How Can Church Management Software Mergers Pose a Threat to Your Church?
In this article, we identify some of the recent major church management software (“ChMS”) company mergers and sales. We also share four key questions you can ask to analyze whether an individual sale or this pattern of acquisitions, sales, and mergers of ChMS software companies is helpful or harmful to your church.
As a church leader making decisions about Church Management Software (“ChMS”), you already have a difficult job. Lots of options exist, each vendor claims superiority, and every company touts different functions, ministry enhancement features, support options, etc. On top of that, ChMS decisions involve a great deal of money, time, training, process development, etc. Recent events have made this even more difficult. If your church gets caught up in the whirlwind of sales and mergers amongst payment processors and ChMS providers, you can be left with expensive software that is no longer supported and will not be a viable tool into the future.
Sorting out what all this means for your church can be very difficult and can leave your head spinning with difficult questions: What does the future hold for the ChMS platform I am currently using? Is my ChMS being sold now, or is it likely that it will be sold in the future? How will this affect the product and support? How can I make good decisions amidst so much change? Should I make a move now, or wait for the dust to settle? Am I prepared for the dreaded “end of support” notice that will force an emergency search for a new product?
Recent End of Support Announcements
In the last couple of weeks, a relative newcomer to the Church Management Software industry, Blackbaud, announced that they are no longer developing new features for their ChMS product, Blackbaud ChMS. Given their recent entry and investment into the space, this announcement was surprising to many. Blackbaud will end support by October 2023. As part of their announcement, they have offered a migration path via a partnership with Tithe.ly, to Tithe.ly’s Breeze ChMS product. For Blackbaud users, moving to Breeze is not an automatic step. Tithe.ly only recently acquired Breeze, and it is not clear what direction Breeze will take under Tithe.ly’s ownership and management.
Ministry Brands also recently announced the end of Service U, (once the standard for church facilities scheduling for churches,) along with a partnership to help clients move to eSpace by Smart Church Solutions, the current leader in church facilities scheduling and management. Ministry Brands has encouraged churches to migrate Service U payment processing to other Ministry Brands payment products.
These recent end of support announcements have a big impact on ChMS customers because they often force a relatively quick decision and migration path that typically was not a part of the church’s strategic plan. Such announcements are disruptive and often come at the most inopportune time. The resulting software conversions require the church to undertake hundreds of hours of time evaluating new options, implementing a new ChMS, training staff and volunteers, and optimizing a new software platform that often feels foisted upon them.
Church Management Software has become Big Business
The church management software space has changed markedly over the past decade. No longer just a tool for discipleship and church management, ChMS has become big business. Most of the acquisitions and other business combinations that have taken place over the past few years are backed by private equity, publicly held banks, or other investor-led groups. These types of deals come with investment performance objectives that are not driven by traditional ministry goals.
In some cases, to be sure, these deals have been consummated by Christian businesspeople driven by a desire to help bring Jesus to the world and to disciple and care for people. Nevertheless, even in these cases, the need for robust and timely financial returns to investors determines much of the ongoing operating strategy of the ChMS company, including product support, enhancements, software design, etc.
In other cases, ministry does not seem to have been a prevailing concern for the merger or sale. Smart businesspeople have realized that churches process a lot of money through donations every month, and for many companies, payment processing is an attractive business in which to be involved. Access to givers or donors is more than enough, in many cases, to justify a ChMS acquisition.
Recent Merger and Acquisition Examples
Recent mergers and acquisitions over the past couple of years include some of the following notable cases:
- Ministry Brands started this recent trend in 2013 and has now completed over 25 acquisitions including:
- Shelby Systems
- Fellowship One
- SimpleChurch CRM
- Kindred Giving
- Protect My Ministry
- Service U
- And many others…
- Blackbaud purchased Seraphim in 2019, shut it down, and started Blackbaud ChMS based on their Raiser’s Edge donation management product.
- PushPay acquired Church Community Builder and Resi
- Tithe.ly purchased Elevanto and Breeze
- ACS Technologies has acquired:
- Ministry Platform
- Pocket Platform
- Higher Ground
- Ministry Insights
- Subsplash recently acquired the Australian ChMS product, Fluro in late 2021/2022.
At Enable, we work with clients who use many ChMS platforms and products, and we maintain a “vendor neutral” position – in other words, we don’t endorse any specific products. We serve churches by helping them make decisions and implement the software that best fits their unique needs. While we often have educated guesses on what we think a company’s strategy will be, we try not to make hard speculations. This landscape changes quickly, and in some cases, information communicated by companies about their future directions and plans changes abruptly. So, what can a church do to protect itself and make good decisions?
4 Questions You Need to Ask to Assess Possible Risks to Your Church
The following questions provide some general guidelines in assessing how any given acquisition may affect your church and your ChMS decisions.
What is the core business of the parent / acquiring company?
The answer to this question may help you make an educated guess as to what they see as success, and what their long-term plans may be.
- Has their primary business been to acquire and “flip” their investments? Private equity firms look to get a return on their investment funds within a relatively short window, (typically within 3 years,) often selling to other private equity firms or institutional investors to realize their profit. Some specialized firms look to own and manage the companies they acquire for a longer period and seek to make their return on profits. The investment objectives of the acquiring firm will certainly affect operational strategy.
- If the primary business is payment processing, that could indicate that their primary motivator is to differentiate their payment systems from the competition. Payment processing itself is a commodity business. At its core, payment processing is moving money from one bank account to another. Applications add features and other benefits to differentiate one product from another. From a development standpoint, it can also simplify the software because the developers don’t have to make their software work with many payment processors and can focus on more fully integrating payments into their own forms and apps. Payment processors typically receive 1-2% of every transaction. Owning the ChMS makes it more likely that donors will process payments through the processor’s systems; additionally, it makes it harder for churches to switch processors when their payments are integrated with the ChMS.
- If the acquiring company is an existing Church Management Software provider, they could be looking to round out their product line or modernize their offering. If they don’t have a good solution for large churches or need a better way to serve certain types of churches or denominations, it may be more effective to purchase a product that fills that gap than to develop a new product from scratch. They may also be looking to eliminate a competitive product and gain market share by converting that product’s customer base to another one of their products.
What other acquisitions has the company made, and what have they done with those products?
Did they improve and enhance the acquired products, or allow them to stagnate? Did they roll the acquired functionality into other products? Did they flip them and sell them to other companies?
- Is there any indication of how the company tends to maximize their return on investment? In the past, have they cut costs by reducing support or development with other products? Sometimes, Facebook user groups and other references will give a sense of previous experience.
What is the background of the acquiring company’s leadership, executives, and the new leadership team they’ve brought in to help manage the businesses they’ve just acquired?
What does it tell you about the company if the new president or general manager comes from the banking or payments industry, as opposed to having a software background, or a ministry background? There may be some hints about the direction of the company in the types of hires they’ve made. A LinkedIn search can help you to know a little background.
How long has the company been around?
In some cases, a group of investors have formed quickly with the purpose of acquiring a portfolio of related companies. If the investors don’t have a previous background related to church ministry, does that provide some insight into the overall mission of the new company? If they’ve been around for a long time and clearly have a background of support to ministries and churches, you may find more comfort in the overall commitment of the company to the product and to helping you improve your mission.
We’ve worked with churches who care deeply that the companies they work with not only share their values, but also the Kingdom mission that drives them to get up and take on the hard work of ministry every day. And we’ve also worked with others who primarily valued the effectiveness of the product, regardless of whether the investors of those products shared the same motivations and mission. Issues of alignment with ministry partners vary by church, so you should consider how your church views these issues.
This current phase of merger and acquisition frenzy is disruptive and unsettling to many church team members who spend many of their working hours living in ChMS software packages. Enable’s focus is to help churches make great decisions about the implementation of technology to enable and support ministry so that lives can be changed. If you need someone in your court, to help you think about how your ChMS and the related software and processes can better serve your church, we’d love to help! If we can help you or your church in any way, please don’t hesitate to reach out at [email protected].
Written by: Elliott Wood, Director of Consulting, Enable Ministry Partners