage of their platforms to raise more money, more awareness. You may be surprised at the opportunities you have.
- Challenge your CSR SaaS provider. With so much change in play, the vendors have important stories to tell. Make sure they tell them. In the old days, we vetted a CSR SaaS vendor via a demo, mapping their product features to our programs. Today, the conversation needs a different tone. Start by asking how the vendor is going to support your company, your employee-donors, and your charities. For example:
- How does the vendor define a user having a successful experience with your software?
- How can you as the CSR program administrator measure the engagement and impact of employee participation?
- What benefits do charities derive from the software, other than receiving a gift of money or volunteer time?
- How transparent and inexpensive is the processing of the gift transaction to the recipient charity? This one is particularly important – is anybody out there really vetting gift distribution?
- What is your company doing to address so much change in the industry? How will you keep up or get ahead?
- And when you talk to a vendor not on my “leader board” – like a Bright Funds or FrontStream or StratusLIVE – ask them to differentiate themselves from the leaders. Give them the opportunity to tell you why their solutions might be the better fit for your needs.
Bringing it home
Good news, CSR fans. Our industry is alive and well. From what was once perceived as an obligation to give, or worse, a company expense that can be trimmed, Corporate Social Responsibility is big-time. If you thought that Blackrock President Larry Fink’s 2018 Letter to CEOs was a challenge, you should read the 2019 Letter subtitled Purpose & Profit. Investors are serious about the work we do.
And with so much capital paying attention to our industry, expect more change. More importantly, expect more change for the better.
More good news. We get to participate in and help drive the future of our industry. Technology is an impactful force for change in all industries. It is no different for CSR SaaS software. One way to look at all the vendor consolidation over the past few years is that there are fewer vendors to keep track of. A better view, however, is that our industry is going to benefit from the presence of major software companies like Salesforce, Blackbaud and Microsoft. And if I haven’t made the point clearly enough, these companies want to hear from you. So make some calls.
As for the mid-tier CSR SaaS providers, they want to hear from CSR professionals and nonprofit fundraisers, too. Not to be left behind, their job is to offer additional product differentiation and a higher quality of personalized service in order to win or keep your business.
As the customer, take advantage of this opportunity. Change is good. Progress is even better. CSR SaaS is really growing up.
Oh, and if you’d like some help making sense of all of this, please give us call. We are standing by to assist.