What changed in this filing

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Item 1. Business

2022-03-01 compared with 2021-02-23 · 161 added, 141 removed, 263 unchanged (53% of the section changed)

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Serving the entire social good community—nonprofits, higher education institutions, K–12 schools, healthcare organizations, faith communities, arts and cultural organizations, foundations, companies and individual change agents—we connect and empower organizations and individuals to increase their impact through cloud software, services, data intelligence and expertise.

Blackbaud brings nearly four decades of leadership to this sector:

since originally incorporating in New York in 1982 and later reincorporating as a South Carolina corporation in 1991 and as a Delaware corporation in 2004, our tailored portfolio of software and services has grown to support the unique needs of vertical markets, with solutions for fundraising and CRM, marketing, advocacy, peer-to-peer fundraising, corporate social responsibility, school management, ticketing, grantmaking, financial management, payment processing and analytics.

Blackbaud brings over four decades of leadership to this sector:

since originally incorporating in New York in 1982 and later reincorporating as a South Carolina corporation in 1991 and as a Delaware corporation in 2004, our tailored portfolio of software and services has grown to support the unique needs of vertical markets, with solutions for fundraising and CRM, marketing, advocacy, peer-to-peer fundraising, corporate social responsibility (CSR) and environmental, social and governance (ESG), school management, ticketing, grantmaking, financial management, payment processing and analytics.

Our solutions are designed to meet the needs of virtually all types of organizations in the social good community, from major global institutions to small charities to individuals.

At the end of 2020, we had over 45,000 customers located in over 100 countries, with millions of users.

During 2021, we had nearly 40,000 customers with contractual billing arrangements and nearly 100,000 customers that paid Blackbaud through transactional fees.

Through our customers and our solutions, Blackbaud supports millions of users and we connect millions of supporters to over 150,000 organizations and causes in over 100 countries.

We are deeply proud to play a part in our customers’ success in their missions to provide healthcare and cure diseases, advance education, preserve and share arts and culture, protect the environment, support those in need and much more.

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The social good industry is significant, spanning far beyond philanthropy, and our addressable market is substantial and growing

Worldwide there are millions of social good organizations including nonprofits, foundations, companies, education institutions and healthcare organizations.

Worldwide there are millions of social good organizations including nonprofits, foundations, companies involved in corporate social responsibility and ESG, education institutions and healthcare organizations.

Billions of individuals are also active participants in the social good community by donating funds, volunteering their time, advocating for a cause, receiving services from or otherwise engaging with social good organizations.

Our estimated current total addressable market ("TAM") is greater than $20 billion.

This includes expansions into new and near adjacencies in 2019, including our Cloud Solution for Faith Communities, our expanded Cloud Solution for Higher Education, as well as our acquisition of YourCause Holdings, LLC ("YourCause") in January 2019.

This includes our acquisition of EVERFI, Inc.

("EVERFI") in December 2021, as described in Note 3 to our consolidated financial statements in this report.

EVERFI is an international technology company driving social impact through education to address the most challenging issues affecting society ranging from financial wellness to mental health to workplace conduct and other critical topics.

EVERFI's educational solutions reach both adult and K-12 learners.

To date, EVERFI has reached more than 45 million learners globally.

Traditional methods of fundraising and organizational management are often costly and inefficient

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Some social good organizations have developed proprietary software, but doing so is expensive, requiring on-site technical personnel for development, implementation and maintenance.

2021 Form 10-K

Blackbaud, Inc.

The nonprofit industry faces particular operational challenges

Nonprofit organizations, education institutions, healthcare organizations and houses of worship must efficiently:

• Solicit funds and build relationships with major donors;

• Solicit funds and build relationships with major and institutional donors;

• Garner small cash contributions from numerous contributors;

• Manage and develop complex relationships with large numbers of constituents;

2020 Form 10-K

Blackbaud, Inc.

• Advocate for policies and behaviors that advance their cause or institution;

• Communicate their accomplishments and the importance of their mission online and offline;

• Comply with complex accounting, tax and reporting requirements that differ from those for traditional businesses;

• Comply with complex accounting, tax and reporting requirements that differ from those for for-profit businesses;

• Solicit cash and in-kind contributions from businesses to help raise money or deliver products and services;

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• Achieve better internal collaboration and alignment with board members, reviewers and other stakeholders;

• Illustrate the impact of their corporate philanthropy efforts to the communities they serve;

• Illustrate the impact of their corporate philanthropy and education efforts to the communities they serve;

• Engage employees in meaningful volunteering, giving and other activities;

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• Cultivate new and existing donors.

Our objective is to maintain and extend our position as the leading provider of cloud software and services for the global social good community, supporting our customers' missions from securing resources, managing their operations, to delivering their programs and measuring their impact.

Our objective is to maintain and extend our position as the leading provider of cloud software and services for the global social good community, supporting our customers' missions from securing resources and managing their operations, to delivering their programs and measuring their impact.

Our key strategies for achieving this objective are described below.

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During 2021, we continued to execute our four-point growth strategy targeted to drive solution and service innovation, quality enhancement, increased operating efficiency and improved financial performance:

Delight Customers with Innovative Cloud Solutions

This strategy reflects our relentless focus on driving value and outcomes for our customers through our solutions.

Blackbaud SKY®, our platform for cloud innovation, is a core tenant of this strategy and continues to power an elevated level of innovation by our engineers.

It is also enabling our growing ecosystem of partners who are also passionate about social good, to extend and expand the capabilities available to our customers.

During 2020, we continued making critical investments in research and development and increased our engineering hiring during the fourth quarter.

We also released the Blackbaud Marketplace during 2020, offering curated third-party apps, enabling organizations of all types and sizes to discover new ways to amplify their impact by enhancing their best-of-breed Blackbaud solutions with specialized capabilities like connecting bidders at fundraising auctions, tracking branded merchandise purchased in an online store or texting volunteers about an upcoming event.

The customers we serve require vertical specific business solutions to automate their operations.

Throughout 2020, we have remained focused on driving value and outcomes for our customers.

We reprioritized and expedited product enhancements to support our customers' needs, especially in light of COVID-19 and the continued shift to virtual, digital-first operating models.

For example, we released fitness tracking integration in Blackbaud’s peer-to-peer fundraising portfolio, a new virtual prayer wall enabling congregants at houses of worship to share and respond to prayer requests online, text messaging capabilities for scholarship directors and higher education institutions to ensure no funds were going unutilized and expanded the global capabilities of YourCause CSRConnect making it easier for companies to bring employees across geographies together in support of causes around the world.

Blackbaud Peer-to-Peer Fundraising powered by JustGiving continues to gain traction.

During 2020, we migrated everydayhero customers over to Blackbaud Peer-to-Peer Fundraising powered by JustGiving and sunset the everydayhero product as we continue to rationalize our portfolio while continuing to delight our customers with innovative cloud solutions.

Drive Sales Effectiveness

Expand Total Addressable Market ("TAM")

In December 2021, we doubled our TAM when we acquired EVERFI, an industry leader in global social impact technology.

Adding EVERFI advances our position as a leader in the rapidly evolving ESG and CSR spaces and offers cross-selling and upselling opportunities through complementary product offerings with YourCause® solutions.

Our TAM now stands at over $20 billion, and we remain active in the evaluation of opportunities to further expand our addressable market through acquisitions and internal product development.

Lead with World Class Teams and Operations

We have been investing in sales and marketing to better address our market opportunity with a focus on digital lead generation.

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This is just one of many examples of how we are optimizing our structure, tools and processes to better address our large vertical market opportunities.

We have also taken lessons learned throughout 2020 and re-evaluated elements of our go-to-market strategy with a digital-first mindset and we have a significant opportunity to leverage the investments into digital to reduce our customer acquisition cost and increase our sales velocity, ultimately, driving a more scalable and cost-effective go-to-market model.

We did not complete any acquisitions during 2020 as we have remained vigilantly focused on supporting our customers and employees during this time.

We remain active in the evaluation of opportunities to further expand our addressable market through acquisitions and internal product development.

We believe we have significant opportunities in front of us as we are less than 10% penetrated into a total addressable market of over $10 billion.

Improve Operating Efficiency

We are also focused on operational efficiency to strengthen the business and position us for long-term success.

During 2020, we pivoted to place a greater emphasis on profit in alignment with the balanced approach management takes to operating the business.

As a result of the pandemic, our near term visibility into revenue growth was impacted and we took certain actions early on to ensure our liquidity (see Note 2 to our consolidated

We have also taken lessons learned throughout the pandemic and re-evaluated elements of our go-to-market strategy with a digital-first mindset, and we have a significant opportunity to leverage the investments into digital to reduce our customer acquisition cost and increase our sales velocity, ultimately, driving a more scalable and cost-effective go-to-market model.

Delight Customers with Innovative Cloud Solutions

This strategy reflects our relentless focus on driving value and outcomes for our customers through our solutions.

Blackbaud SKY®, our platform for cloud innovation, is a core tenant of this strategy and continues to power an elevated level of innovation by our engineers.

It is also enabling our growing ecosystem of partners who are also passionate about social good, to extend and expand the capabilities available to our customers.

During 2021, we continued making critical investments in research and development.

Through our commitment to giving customers the flexibility to benefit, not just from Blackbaud's innovation, but the innovation happening outside of our walls, we developed more tools designed to create new capabilities that extend Blackbaud solutions.

We now have over 6,000 non-Blackbaud developers registered in our ecosystem and we have seen substantial growth in the Blackbaud marketplace, where over 6,500 organizations have found a curated app to help them work smarter.

Some of the use cases we have seen in the market include:

an app that integrates Shopify with Raiser's Edge NXT® and a new API integrating YourCause with Workday, enabling our customers to easily connect employee data into the YourCause platform for more effective employee engagement.

We have also enabled non-developers with low-code or no-code tools, such as our Microsoft Power Platform connector, to build automated workflows with our APIs without having to be seasoned developers and we continue to innovate as online gifts become a greater share of our customers' total donations.

The customers we serve require vertical specific business solutions to automate their operations.

In 2021, we released a variety of enhancements enabling them to maximize their time, team, and relationships, including substantial updates to Blackbaud Grantmaking and a significant release for accounts receivable functionality in Blackbaud Financial Edge NXT® is now with early adopters.

2021 Form 10-K

Blackbaud, Inc.

financial statements in this report for a discussion of some of these actions) and shifted more of ou r focus to profitability.

Our employees switched to working fully remote at the onset of the pandemic and the business continued operating smoothly.

This caused us to re-evaluate our workforce strategy and when employees return to the office, we will have more employees working remotely either part-time or full-time, even within our hub locations.

As a result, we revisited our real estate strategy with a focus on optimizing our footprint for the future of work at Blackbaud, including the purchase of our LEED (Leadership in Energy & Environmental Design) Gold certified global headquarters facility in Charleston, South Carolina ("Global Headquarters Facility") and exit of certain office leases globally, as we will not need as much of an office footprint going forward.

Our aim is optimizing our office utilization, improving our geographic sales coverage and enhancing our employees' daily experience to improve productivity and effectiveness.

Focus on Employees, Culture and ESG Initiatives

During the first quarter of 2021, we elevated a specific strategy focused on our employees, culture and ESG initiatives.

This is not new for us.

It is something that is in our DNA and is a big advantage as we look to attract and retain top talent.

This is evident in our 2020 social responsibility report, which was released in April 2021.

We are fully committed to continuing to create a diverse and inclusive environment at all levels of the organization.

Early in 2021, we established an ESG Steering Committee with our CEO as the executive sponsor, and Board of Directors involvement.

During the first quarter of 2021, we also joined the United Nations Global Compact.

Building on our culture of innovation, we launched a new ideation initiative called "Imagine Week," inviting employees across the globe to pitch their ideas directly to the executive leadership team.

Employees at every level and length of tenure in the company made proposals ranging from fundraising to customer service improvements.

These ideas are making their way into our go-forward plans.

In addition, we recently decided, effective in December 2021, to permanently close our fixed office locations (with the exception of our global headquarters facility in Charleston, South Carolina) to align our real estate footprint with our transition to a remote-first workforce.

We may enter into arrangements for smaller more flexible workspaces where necessary.

This decision did not include EVERFI's office locations.

Delight Our Customers

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Our higher purpose is to help good take over the world, and we have incredible customers whose missions make the world a better place.

Driven by this purpose, our employees come to work every day knowing that they can make a real difference with our customers as they pursue their missions.

Driven by this purpose, our employees work knowing they make a real difference.

Collaboration, innovation and high standards are core to our culture and help to enable the great work we do.

We strive to hire and retain the best employees and provide a workplace where their talents and potential are realized.

We strive to hire, develop and retain the best employees and provide a supportive and inclusive environment where their talents and potential are realized.

During 2021, we expanded our workforce strategy to become "Remote First" which signals Blackbaud's goal to attract talent globally.

For additional information, see “Human Capital Resources” below.

Drive Strength in Our Sector as an Industry Thought Leader

In our nearly 40 years of operation, we have gained significant insight into the overall market and industry segments in which we operate.

In our over 40 years of operation, we have gained significant insight into the overall market and industry segments in which we operate.

We produce a wide range of thought leadership resources, including blogs, monthly indices and white papers, which provide insights and guidance to the social good community.

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sgENGAGE, our blog and podcast, provides free best practices resources that drive impact across the social good community, as well.

Last year, we announced our partnership with One Million by One Million ("1Mby1M") to launch the Social Good Start-up Challenge focused on tech start-ups on a mission to solve problems that matter to the social good community.

In 2020, we announced we’ve expanded this initiative into the Blackbaud Social Good Startup Program, a year-long accelerator designed to support innovative startups with the potential to impact the ecosystem of good.

In 2020, we announced Blackbaud Social Good Startup Program, a year-long accelerator designed to support innovative startups with the potential to impact the ecosystem of good.

In alignment with our commitment to diversity in the tech community, we focused our January 2021 cohort on founders from underrepresented backgrounds.

Last year, we also announced The Explorer by Blackbaud Institute, the premier online knowledge base for information and statistics about social good.

Content is updated regularly and is provided free of charge to the public as a part of Blackbaud’s give-back philosophy.

We intend to expand these activities and further build our reputation as a thought leader within the industry.

2021 Form 10-K

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Powering thousands of events each year, Blackbaud TeamRaiser allows nonprofits’ supporters to create personal or team fundraising web pages and send email donation appeals in support of events such as walks, runs and rides.

Blackbaud Peer-to-Peer Fundraising™, powered by JustGiving™ is one of the world's leading social platforms for giving.

Blackbaud Peer-to-Peer Fundraising, powered by JustGiving provides world-class technology and innovative tools to connect people with the causes they care about.

JustGiving® from Blackbaud® is one of the world's leading social platforms for giving.

JustGiving provides world-class technology and innovative tools to connect people with the causes they care about.

By making giving more simple, social and rewarding, this platform helps all causes, charities and people in need to reach more people and raise more money.

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Blackbaud Volunteer Network Fundraising helps institutions manage volunteer fundraising campaigns with tools for project management, communication and reporting.

2021 Form 10-K

Blackbaud, Inc.

Marketing and Engagement

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It includes tools to build online fundraising campaigns as part of an organization's existing website or as a stand-alone fundraising site.

Donation forms, gift processing and tools

2020 Form 10-K

Blackbaud, Inc.

for communicating through web pages and email give our customers the essentials for building sustainable donor relationships.

Customers can also purchase additional modules including Blackbaud Luminate Advocacy ™ , which combines online marketing tools and legislative data to mobilize supporters and influence policy-makers.

Donation forms, gift processing and tools for communicating through web pages and email give our customers the essentials for building sustainable donor relationships.

Blackbaud Online Express ™ is a simple, cloud fundraising and marketing tool designed for smaller nonprofit organizations using Blackbaud Raiser's Edge NXT.

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A new Student Information System that works directly with Blackbaud Learning Management System™, Blackbaud Student Information System simplifies the process of sharing student data and academic records securely.

Blackbaud Learning Management System™ is a learning management system that makes it easy to manage, connect, and share information with students, parents, and an entire school community.

Developed with direct input from our customers, Blackbaud Learning Management System gives teachers the tools to meet the demands of a modern private school.

2021 Form 10-K

Blackbaud, Inc.

Blackbaud Learning Management System™ is a learning management system that makes it easy to manage, connect, and share information with students, parents, and an entire school community.

Developed with direct input from our customers, Blackbaud Learning Management System gives teachers the tools to meet the demands of a modern private school.

Blackbaud Enrollment Management System™ is an enrollment management system that simplifies a school’s admissions process.

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Faith communities can also add other Blackbaud capabilities from the new Cloud Solution for Faith Communities as their needs scale all through one integrated experience.

Social Responsibility

YourCause® Grants Connect® and YourCause CSR Connect® are cloud solutions for employee giving, volunteering, and communication used to support corporate philanthropy by building meaningful connections between corporations, employees and nonprofits.

Social Responsibility and ESG

YourCause GrantsConnect® and YourCause CSRconnect® are cloud solutions for employee giving, volunteering, and grantmaking used to support corporate philanthropy by building meaningful connections between corporations, employees and nonprofits.

After implementing YourCause solutions, customers typically show significant growth in volunteers, donations, engagement and more.

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overall ability to attract employees and customers alike by strengthening a company's reputation.

EVERFI is a SaaS software platform building digital education content that addresses the Missing Learning Layer and equips organizations to deliver Impact as a Service in their communities, empowering individuals with the tools and skills to drive ecosystems of change and inspire lifelong success.

EVERFI offers programs on important societal topics such as financial literacy, health and well-being, social and emotional learning, STEM and digital literacy, among many others.

EVERFI also delivers adult-focused content in the HR and compliance training space for companies and institutions.

Through the platform and program offerings, EVERFI is able to yield anonymized learner data to reflect the true impact of their educational offerings.

Payment Services

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Organizations can also set spend controls for individual cardholders, track business expenses across the organization and ensure that policies are being enforced—all managed online and integrated with Blackbaud Financial Edge NXT.

Our analytics offerings provide comprehensive solutions for donor acquisition, prospect research, data enrichment and performance management, enabling nonprofits to define effective campaign strategies and maximize fundraising results.

These services either integrate with or are already integrated into our software solutions to give our customers a comprehensive view of their supporters and the market and provide information essential to making well-informed operating decisions.

Blackbaud’s Intelligence for Good® is a unique, comprehensive approach through which we combine artificial intelligence, analytics, big data, and expertise in cloud services and other channels.

This powerful approach enables social good organizations to transform data into insights.

We embed the value of Intelligence for Good directly in our solutions through SKY Intelligence®.

2021 Form 10-K

Blackbaud, Inc.

Our analytics offerings include subscription solutions and services within the following areas:

Donor Acquisition - Our donor acquisition solutions leverage unique data assets to create acquisition mailing lists and predictive models that identify donor populations that meet the affinity, value and response criteria of our nonprofit customers.

Nonprofit organizations use our prospect lists to solicit gifts and other support.

Prospect Research - Our prospect research solutions include:

custom data modeling that delivers critical information on a prospect's likelihood to make a gift to an organization;

wealth screenings that deliver detailed wealth information and giving capacity data on prospects;

and web-based prospect management software that combines public data with donor information from a nonprofit's database to build a complete view of prospects for targeting and securing gifts.

Data Enrichment - Our data enrichment solutions enhance the quality of the data in our customers' databases.

These solutions include:

identifying outdated address files in the database and making corrections based on United States Postal Service data, as well as appending data by using known fields in an organization's constituent records to search and identify key demographic and contact information.

Benchmarking and Performance Management - Our performance management solutions create relevant and insightful reports that benchmark performance and illustrate key industry trends based on performance attributes provided by our nonprofit customers.

Nonprofit organizations use our performance and industry analysis reports to assess marketing and operational effectiveness, and to influence operational planning.

Data Intelligence

Our data intelligence offerings provide solutions for data health, insights and performance, enabling nonprofits to define effective campaign strategies and maximize fundraising results.

Blackbaud’s Intelligence for Good® is our unique, comprehensive approach through which we combine artificial intelligence, analytics, big data, and expertise to deliver high-impact data intelligence.

This powerful approach enables social good organizations to transform data into insights and outcomes.

Data Intelligence is the Blackbaud portfolio of solutions and services that use data science and AI to turn customer data into valuable insights that inform decision-making and help them achieve their goals efficiently.

Blackbaud's Data Intelligence portfolio consists of three key outcome areas:

Data Health solutions enhance and maintain constituent data so the customer is always working with accurate and up-to-date information.

Examples of these solutions include:

identifying outdated or invalid constituent addresses in the database and making corrections based on United States Postal Service data and using name and address matching to append additional contact or demographic data points to constituent records to support better segmentation and engagement.

Insights inform strategic decision-making and actions that increase efficiency and drive successful outcomes.

Insights are extracted by combining customer data with licensed and proprietary data before leveraging advanced AI capabilities and expertise from Blackbaud’s dedicated team of data scientists.

Some examples of constituent insights include:

numerical scores that predict the likelihood of a constituent making a gift to a customer, wealth screening software that allows customers to screen their affluent constituents against publicly available records to build detailed wealth profiles and persona cluster segmentation that sorts constituents into groups based on shared traits with guidance for how to craft targeted messaging for each group.

Performance solutions help customers to assess their fundraising performance across donor segments, benchmark themselves against peer organizations and understand industry trends.

These solutions provide a holistic view of donor performance that goes beyond standard campaign-based reporting, with KPIs related to acquisition, upgrading, retention and reactivation.

Customers use our performance solutions to identify areas of weakness and opportunities for improvement, track the donor impact of strategic initiatives, understand and respond to industry trends, set realistic benchmarks and fundraising goals and maintain a consistent reporting methodology to assess growth over time.

Customer Success

Our Customer Success organization is responsible for managing the post-sale relationship with our customers, starting at onboarding and continuing through the customer lifecycle.

Our Customer Success organization is responsible for ensuring our customers are able to achieve their desired outcomes through Blackbaud solutions, starting at onboarding and continuing through the customer lifecycle.

Our Customer Success team develops and fosters relationships within all levels of the customer organization to build more demonstrated value in our solutions and services, while helping customers achieve their desired outcomes.

Customer Success Managers work to proactively communicate to drive overall satisfaction and retention of our customer's business.

Our customer success resources work to proactively communicate to drive overall satisfaction and retention of our customer's business.

They work to collect and analyze actionable information, whether that is through direct customer relationships or through aggregated analytics that drives future one-to-one or one-to-many interactions.

Their goal is to partner with customers to ensure that they are fully engaged and have an advocate within Blackbaud who works to meet their needs.

Customer Success Managers bring industry knowledge and expertise to the customer relationship and strive to help our customers achieve positive growth and outcomes.

Customer Support & Maintenance

Most customers that purchase our solutions also enroll in one of our support and maintenance programs.

For all our cloud subscription solutions, customer support is automatically included as part of the solution with no additional charge.

Customers enrolled in the programs enjoy fast, reliable customer support, receive regular software updates, stay up-to-date with regular communication and have unlimited, around-the-clock access to support resources, including our extensive knowledgebase and forums.

Customers who enroll in upgraded support and maintenance plans receive enhanced benefits such as call support priority and dedicated support resources for an additional charge.

Customer success resources bring industry knowledge and expertise to the customer relationship and strive to help our customers achieve positive growth and outcomes.

Customer Support

For our cloud subscription solutions, access to Customer Support is included as part of the solution with no additional charge.

Benefits, such as priority routing or additional support channels, are continuously enhanced.

Customers enrolled in the programs enjoy fast, reliable customer support, receive regular software updates, stay up-to-date with regular communication and can leverage a unified customer portal for quick and easy access to these resources.

Customers also have around-the-clock access to support resources for mission-critical needs.

2021 Form 10-K

Blackbaud, Inc.

Professional and Managed Services

Our expert consultants provide data conversion, implementation and customization services for each of our software solutions.

Our expert consultants, and those in our partner program, provide data conversion, implementation and customization services for each of our software solutions.

These services include:

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• Website design services.

In addition, we apply our industry knowledge and experience, combined with expert knowledge of our solutions, to evaluate an organization's needs and consult on how to improve a business process.

2020 Form 10-K

Blackbaud, Inc.

In addition, we, and our delivery partners, apply our industry knowledge and experience, combined with expert knowledge of our solutions, to evaluate an organization's needs and consult on how to improve a business process.

We provide a variety of onsite, instructor-led online and on-demand training services to our customers relating to the use of our solutions and application of best practices, including our highly-rated Blackbaud University curriculum, through which customers can achieve certifications on Blackbaud software, which can serve as important catalysts for professional growth in the nonprofit industry.

Our instructors have extensive training in the use of our solutions and present course material that is designed to include hands-on lab exercises, as well as course materials with examples and problems to solve.

At the end of 2020, we had over 45,000 global customers including nonprofits, foundations, companies, education institutions, healthcare organizations and other social good entities.

There are millions of users of our solutions in more than 100 countries.

We have updated our methodology for counting customers to better represent our current offerings and our growing population of customers with contractual billing arrangements and customers that pay us through solutions usage or transaction fees, some of which are in lieu of contractual billing arrangements.

During 2021, we had nearly 40,000 customers with contractual billing arrangements and nearly 100,000 customers that paid us through transactional fees.

Through our customers and our solutions, we support millions of users and we connect millions of supporters to over 150,000 organizations and causes in over 100 countries.

Our largest single customer accounted for less than 0.2% of our 2021 consolidated revenue.

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As of December 31, 2021, we had 330 direct sales employees.

We conduct marketing programs to create brand recognition and market awareness for our solutions and services.

Our marketing efforts include participation at trade shows, technical conferences and technology seminars, publication of technical and educational articles in industry journals, preparation of competitive analyses and the use of software tools to enhance our digital footprint and drive lead generation.

Our customers and strategic partners provide references and recommendations that we often feature in our advertising and promotional activities.

We believe relationships with third parties can enhance our sales and marketing efforts.

We have and will continue to establish additional relationships with companies that provide services to the philanthropic industry, such as consultants, educators, publishers, financial service providers, complementary technology providers and data providers.

These companies promote or complement our solutions and provide us access to new customers.

The market for software and related services in the philanthropic industry is competitive and highly fragmented.

Our marketing organization, which includes brand, digital, content, product, event and demand generation marketing and corporate communications, develops and launches multi-channel campaigns designed to create brand recognition and market awareness for our solutions and services.

Through the Blackbaud Institute, we also give back to the social good community by developing in-depth research and thought leadership content to help to drive better outcomes for their organizations with data, technology and expertise.

Our digital demand generation motion focuses on targeted account-based marketing plays, as well as intent-based programs including paid search, retargeting, social and content syndication programs.

We supplement the digital motion with select participation at virtual and in-person third-party trade shows, technical conferences, and technology seminars.

We also target publication of our thought leadership content and position our subject matter experts in industry journals and publications.

We have a large base of loyal customers and strategic partners that provide references and recommendations often featured in our advertising and promotional activities.

2021 Form 10-K

Blackbaud, Inc.

The market for software and related services targeting philanthropic-focused for-profit and nonprofit organizations is competitive and highly fragmented.

For certain areas of the market, entry barriers are low, as general tools for small businesses can usually be configured to manage the most basic marketing, contact management, and accounting needs of social good organizations.

In parallel, as software development evolves from a highly-complex tradecraft with nuanced understanding of architectural patterns and discrete languages, to click-to-code and drag-and-drop development with natively cloud-based infrastructure, it becomes easier for competitors to quickly spin up basic applications with embedded security and functionality.

However, once basic needs are met, programs unique to social good organizations like fundraising, gift and grant management, and peer-to-peer activism require highly specialized tools to configure and transform general business software to match the complexities of the industry.

However, once basic needs are met, programs unique to social good organizations like the stewardship of relationships critical to major gift fundraising, the cultivation and management of gifts and grants, the multi-level networking required for peer-to-peer activism and the sensitive data behind critical programs run by healthcare and education institutions ensure the ongoing need for highly specialized tools.

These specialized applications have a higher barrier of entry as they require industry insight to accurately articulate the business workflow that generates the requirements for software products.

Moreover, because social good organizations rely heavily on relationships with and among their supporters, integration of systems drives value beyond mere efficiency.

Hence, we believe our insight, the full spectrum of our current solutions and our ability to deliver on future solutions makes us a strong competitor.

Hence, we believe our insight, the full spectrum of our current solutions and our ability to deliver future solutions make us a strong competitor.

We expect to continue to see new entrants as focus on social investment solutions increases to satisfy Millennial and Gen Z donors, the barriers of entry continue to decline with natively cloud solutions and social good organizations more readily require digital transformation of business processes and data-driven decision making.

2020 Form 10-K

Blackbaud, Inc.

Our competition falls into four primary categories:

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In addition, our open platform allows integration to specialized applications so the opportunity for disruption from these competitors is minimized.

• Vertical-specific solutions are offered by competitors seeking to meet the enterprise-wide needs of a specific sub-segment of social good community.

• Vertical-specific solutions are offered by competitors seeking to meet the enterprise-wide needs of a specific sub-segment of the social good community.

Typically, these solutions are offered by vendors who may offer either a point solution or integrated suite of products used by a vertical.

We believe we compete successfully against these competitors through a combination of our integrated suite of offerings within verticals where we compete, offering solutions with market leading robustness as well as the scale, reach, and reputation of our organization.

• General business software vendors , such as Salesforce.com and Oracle, compete with us in certain areas of our business.

• General business software vendors , such as Microsoft, Oracle and Salesforce.com, compete with us in certain areas of our business.

While there is a growing trend toward social investment that is prompting philanthropic solutions from these general business vendors, most do not have a complete nonprofit specific focus and, therefore, do not offer or intend to offer nonprofit-specific versions for outside sales.

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As a result, we believe we can compete successfully to meet nonprofit-specific requirements, often integrating with general business platforms used for their more generalized operations.

• Consumer-oriented fundraising platforms, such as GoFundMe, Virgin Money Giving and Facebook compete with our business where consumers raise funds directly.

• Consumer-oriented fundraising platforms , such as GoFundMe and Facebook compete with our business where consumers raise funds directly.

To drive adoption of their platforms, these vendors rely on a combination of direct-to-consumer marketing, marketing to nonprofits who in turn market to their supporters, and marketing to intermediate entities such as an event sponsor who will market to participants.

We believe we compete well in this market through a combination of positive brand recognition among all three of these groups and the combination of our consumer- and organization-oriented tools relative to those of the competition.

2021 Form 10-K

Blackbaud, Inc.

Less frequently, we compete with providers of traditional, non-automated fundraising service providers, including parties providing services in support of traditional direct mail or email campaigns, special events fundraising, peer to peer, telemarketing and personal solicitations.

We believe we compete successfully against these traditional fundraising service providers, primarily because our solutions and services are more automated, more robust, more tailored to the needs of nonprofit organization and more efficient.

Technology and Architecture

Blackbaud SKY provides the foundation for all of Blackbaud’s cloud solutions, enabling highly available and easy-to-use cloud capabilities that integrate seamlessly and offering best-in-class infrastructure, integrated shared services, and modern, effective, purpose-built solutions.

The platform’s service-oriented architecture organizes application features into independently deployable services and then leverages these self-contained services as integrated capabilities across our solution portfolio.

This enables rapid innovation with high levels of reliability, availability and security, and lets Blackbaud evolve services over time at asymmetric paces as tech trends and tools emerge.

Blackbaud SKY prioritizes customer value, including risk management, and speed of delivery.

It enables rapid releases, scalable and high-quality services, and speedy time to market.

Blackbaud SKY forms the foundation of our technology strategy.

The SKY platform consists of several key building blocks including cloud operations, developer tools, data intelligence and core services.

The SKY Engineering System, architecture and integrated core shared services empower our developers to create highly available and easy-to-use cloud capabilities that surface to our customers as modern, effective, purpose-built functionality within most current products as well as new solutions.

The best-in-class infrastructure of SKY enables rapid innovation with high levels of reliability, availability and security, and lets Blackbaud evolve services over time at asymmetric paces as tech trends and tools emerge.

Overall, Blackbaud SKY prioritizes customer value, including risk management, and speed of delivery.

It enables continuous releases, scalable and high-quality services, and speedy time to market.

Blackbaud SKY also provides a toolset for customers, partners, and developers to create and deploy self-contained services within the Blackbaud SKY ecosystem.

SKY API enables developers to augment Blackbaud solutions with industry-standard REST APIs, standards-based authentication protocols, and a best-in-class developer experience.

SKY UX allows developers to create applications with the same consistent, cohesive user interface

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Blackbaud, Inc.

as Blackbaud’s native solutions using an open source framework that implements Blackbaud design patterns and provides guidelines and tooling for the entire application lifecycle.

SKY UX allows developers to create applications with the same consistent, cohesive user interface as Blackbaud’s native solutions using an open-source framework that implements Blackbaud design patterns and provides guidelines and tooling for the entire application lifecycle.

Additionally, the Blackbaud Marketplace features a curated list of applications that can help amplify an organization's impact in the Social Good sector.

Blackbaud customers can discover applications in the Marketplace that extend new capabilities to their Blackbaud solutions.

These tools enable Blackbaud customers to benefit not just from the innovation of Blackbaud’s own large team of developers, but also from an exponentially larger community of partners and third-party developers.

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• Flexibility:

Customers can extend our component-based architecture to accommodate changing demands without modifying source code.

Customers and partners can extend our component-based architecture to accommodate changing demands without modifying source code.

• Adaptability:

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To protect our intellectual property, we rely on a combination of patent, trademark, copyright and trade secret laws in various jurisdictions, as well as employee and third-party nondisclosure agreements and confidentiality procedures.

We maintain many trademarks, including, but not limited to “Blackbaud,” “Raiser's Edge NXT” and “Luminate.” We currently have one active patent on our technology and have two pending patent applications.

We maintain many trademarks, including, but not limited to “Blackbaud,” “Raiser's Edge NXT” and “Luminate.” We currently have two active patents on our technology and have one pending patent application.

Human Capital Resources

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We are not involved in any material disputes with any of our employees, and we believe that relations with our employees are strong.

We benefit from an engaged and driven employee base motivated to join the company by our higher purpose, which is "to help good take over the world." Our purpose attracts talented, competitive applicants, with 92% of employees saying our focus on social good organizations was a driver in their decision to join the company.

This differentiator not only builds stronger employee engagement, but it helps us to provide a higher level of service to our customers across the social good community, with 92% of employees reporting that they actively serve as volunteers and 23% serving on a nonprofit board or committee — direct experience that enables them to better serve our customer base.

Blackbaud also attracts talented employees through effective and targeted recruiting strategies.

In 2020, Blackbaud announced the launch of a new workforce strategy, allowing for many employees to have the option to work from other geographic locations within the country of the position, helping to expand the pool of qualified applicants for roles.

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Blackbaud, Inc.

We benefit from an engaged and driven employee base motivated to join the Company by our higher purpose, which is "to help good take over the world." Our purpose attracts and retains talented, competitive applicants, with 91% of employees saying the fact that Blackbaud operates in a socially responsible manner is important to them.

This differentiator not only builds stronger employee engagement, but also helps us provide a higher level of service to our customers across the social good community, with 72% of employees report that they continued to volunteer during the pandemic despite its unique challenges and one in five serve on a nonprofit board or committee—direct experience that enables them to better serve our customer base.

Blackbaud also attracts and promotes talented employees through effective and targeted recruiting strategies.

In 2021, we expanded our workforce strategy to become permanently "Remote First" which signals Blackbaud's goal to attract talent globally.

Employee engagement is a focus at Blackbaud, and we continually work to understand what matters and to make our workplace better to attract, develop, and retain talent.

In 2021, nearly every employee at Blackbaud participated in "the Blackbaud Way" — a training designed to connect employees with Blackbaud's mission, values and expectations for our customers and Company culture for the best experience for all.

Employee feedback on this experience was overwhelmingly positive.

Every manager at Blackbaud is required to take a multi-course "Engagement Labs" training designed to equip them with the practical skills to ensure their teams are highly engaged.

We assess and measure progress on engagement and growth opportunities at the individual level through quarterly check-ins and a global career framework that guides employee progression on both management and individual contributor career paths;

we also assess engagement on the team and company level through regular employee surveying.

We assess and measure progress on engagement and growth opportunities at the individual level through quarterly check-ins, which focus on impact and learnings, and a global career framework that guides employee progression on both management and individual contributor career paths;

we also assess engagement on the team and company level through regular employee surveying as well as "Ask Anything" sessions with senior leaders and dedicated "live" Q&A sessions in our company-wide All Hands meetings.

We enable employees to have opportunities for career development through on-demand and company-led trainings.

Our compensation framework is designed so that employees are compensated equitably and competitively, including through base salary, variable pay, equity awards and benefits.

We also seek to support the whole person, through benefits that support wellness and financial health.

We also seek to support the whole person, through benefits that support overall wellness and financial health.

Ultimately, we believe that Blackbaud is an excellent place to work due to our active participation in the Ecosystem of Good®:

we govern our business ethically, contribute to causes and communities that matter to our employees through corporate philanthropy, we pursue sustainability, and we work every day to ensure our workplace is supportive, inclusive and engaging.

We offer an array of philanthropy programs aimed at engaging our employees as agents of good, including matching gifts, competitive grants that honor noteworthy examples of volunteerism, employee-led

2020 Form 10-K

Blackbaud, Inc.

grant committees, skills-based volunteerism initiatives, as well as science, technology, engineering and mathematics focused community programs.

Our commitment to diversity, equity and inclusion supports our efforts to attract, develop and retain a high-performing employee base.

We offer an array of philanthropy programs aimed at engaging our employees as agents of good, including matching gifts, competitive grants that honor noteworthy examples of volunteerism, employee-led grant committees, skills-based volunteerism initiatives, as well as science, technology, engineering and mathematics focused community programs.

Our commitment to diversity, inclusion and belonging supports our efforts to attract, develop and retain a high-performing employee base.

In September 2020, we welcomed our first Diversity and Inclusion Officer, as part of our strategy to further accelerate our diversity, inclusion and belonging efforts, while continuing to strengthen relationships with our people and the communities in which we operate.

This new leadership focus will amplify and accelerate the significant initiatives already in place at Blackbaud, including:

ongoing unconscious bias workshops;

ongoing workshops on creating an inclusive culture;

respect in the workplace training for all employees and enhanced training for managers;

business networking affinity groups, including veterans, LGBTQ employees, women in technology, women in sales, African American employees and employees interested in sustainability.

affinity groups, including veterans, LGBTQ employees, women in technology, women in sales, Black employees, employees interested in sustainability and, our newest team, those employees with a disability.

Additional information related to our human capital strategy can be found in our 2020 Social Responsibility Report, which is available on the Corporate Social Responsibility section of our website.

Information contained on or accessible through our websites is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.

For a discussion of seasonal variations in our business, see “Management’s Discussion and Analysis of Financial Conditions and Results of Operations — Seasonality” in Item 7 in this report.

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Working Capital

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Boor 59 Executive Vice President and Chief Financial Officer

Gregoire 53 Executive Vice President and President, Enterprise Markets Group

53 Executive Vice President and Chief Products Officer

Mooney 62 Executive Vice President and President, General Markets Group

Gregoire 54 Executive Vice President and President, U.S.

McDearis 54 Executive Vice President and Chief Products Officer

Mooney 63 Executive Vice President, Strategy and Corporate Development

Olson 58 Senior Vice President and General Counsel

McDearis was designated by our Board of Directors as an executive officer as defined in Rule 3b-7 of the Exchange Act effective January 1, 2021.

Gianoni joined us as President and Chief Executive Officer in January 2014.

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Gianoni was Executive Vice President and General Manager of CheckFree Investment Services, which provided investment management solutions to financial services organizations, from June 2006 until December 2007 when CheckFree was acquired by Fiserv.

From May 1994 to November 2005, he served as

2020 Form 10-K

Blackbaud, Inc.

Senior Vice President of DST Systems Inc., a global provider of technology-based service solutions.

From May 1994 to November 2005, he served as Senior Vice President of DST Systems Inc., a global provider of technology-based service solutions.

Gianoni is a member of the Board of Directors of Teradata Corporation, a publicly traded global big data analytics company.

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He holds a BS in Accounting from New Mexico State University.

Gregoire joined us as Executive Vice President and President, Enterprise Markets Group in April 2018.

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Blackbaud, Inc.

Gregoire has served as our Executive Vice President and President of U.S.

Markets since April 2021.

He joined us as Executive Vice President and President, Enterprise Markets Group in April 2018.

Prior to joining us, Mr.

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He holds a BS in Management from The Georgia Institute of Technology.

Mooney has served as our Executive Vice President and President, General Markets Group since January 2010.

Mooney has served as our Executive Vice President of Strategy and Business Development since April 2021.

Before that he was the Executive Vice President and President, General Markets Group since January 2010.

He joined us in July 2008 as our Chief Commercial Officer.

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Prior to joining us, he was an attorney with Alcatel-Lucent USA, the U.S.

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subsidiary of France-based Alcatel-Lucent (now owned by Nokia Corporation) that designs, develops, and builds wireline, wireless, and converged communications networks, from July 1997 to September 2008.

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Olson was employed in legal positions with MCI, Inc., a global business and residential communications company, from September 1996 to July 1997, and Unisys Corporation, a global information technology company, from July 1992 to September 1996.

Olson is a member of the MUSC (Medical University of South Carolina) Hollings Cancer Center Citizens Advisory Council and is on the board of the Charleston Symphony and Charleston Jazz.

Olson is a member of the MUSC (Medical University of South Carolina) Hollings Cancer Center Advisory Board and is on the board of the Charleston Symphony and Charleston Jazz.

He holds a BS from Georgetown University, a JD from Dickinson School of Law and an MBA from Seton Hall University.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business