Washington, DC – The first thing a solution provider should know about targeting the ever growing non-profit sector is that it is actually all about profit.
According to Frank McGee, the president of Goodwill Industries International of Omaha, Neb., the sector actively looks for ways through technology to increase profitability.
“Just because you’re a non-profit doesn’t mean you don’t make a profit,” he said.
Goodwill is one of the world’s largest non-profit organization. It generates approximately $3 billion through a network of more than 180 independent managed, community organizations in Canada, the U.S. and other countries. Goodwill, mainly through donations, provides education, training, and career services for people with disadvantages.
At Goodwill Omaha, McGee operates 11 retail stores and last year processed 19 million pounds of donations. “We need more dollars available to us to replace old equipment and develop new product revenue streams. Sage helps us to generate reports on our profitability,” he said.
Sage Software has products such as Fund Accounting inside its Non-Profit Solutions area that provided Goodwill with accurate, year-end and other financial information which McGee could present to the his board.
Krista Endsely, senior vice-president and GM of Sage’s Non-profit solutions category, added that Goodwill’s accounting and profit goals would not have been possible without the assistance of channel partners.
”Without a partner being the face of Sage for that customer it would not be possible,” she said.
However, while charitable foundations such as Goodwill have found success, the overall non-profit vertical is going though a rough set of challenges brought on by a more knowledgeable base of donors and the recent spell of accounting fraud scandals that have hit the industry.
Heather Burton, Sage’s senior vice-president of marketing for the non-profit division, said the sad state of the economy (mainly in the U.S.) is also having an impact on non-profits.
Meanwhile, other data from Sage shows that issues with the economy are not slowing-down donations. According to Burton’s research, non-profit donations have grown in the past 20 years to reach $200 billion.
There are 1.5 million non-profit organizations, which is a 36 per cent increase from just ten years ago. More than 90,000 of these organizations have a budget a million dollars or more, Burton said.
The non-profit sector is a large and somewhat untapped market for channel partners. The top five categories in non-profits are: human services, philanthropy, volunteerism, grant marketing, and general health and rehabilitation. The largest is human services with a 16.1 per cent market presence. The next three are at a combined 16.1 per cent, according to Burton’s research.
“The cost of doing business is on the rise and it affects non-profits with gas and the cost of food. A food bank, for example, has to pay its employees so every dollar they raise has to have maximum impact and make a difference,” Burton added. Many non-profits today have to figure out other ways to get more dollars in and they also have to run as effective as a real business, Burton said.
“Non-profits are facing increased scrutiny. The spotlight is on this space and everyone’s eyes on are this space. Organizations are facing performance checks and balances and higher regulations to make sure they spend their money wisely. This is a Sage strength. It’s all about being transparent,” Burton said.
There are also a few cultural changes that non-profits have to deal with today that their predecessors never had to. For instance, there is a change of mindset in the donor community. Burton said donors are now similar to investors and they demand to look at a charity’s bottom line and its profit & loss before they think about funding.
“They don’t want their funds spent on rent, for example. You have to prove that the book you gave to a kid will lead to his or her literacy,” Burton said.
Non-profits also suffer from the shortage of staffing and leadership that the IT industry is also coming to grips with. “Donors, again don’t want to pay for that, however, they want non-profits to run like a business and still feed starving people,” she added.
Sage’s Bonnie McLain, the director of product management, said that Sage, along with its channel partners, is offering on-demand or hosted access to software to help non-profits in this area.
The company has also introduced a Complementary Partner Program, which will have tools and product solutions for this area available in a partner services directory. “No one had traction with it before and this program will take tools and connect them with partners. These solutions will make you some money and solve customer needs,” McLain said.
Sage is currently in phase one of a three phase rollout of this partner program. In future rollouts, Sage plans to offer a private label option for partners.
The company has also released Fund Accounting Version 11, along with an update version of Fundraising 50.