7.4. Opportunity: The Business Problem
Today, there are more than one million nonprofit organizations in the U.S. Accounting for $650 billion in proceeds, the nonprofit sector ranks as the third largest industry in the U.S. Yet, like many sectors, in raw numbers the overwhelming majority of nonprofit groups are small to midsize organizations. In many cases, they rely in whole or in part on volunteer labor, and are therefore rarely capable of implementing or maintaining IT systems beyond a few stand-alone personal computers. The result is that most nonprofits are left to manage funds manually.
eTapestry entered the market to provide solutions to charitable groups that could not afford their own systems. Thanks to the reach of the Internet, eTapestry could build a standard application and offer it as a browser-based Web service that charitable organizations could rent for nominal cost. (They also offer an incubator program that provides free access to organizations that have only a single user and fewer than 1,000 donor accounts.)
Although charitable organizations are often considered unique, when it comes to transacting business, they share much with their for-profit counterparts. At the most basic level, both sectors need to track finances and manage customer relationships in order to operate.
In many cases, the differences boil down to terminology: For-profit businesses track orders and customers; nonprofits track donations and donors. Furthermore, repeat business is a key goal for both classes of organizations, because the cost of revenue acquisition is much lower compared with seeking out new customers or donors.
The realization that charitable organizations require sound business management solutions was the driving force behind eTapestry.com. Admittedly, the concept wasn't new. Fundraising management solutions have been in existence for many years. However, at costs ranging from tens to hundreds of thousands of dollars, few nonprofit organizations were large enough to afford them.
However, nonprofits, large or small, need business solutions that, in important ways, differed from the accounting and customer relationship management packages common to the corporate market. “The unique thing about nonprofit organizations is that they must manage soliciting the funds and recording gifts as they come in,” says Rusche, who adds, “This can get very complex, because the donations have to be categorized according to the unique relationships of the fundraising process.”
For instance, there are different types of gifts. Some gifts are considered “hard” donations; they correspond to the actual amount pledged by the contributor. However, in many cases, there are “soft” donations, as well, which consist of matching contributions many companies offer for their employees. The types of gifts vary. There are individual gifts that are contributed as part of a fundraising drive, and there are planned gifts that are dispersed by an institution or as part of the arrangements from the trust fund from someone's estate. In addition, memorial contributions may come with stipulations that relatives of the deceased be specially notified.
The following are some of eTapestry's major features.
Donor Profiling. This feature accounts for various methods by which donors are to be contacted. For instance, they may have different mailing addresses or seasonal addresses. Donors are categorized by their roles, which in turn governs what pieces of mail should be sent. And they may have unique relationships to other donors, which must be acknowledged.
List Management. Nonprofit organizations conduct numerous direct mass mailings. Like any direct marketer, nonprofits must carefully track these mailings to ensure that the recipients on a list receive the right mailings. This is especially critical for nonprofits, which cannot afford to oversaturate their members or donors with annoying duplicate mailings.
Message Center. Because maintaining one-to-one relationships with donors is essential to maintaining donations, nonprofit organizations must conduct careful contact management. This is especially critical for the top 2 percent to 3 percent of donors who consistently make the largest contributions. They must track all communications with donors and groups of donors, and provide calendaring services that allow event notifications to be mailed. The eTapesty system allows donors to make appointments and schedule events that are posted on the organization's Web sites. It also conducts targeted and mass e-mail notifications based on donor profiles.
Volunteer Profiles. Because nonprofits depend heavily on contributed labor, they must classify the skills and preferences of their volunteers when it comes to mundane operations. In addition, for tax and legal purposes, volunteer effort must often be recognized as “in kind” donations, with monetary value.
Calendaring and Event Management/Notification. Special events play large roles in fundraising. Organizations require solutions that allow them to register donors or attendees, and in conjunction with the messaging functions, remind donors when events of interest are scheduled.
Gift Processing and OnLine Donations. The order-entry function for nonprofit organizations has similarities to that of conventional businesses. However, differences include how “orders” are tracked, such as differentiating whether a contribution is “hard” or “soft,” and whether other donors, organizations, friends, or relatives must be notified. Prior to the eTapestry application, no single solution combined online donations with the ability to record and track them.
Audit Trails and Rollback Capabilities. Gifts contributed to charitable organizations are sometimes redirected; the system must be able to update, and in some cases, reverse previous transactions already recorded.
Reporting. The application provides summary and drill-down reports covering campaign activity, such as how much money poured into a specific campaign, where it came from, and which activities were the most productive. Nonprofit organizations using the eTapestry application can also make ad hoc queries of their donor database and campaign activity.
B2B Integration. With the use of HTML links and XML data integration, eTapestry users can take advantage of value-added services from a growing list of business partners. For instance, using an XML link, customers can use the PGCalc online application to calculate the tax implications of planned gifts.
The key to the power of the eTapestry application is its central repository for all transactional information, from contact information and donor activity to the services offered by eTapestry's partner sites. This provides a complete picture of donor activity—the lifeblood of charitable giving. Because the service is hosted on a secure server that supports 128-bit secure socket layer encryption, eTapestry customers are assured that all transactions are safe.
7.4.1. Challenges
The major obstacle was that Internet technology is a moving target. For instance, when the development team began work in late 1999, the J2EE standard had not yet been released. The result was that the development team created a number of services that subsequently became commercially available once the J2EE specification was made public. Some of the services custom developed included user authentication and the management of interactions among JSPs and servlets.
A prime risk in the effort was being caught with obsolete technology. eTapestry chose Java technology because it has become a major standard for e-commerce platforms and applications. Admittedly, because the J2EE platform was still emerging at the outset of the project, the team developed some home-grown application services that would have to be migrated once the technology matured matured. However, by adhering strictly to object-oriented application design practices, the code could be modularized and isolated from the rest of the application, allowing subsequent replacement with more-standard technology.
Like any application, the quality of development and deployment would play a do-or-die role. In this case, failure of the application would take the entire business down with it, since the company was founded around the new software.
Implementation concerns included scalability and flexibility. Because the company's long-range plans were based on concurrent usage levels at 10 to 20 times current volumes, the company could not afford to develop anything that would later require costly redesign or architectural migration. Besides the unwanted costs of new development, the company did not want to subject its customers to a shakeout process just as the business was taking off.
According to Ganyo, scalability requirements were one of the factors behind the Java decision. “If we went with a proprietary environment, we ran the risk of being locked into designs that might not handle the number of users we were targeting,” says Ganyo.
In addition, eTapestry required a modular application architecture that would allow it to quickly add functionality in response to customer demand. For instance, the company recently added a calendaring function that allows donors to store appointments, and subsequently upgraded it with reminder-alert capabilities. Using a strict object oriented (OO) design enabled eTapestry to add functionality without disrupting the core application.
Finally, there was the challenge of supporting and introducing business-to-business integration to a market that was not computer literate. In some cases, eTapestry customers have stand-alone databases or spreadsheets that list donors, and calendaring systems that list events. In other cases, the source data was maintained manually. eTapestry had to develop a system that was open, yet simple enough to facilitate the entry or transfer of data from its would-be customers.
Furthermore, to make the service more compelling, eTapestry also had to design a system that would accommodate integration with business partners. That could include software or service providers who could add value to eTapestry's applications, service providers to its customer base, along with corporate donors, which might offer automated or institutional donations via existing HR or payroll systems.