Matthew Warner started out in entrepreneurship intent on building a Facebook for churches and ministries; he ended up launching Flocknote, a popular text- and email-messaging service that's exclusively focused on religious institutions.

"When I started [Flocknote] 10 years ago, a church didn't have a software budget," says Warner, now 38, whose Dallas-based company booked $2 million in revenue last year and landed at No. 1,520 on the Inc. 5000, an annual list of the fastest-growing private companies in the U.S. "Churches went from spending nothing on software to good-size churches now spending thousands of dollars a month on software because they know it's worth it."

Indeed, Flocknote joins a growing list of tech companies outfitting today's faith-based organizations with communications and analytics tools. The worldwide market for church management software alone reached about $731 million in 2018, according to an April report from the London-based research firm TechNavio. In the next four years, that market is expected to jump to about $951 million.

Like many traditional brick-and-mortar businesses, congregations are adapting their practices to keep people engaged and coming back. The need has become particularly urgent, as the Pew Research Center notes in its most recent Religious Landscape Study that an increasing number of Americans--Millennials in particular--say they do not subscribe to any organized religion.

"Millennials are so much less likely to go to church than their parents or grandparents," says Brian Grim, a former senior researcher at the Pew Research Center who now serves as president of the Religious Freedom & Business Foundation. "One thing I've really been impressed with is that faith groups are not static," he says, adding that religious communities need to respond to this reality.

Christian megachurches, which require far more than a couple of microphones to cater to their thousands of congregants, have been some of the earliest adopters of the religion tech industry. "They have sound people and they have folks who run the IT departments that make this all happen," says Steve Cumbia, vice president of technology at ACS Technologies. The Florence, South Carolina-based church database software maker has been serving parishes--and some synagogues and mosques--since 1978. It generated between $60 million and $90 million in revenue last year, according to TechNavio's report. 

"You still have little churches out in the country that don't even have an internet connection," Cumbia says. "But then you have the megachurches in large cities that are incredibly technically savvy."

Even so, the dynamic is starting to shift. Smaller and medium-size churches now hire IT professionals or enlist volunteers to manage a growing set of must-have software services. 

As churches start to move more of their operations online, they're realizing they have a trove of data available to better understand their attendees. Mike Essington runs information technology at Epiphany Catholic Church, a parish in Normal, Illinois, that counts 1,400 families in its congregation. Epiphany, which also operates a private Catholic school, subscribes to a variety of software products, including ACS Technologies' Parish Data System, Ministry Brands' eGiving solution for online donations, and Flocknote's messaging platform. Essington says Flocknote's analytics features have helped the church determine when it's best to send text messages versus emails. "Depending on your age," he says, "certain people like to get texts more. My nieces, for example."

The 2,200-family Catholic church Christ Our King in Mount Pleasant, South Carolina, has begun using Flocknote's analytics features to better understand the sentiments of its parishioners. "I sent one [message] out yesterday to 69 people. Forty-six have read it as of this moment. I can even tell you that there was a poll in there and 11 of the 69 voted in the poll," says IT volunteer Brian Justice. "Five years ago, we didn't have anything like this. Everyone had an Outlook distribution list." 

It's that kind of enthusiasm that's converting investors. Three private equity firms--Insight Partners, Genstar Capital, and Providence Equity Partners--have invested in industry power player Ministry Brands, a seven-year-old Knoxville, Tennessee-based company with more than 30 software brands that help churches manage everything from donations to congregant data. It's unclear how much these firms have invested, as they all declined to comment or share specifics with Inc. Various reports put their investments at north of $1 billion.

Tithe.ly, a roughly 90-person company founded in 2015 that sells its own suite of products focused on giving and church management, closed a $15 million Series F investment round earlier this year. Its COO, Frank Barry, declined to share the names of its investors, but he did say the company chose backers who were on board with its faith-oriented mission to help local churches use tech well. 

"They're not just pure institutional investors," Barry says. "We've really tried to look for the kind of people that we personally connect with and have great relationships with." All Tithe.ly employees work remotely, and the company operates in seven countries outside the U.S., including Singapore, Japan, the United Kingdom, and Canada. It works with close to 11,000 religious institutions around the world.

Flocknote does not have any venture funding. In 2012, it raised an undisclosed sum, which it has since repaid, from Lighthouse Catholic Media, a company that distributes faith-based content. Flocknote's platform is used by some non-Christian organizations, Warner says, but its products mostly target Christian churches, where the company has seen the most traction. With 5,000 churches in North America under its wing--and 2,000 additional churches in its sights by year-end--Warner is optimistic about the company's prospects. 

"We're averaging 56 percent a year right now in revenue growth," he says. "We're at a phase where we're trying to establish the right structure: preparing for the faster growth maybe to come, but not wanting to grow too fast to where we kind of lose our personality and our culture.​"

Published on: Nov 21, 2019