I know, my mother said that is was rude to say "I Told You So."
But I did.
Back in October of 2004 I made several predictions. See Time to learn new dance steps and Predictions
Both called for major changes in the software industry that serves philanthropy.
Well, that future is now, or rather yesterday. On March 31, MicroEdge (market share gorilla in community foundations ~ 1800 clients overall) announced the firing of its CEO. On March 29, Community Foundations of America announced an alliance with Kintera.
Looking over the landscape of markets, vendors and products, I can tell you what I think will happen next. And it won't involve the customers (read: foundations, nonprofits, donors) getting what they want or need UNLESS they act faster than they've ever acted, in ways they haven't before, and with an eye to the motivations of market forces that are virtually foreign to them.
Yes, there could be an ending to this story that serves philanthropy well - there are very real steps that could be taken to take advantage of this situation. Anyone want to bet?
Perhaps 25 years in the np sector (both sides of the philanthropic dance), followed by a new incarnation as corporate business strategist, explains my cynicism about the possibilities of significant change in the deadly dance between the funder and the funded, to which you referred in your original blog of 10/04. As you indicated, the rhythm of the dance in the np sector is largely determined by the focus of funding from third parties, rather than by the shifting needs of the market (those whose lives the np sector intends to serve). The introduction of new technology service providers to nonprofits isn't about a new source of funding, but rather a new source of efficiency and innovation, the two issues that lie at the heart of the sector's structural woes. Efficiency and innovation are the two primary drivers in the commercial sector. Not so for nonprofits. The competitive necessity to be efficient, to increase profit margins, is distorted in the np sector by funding not tied to production, or to the marketplace directly. Similarly, innovation (which any technology offering would aim to encourage and on which its future is dependent) is inhibited by the dance with funders who reward adherence to their intellectual priorities and who discourage risk, punish failure, and oppose deviations from recognized practice (all of which lie at the heart of innovation). Perhaps the most notable difference between the nonprofit and the commercial sector is that in the np sector, ideas follow money. In the commercial sector, money follows ideas. The question I'd ask of any new entrants like Kintera and Collaborative Standards is whether they really understand the dynamic of the dance they've entered, whether they understand that their new clients (nonprofits) are not free to dance to a new beat, no matter how exciting or promising. My bet? These new service providers will share the market with the old for a time, then dominate….and then they'll have the unenviable position previously occupied by MicroEdge…..a head full of arguments about the “enormous potential” but a belly full of irrational obstacles that are nonetheless real.
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