An open invitation from our guest, Erik Arnold, Global CTO – Microsoft Philanthropies, Tech for Social Impact, for the greater technology ecosystem to participate in the Nonprofit Common Data Model to help grow the work of impact organizations.
This incredible conversation between Tracy, Tim and Erik delves into Corporate Social Responsibility, Tech for Social Impact, ethical pricing for technology and most importantly, the Common Data Model. And spoiler alert, it’s NOT the Microsoft Common Data Model, it’s the Common Data Model and Microsoft has taken the first big step in providing a durable and incredibly valuable resource for our nonprofit community that may survive any individual tech company, platform or initiative.
On the impact of technology to the nonprofit community
“Corporate Social Responsibility (CSR) is great and is absolutely appreciated and 100% needed; but what is needed even more is a dedication to durable technology that lasts beyond just an individual volunteer engagement or an individual grant.”
“Corporate givers give differently and will always give differently than traditional funders. To really make it work on the private sector you need to encourage and model sustainable business practices. On the nonprofit side, they need to get over the expectation that not everything can be free. If you really want scalable engagement with the private sector, there is a cost. We must make sure that the cost is fair and ethical and affordable and must work in partnership with the private sector”.
What is Microsoft Tech for Social Impact?
“In the Microsoft Tech for Social Impact team we focus on working with nonprofits and united nations organizations. Microsoft views nonprofit as a priority industry just like any other priority industry, like financial services or manufacturing or healthcare education automotive, etc. we consider nonprofit right up there at the top and make investments around it. I lead an engineering team where we develop purpose-built products for the nonprofit sector. I also lead our digital enablement team where we focus not just on the technology itself but also all the capacity building nonprofits need to be successful in using technology. That includes advisory services around digital transformation, how do you think about your mission using digital technology, how do you build that right vision and culture and support from leadership. What are the right opportunities to bring digital technology into the organization be it operations or mission first and then and only then think about which technology and make a decision on platform on the tech itself. We have skilling programs, digital enablement programs, deeply discounted software pricing, free software and purpose-built technology and we combine all that into this team to engage with nonprofits around the world.”
“This last fiscal year we worked with about 200,000 organizations across the planet. Microsoft philanthropies is one of the largest corporate philanthropies out there. Last year for the first time we crossed the two billion dollar threshold in software cash and services donated by the company and our employees to about 240,000 nonprofits globally”.
On ethical pricing and Microsoft as a sustainable business
“The way I define ethical pricing is that there is a cost to running cloud software and to create a sustainable business model you need to have some small amount of margin on top of that price that covers overhead. My own salary, our innovation budget, our grants and things like that are overhead, so that’s what I mean by ethical pricing. You get it as close to revenue neutral as you can but you also have to pay for the business overhead”.
“Our employees donate hundreds of thousands of hours every year, we have over 70% participation in employee giving every year and we focus not just that CSR component but on how we think about our contribution to the planet from all the sustainability goals”.
“You may have seen us talk about how we’re going to be water neutral, carbon negative, and we’re making big investments. That also means the partners we work with and wanting those partners to be sustainable. It means when we develop technologies that we don’t leave any people behind including vulnerable populations or people that don’t have the economic opportunity that many people have in the global north.
“At Microsoft, when we think about our work we think about it in the context of four societal pillars: (1) Trust, (2) Fundamental rights, (3) Inclusive economic growth and (4) Sustainability.
On the purpose of a Common Data Model (CDM)
“There have been a lot of really successful and impactful technology companies playing in the sector for decades that have developed industry standard models that work for their platforms, and if you buy into that platform you get a lot of value out of that. But what I was missing when I was in the sector is that if I as a nonprofit want to make the choice of an application from platform A, and an application from platform B, and an application from platform C, I end up having to be the one that has to stitch all that together.”
“If you think about you know some of the most common processes around program design, program delivery, the traceability of funds, fundraising, the different kinds of fundraising, micro-calculation, revenue recognition, off-milestone payments, ceilings, all the stuff that is unique to the nonprofit sector doesn’t fit a commercial CRM or a commercial ERP.”
“There are many different kinds of industries inside nonprofit. I named some of the things that nonprofits all do in common, but a child sponsorship organization is going to have specific needs that are very different from a conservation organization, etc”.
“Platform companies will make investments and choices about where they go deep and where they are going to stay at a common layer. So for me the importance of making that shift from industry standard data model to a common data model is that common data model is the rosetta stone across the platforms”.
“CDM enables nonprofits to be able to have a mapping for across solutions and so you now have a better choice of which applications to bring into your environment and how can you aggregate the data across those applications so that you can find the right programmatic insights. All of that is what gets unlocked if we agree as platform companies to stop disagreeing at that data layer. Let’s compete and build innovation at the app layer all day long but let’s at least agree that under that substrate we’re going to make it easier for nonprofits to align”.
What is the Common Data Model?
“The CDM is about 95 or so different entities and about 1600-1700 attributes off those entities and the relationships between them that make up the nonprofit specific unique data fields that aren’t just relabeling but kind of represent net new uniqueness for the nonprofit sector.”
“On top of that we also then took IATI and data modeled out all of the structure. IATI is the International Aid Transparency Initiative utilized by a lot of institutional donors particularly in Europe for tracing the funding through to partners through sub-agreements, the impact of that work and back. IATI is a separate modeling layer and so if you’re not an organization that utilizes IATI then you stick with the core CDM. If you are using IATI then there’s a whole other set that comes along with it that aligns to that international standard.”
“In a very direct way, the CDM creates alignment across platforms that actually drives every single entity in that alignment to do better on their own technology for nonprofits because what you’re doing is now you are actually truly selling your value”. – Tracy Kroznak, Now IT Matters.
On whether the Common Data Model is the Microsoft Common Data Model
“We’ve completely decoupled the Common Data Model from any Microsoft Dynamics dependencies. It is a truly system platform agnostic set of entities and attributes and relationships that describe that core uniqueness of nonprofit mission delivery and fundraising”.
“We try to act as the first best customer of that. That means we take that model and we incorporate it into products that we build as essentially an ISV. I’m creating specific tailored made solutions for the sector and that we subscribe to the relationships and to the intent of those relationships for how data flows, how things are framed and and developed in any applications that we create. If you build that Common Data Model into your solution, in theory any other solution that builds or maps to the Common Data Model, now that data is easier to join and combine”.
“More and more of Microsoft is incorporating the Common Data Model across the Common Data Service across Azure and Microsoft Dynamics. We also do a lot of work with other Microsoft partners who adopt the Common Data Model and incorporate it into solutions built on top of what Microsoft will create first-party. What we’ve heard from those partners is that just the data model itself takes out somewhere around 15-25%of the professional service implementation costs of implementing a CRM into a nonprofit because all of that data modeling work and the data relationship work is already done”.
“The CDM also then allows you to then innovate more into new white space. By doing this work as Microsoft we take that R&D out of the equation for software partners that want to build solutions. Maybe deeper solutions around case management or addressing addiction or for really small organizations that don’t have the money to invest in configuring the technology themselves, offer them the ability to work with more partners that offer them more choice for more turnkey solutions”.
“The next layer out then is cross platform and how does it help us in working with some of the other platform companies that are out there that have been in the space for a while and have very mature, premier applications in use today by even mapping to the CDM and so we have mapping documentation out on the github repo on how you can take your entities and map them to the CDM even if you’re not incorporating the CDM into your solution”.
“I commit from a Microsoft perspective that I and my team will work with any tech sector partner out there that wants to have a conversation or wants to talk about what this actually looks like to work with the CDM. We compete with a lot of these organizations, but we’re not talking about competition on the application layer, we’re talking about how we could potentially collaborate on the data integration layer and at least have some mappings and make it easier for organizations that do to choose to pick applications up they should have that choice and and they should be able to work with their data in a more open way”.
“We’ve got a single integration point through the Common Data Model and Common Data Service that gives you access to every application in Microsoft’s ecosystem across the entire Microsoft cloud from Modern Work to Azure to Microsoft Dynamics and Power Platform. If you choose, you can use low code or no code application configuration solutions like Power Platform that consume the Common Data Model and build those bespoke systems and be sure that those bespoke systems align back to your security model and align back to your data architecture”.
The Common Data Model is a taxonomy that describes what we think are the most common scenarios in the nonprofit sector.
On Microsoft’s stewardship of the CDM
“Having a common standard that starts to get in use with technology companies that are implementing it for product means it can’t be the wild west. You have to have a process through which any changes, additions, deprecations or anything that happens around that model needs to be planful once it becomes used. Does it continue to grow and evolve? Yes, 100%. Is that growth community informed? Yes, 100%. Is it also now informed by other tech sector partners that are engaged in it? Yes, 100%. We invest in a cross-sector steering team that convenes a couple of times a year and we meet monthly. We invest in a tech partner advisory team where we work together on what issues and questions and directions other tech sector companies are coming up with. So we act in a stewardship role and carry the banner a little bit but it is by design and by intent and open and available to anyone on any platform”.
The vision and capability of the CDM
“Imagine taking a model like this where we started with program delivery and started with a structure around monitoring and evaluation built out you know based on iot you know log frame formats and looking at theory of change and you know all the rubrics that are out there for how organizations can measure impact and you think across all the different donors and and oftentimes even in a single philanthropy different donor officers asking different questions of different indicators of nonprofits even for a very similar programs what potential what how amazing would it be if we could come together across tech sector academia funders nonprofits igos and talk about common indicator sets and start to include some of those common indicator sets as libraries available to be used through something like common data model.
You can imagine taking this and and starting to think about if we can measure common indicators across nonprofits that has a real potential to accelerate impact.”