Best-of-Breed or All-in-One? What Every Community Foundation Eventually Asks

Filed under: Foundations, Software Solutions, Software Solutions & Training

Every community foundation prospect we have worked with lands on the same question eventually: Should I buy one system that does everything, or should I buy purpose-built tools that each do one thing well?

I’ve been on both sides of this decision. Before Clark Nuber, I ran technology for a community foundation and lived with the tradeoffs firsthand. Now I help community foundations work through the same choice from the vendor side. Here’s what I’ve learned.

All-In-One Platforms Solve the Wrong Problem

Tools like Foundant became popular for a reason. They’re easy to buy, easy to implement, and they promise one login for everything. For contributions and grants, they genuinely perform well.

The problem shows up on the accounting and donor development side. These platforms weren’t built as general ledgers or donor relationship systems, and it shows. Foundations end up using spreadsheets to cover fund accounting complexity or exporting data to a real Customer/Constituent Relationship Management (CRM) system because the built-in donor tools can’t keep up with a serious major gifts program. You end up with an “all-in-one” system that quietly turned into three systems anyway, except now they’re harder to pull apart.  Which brings us to the “all-in-one” myth: we recently came across a community foundation that said they had an “all-in-one” system but when they did a software inventory, they realized they had over eight key business systems.

Private equity has been buying up these “all-in-one” platforms specifically because they know community foundations are an attractive, underserved market. That doesn’t make the software purpose-built. It makes it a good acquisition target.

Best-Of-Breed Isn’t Automatically Better Either

The answer isn’t as simple as “buy the best tool for each job.” If you take Salesforce and Sage Intacct, and connect them with a basic point-to-point integration, you’ve just built two silos with a data pipe between them. Your team still reconciles discrepancies by hand, and now they’re supporting two systems plus an integration. That’s more overhead, not less.

Best-of-breed only works when:

• The platforms are actually flexible enough to be configured for fund accounting/management, donor development and grantmaking.
• You have an implementation partner with deep industry expertise to guide you through the process.
• When the integration layer is treated as an integral part of the design instead of something added at the end.

That’s the real difference between “connected” and “integrated.” Connected systems pass data back and forth. Integrated systems share business logic, so a change in one place shows up correctly everywhere else.

What Actually Matters in This Decision

When a community foundation foundation asks me what really matters when they are making this decision, I tell them to stop comparing feature lists and ask themselves:

• Where does the data live, and who owns it?
• What’s the sync direction and timing? Real-time or batch?
• Who governs changes to that integration over time?
• Does the all-in-one option actually handle fund accounting the way our auditors expect, or will we end up in spreadsheets anyway?
• Are we hiring for platforms that are industry standard, or for a niche tool with a thin talent pool?
• Which solution will have the greatest long-term impact on enhancing the staff and donor experience, and on ultimately improving the lives of the communities you serve?

If you answer those honestly, the decision usually becomes clear. Foundations with real fund accounting complexity (multiple fund types, pooled investments, interfund transfers, donor-restricted reporting) tend to outgrow all-in-one platforms fast. Smaller foundations with simpler grantmaking and fewer funds sometimes do fine with a single system, at least for a while.

The Real Lesson

This isn’t really a best-of-breed versus all-in-one debate. It’s a question of whether you’re solving for ease of purchase or ease of operation five years from now. All-in-one wins on the first. Best-of-breed, done right, wins on the second, but only if you invest in the integration the same way you invest in the individual platforms.

That’s the piece that is often underestimated, and it’s the piece we spend the most time getting right.

Did you find this topic helpful? Watch for our next article, where we’ll take a closer look at why so many community foundations are reevaluating their software ecosystems. To make sure you don’t miss it, subscribe to our newsletter or follow Clark Nuber on LinkedIn.

This article contains general information only and should not be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action, you should engage a qualified professional advisor.