This error typically occurs when The Raiser's Edge is not hosted by Blackbaud. It is network related. 

Here is a 3rd party link which discuss it further.
Note: We provide links to third-party websites in an effort to help you resolve your issue. We are not responsible for the information on third-party websites and we cannot assist with implementing resolutions from these websites.

The behavior is usually a combination of the following:
  1. SQL Server Browser Service isn’t running
  2. IP is not configured correctly in the TCP/IP settings  (Navigate to SQL Server Configuration Manager, under the Client Protocols right click on TCP/IP and click Properties)
  3. Port 1433 (default port for SQL communication) isn’t enabled on the IP or is being blocked by a firewall (could be on SQL server or on REWS server. Could be network firewall or Windows firewall on one of the servers)
Please contact the appropriate software vendor or IT professional for assistance with this process or issue which is beyond Blackbaud's scope of support.