What Microsoft Announced
On July 15, 2024, Microsoft abruptly announced that it will be retiring its Fundraising and Engagement solution and ending support effective December 31, 2026. What does this mean for nonprofits, associations, and foundations? And, what does it mean more broadly for nonprofit constituent relationship management systems (CRMs)?
History of Microsoft’s Fundraising and Engagement
Fundraising and Engagement was spearheaded by Microsoft’s Tech for Social Impact and launched in October 2020. It was an effort to make Microsoft Dynamics 365 (CRM) a more competitive offering for nonprofits, associations, and foundations and to compete more directly with Salesforce’s nonprofit offering – Nonprofit Cloud (Nonprofit Success Pack).
Both Microsoft’s Fundraising and Engagement and Salesforce’s Nonprofit Cloud are solutions to make Dynamics and Salesforce, which were built originally for business-to-business sales, work better for nonprofits. Fundraising and Engagement is essentially an add-on to Dynamics 365.
What the end-of-life of Fundraising and Engagement means
Microsoft announced on July 15, 2024, that they were ceasing additional development of Fundraising & Engagement. This means nonprofits, associations, and foundations who have either invested in Fundraising and Engagement, or those who invested in Dynamics 365 with the expectation of eventually leveraging Fundraising and Engagement, need to start planning.
By announcing that they are retiring Fundraising and Engagement, Microsoft is ceding development of certain nonprofit functionality to third-party developers. As Microsoft shared with impacted customers, several solutions exist that provide somewhat similar functionality to Fundraising and Engagement including MissionCRM, Barhead, and mhance. Additionally, there are implementation partners/SI’s that are committed to leveraging what Microsoft has built beyond the end-of-life for Fundraising and Engagement.
Nonprofits who wish to use Dynamics 365 for fundraising would need to:
- license third-party solutions such as the ones that are listed above, or
- work with a partner/systems integrator to continue to support what was built on Fundraising and Engagement.
It’s worth noting that for many nonprofits, this announcement may be reasonably inconsequential. There are many more nonprofits, associations, and foundations who use Dynamics 365 but have not needed to use Fundraising and Engagement. There are potential solutions such as STRATUSLive, with significant market share among United Ways. For associations there is Altai, an AMS (association management system) built on Dynamics, and for foundations there is AkoyaGo built on Dynamics.
Lastly, for nonprofits who have built fully custom configurations on Dynamics 365 or legacy Dynamics CRM, the retirement of Fundraising and Engagement is not particularly notable but may impact future plans.
Impact on Nonprofit CRM marketplace
With Dynamics gaining traction in recent years as perhaps the #2 CRM ecosystem behind Salesforce, how does this decision change the marketplace for nonprofit CRMs?
This has some similarities to the earlier years of Salesforce for nonprofits. There was a period where their preferred approach was to not sell a fundraising solution directly, so there were fundraising offerings from third-party solutions like CauseView, Affinaquest, and roundCause. Here is an “oldie but goodie,” article that describes the Salesforce ecosystem back in the day. A now seemingly out-of-date evaluation stacked Microsoft Dynamics against Salesforce, and offers some potential reasons that Microsoft is getting out of the nonprofit CRM solution space.
To the extent that Microsoft’s announcement helps to create/nurture more offerings, a positive is that nonprofits will have more choice. But a negative is that it increases complexity for end users and CIOs due to the diversity of data models from competing solutions.
Microsoft’s announcement may reasonably cause some to wonder about Microsoft’s commitment to competing in the nonprofit CRM space. As long as Microsoft continues to offer discounted pricing for Microsoft Dynamics 365 to nonprofit organizations and their complementary Power Platform solutions, this move may not significantly undermine their competitiveness in this market. It does mean that third-party solutions such as Mission CRM will need to continue to be available for Dynamics 365 to remain competitive. Dynamics 365 remains dramatically less expensive than Salesforce in most scenarios for largely comparable functionality. However, if the nonprofit discounts are on the chopping block, then that would largely relegate Microsoft to the relatively low market share they historically had among nonprofit CRMs.
Options for nonprofits for whom Dynamics is no longer a fit
There are many options for nonprofits for whom Dynamics is no longer a fit. Additional solutions that would position themselves as fundraising-centric nonprofit CRMs include solutions like EveryAction, Virtuous, Raiser’s Edge, and ROI Solutions. Notably, HubSpot is emerging as a potential competitor to both Dynamics and Salesforce. However, few would be true CRM platform competitors to Salesforce in the way Dynamics 365 is. By platform we’re referring to software solutions capable of meeting needs beyond just fundraising.
Nonprofits, associations, and foundations have moved toward CRM platforms over the past 10+ years because of the flexibility they offer. However, at least at the enterprise level, historically only Blackbaud CRM really enters the conversation as a potential platform-based alternative to Dynamics 365 or Salesforce.
Ultimately, if Microsoft were to eventually exit this space it would have a dramatic impact on the already limited CRM platform options available to nonprofits.
Planning for the future
In conclusion, Microsoft’s decision to retire its Fundraising and Engagement solution for nonprofits will impact different organizations differently.
What is the right path forward? Not surprisingly, it depends.
Build believes in the power of a vendor selection. Selections create opportunities to ask, and answer, significant organizational, data, and technology strategy questions. Microsoft’s announcement, for any nonprofit, association, or foundation, creates the opportunity to pause, plan, and act.
For nonprofits who have Fundraising and Engagement, a firm like Build Consulting could help you select the best replacement solution. This work would consider not only the technological change but the organizational change ahead. If you have a trusted partner already, they may also be able to determine the best path forward for your organization.
