Burning Money...

Just tonight I came across this. It's certainly funny, and probably will work for them. (Heck, even this blog post will likely increase their traffic).

However, shouldn't this large company start reducing their inflated prices instead of spending their money on this????

http://www.nonprofitnetworknews.com/index.php?o=DonorPerfect&n=Jon

There comes a time when enough is enough. Marketing is one thing, frivalous spending, at the detriment of your NON-PROFIT clients, is another.

Blackbaud buys Kintera (KNTA)..

Last night I received an email announcing Blackbaud's (BLKB) purchase of Kintera (KNTA), and you can read the rest of the details here:

http://www.nptimes.com/08May/5-30-08bnews.html

Kintera, as you may know, started at the tale end of the dot-com boom, went public, bought several companies, blew through $148 million and imploded.

Yes, my friends, $148 million spent. That's an awe-inspiring sum. I think it's pretty hard to do- I don't think I could have done it as well.

As the San Diego Union-Tribune pointed out, the deal may be good for Blackbaud:

"Blackbaud no doubt views Kintera's 3,900 customers, which include the American Lung Association, Lance Armstrong Foundation and Big Brothers Big Sisters of America, among its prized assets."

It does bother me that the organizations that we are trying to serve are treated as prizes to be won at any cost.

Like Blackbaud's other acquisitions in the past, it's inevitable that most if not all of Kintera will be assimilated within Blackbaud. For example, Kintera offers both Fundware, (Fund Accounting), and Pin! (Prospect Research), which are direct competitors to Blackbaud's Financial Edge and WealthPoint respectively. Kintera's Sphere is a bit different, and could hang on longer. Friends asking Friends will probably remain untouched.

So, where does that leave DonorPerfect?

Again, as I have mentioned numerous times in the past, we are very confident about our position in the marketplace, our robust fundraising solutions, and price-point. We continue to grow at a double digit pace, gaining clients the old fashioned way- we would rather earn a client's respect than buy it.

Competition is good for the non profit market- it reduces prices and increases innovation. We look forward to continue competing with Blackbaud, and expect to further increase our market share as they sort out their most recent acquisition.

If you're an existing Kintera client or prospect, or simply a non-profit looking for a great web-based (or installed) fundraising system at a great price, give us a try. A very friendly and experienced account manager (with an average experience over 8 years!) can walk you through our products, and I think you'll be impressed- I know our clients are!

Blackbaud buys (CHOMP!) eTapestry

Another one bites the dust. From Yahoo financial, I learned today that Blackbaud acquired eTapestry for around $25 million. That's a lot for a company that had only $7-$8 million in annual revenues and made only a small profit.

Although we had no insider information, the news didn't come as much of a surprise to us. Jay Love had sold a previous company he ran called Master Software to Blackbaud in 1997. That was really the first of Blackbaud's many product acquisitions that involved an aggressive strategy of forcing acquired clients to switch to Blackbaud or else face being dependent on software that was no longer supported. The truth is that though a lot of clients grumbled, many went along with Raiser's Edge. In fact, Blackbaud made so much money from this strategy that they've repeated it several times, most recently with Campagne's GiftMaker Pro. At the time we parodied Blackbaud's strategy with a humorous video.

Don't get us wrong, we know it isn't very funny for the thousands of non-profits who felt the rug pulled out beneath them. What amazes me is that how often organizations fail to consider the financial motivations and situation of the software vendor when purchasing software. When Jay left to start eTapestry, he raised $6.5 million from venture capitalists to fund the business. That was back in 2000 and most venture capitalists have an investment horizon of 5 to at most 10 years -- so again, the sale of eTapestry is no surprise.


So the investors in eTapestry are happy, but what about their clients? It's no secret that many people choose fundraising software because it's NOT Blackbaud. Blackbaud's products have a reputation for being complex to use, in addition to being very expensive. I suspect many of them will feel betrayed. Blackbaud has gone out of their way to say they they don't plan on integrating the eTapestry business- at least for the next year, maybe two. It is probably true, given that Blackbaud doesn't have a fully web-based product and Raiser's Edge would be tremendous overkill for the vast majority of eTapestry clients.

But one thing is for sure- Blackbaud is a public company and in their conference call last night (accessible to anyone), they made it clear that they are committed to continuing and even improving their already massive profit margins. To get a return on that $25 million purchase, eTapestry clients are destined to see increasing subscription and service fees in the future.

We think that's a shame and believe the non-profit community is best served by having a choice of solutions- competition is healthy. Blackbaud may want to monopolize the fundraising software business, but we won't let them. DonorPerfect has grown to #2 in the market the old fashioned way - winning new customers one at a time with hard work, perseverance, and a rock-solid commitment to our customers, employees, and partners. As a private company with no outside investors or debt, we've been able to finance our double digit growth for over 25 years.

In the meantime, I believe DonorPerfect offers a compelling and proven solution for non profit organizations. We offer the best benefits and best services at a fair price- and I'm pretty confident that's a winning formula for years and years to come.

If you're an existing eTapestry client or prospect, or simply a non-profit looking for a great web-based (or installed) fundraising system at a great price, give us a try. A very friendly and experienced account manager (with an average experience over 7 years!) can walk you through our products, and I think you'll be impressed- I know our clients are!

Upheaval in the NonProfit Marketplace

Wow, there's been a lot of news about software vendors serving nonprofits. In the last month we had:

Convio buys GetActive
BlackBaud buys Target
Kintera's CEO Resigns

Convio's move to merge GetActive probably makes a lot of sense. Both companies offered, for the most part, similar Web Content Management solutions for medium to large non profit organizations. GetActive focused on advocacy type clients, while Convio strength lies with web fundraising tools. Personally, I've had excellent interactions with both companies, and wish them the best in their merger. It won't be easy, and the buzz is that they will have some work to do to make sure they are known as ConActive and not "GetConned". Again, I've got faith they will be able to pull it off.

As for Blackbaud's purchase of Target Software and Target Analytics- it probably makes sense too. Blackbaud has been traditionally strong for some larger organizations. Of course, I'm a bit prejeduced- though there are many times when DonorPerfect is a better solution, Blackbaud does make sense for some clients as well. However, they lacked a top tier product, one that was capable of handling the largest of organizations (i.e. those organizations with millions of donors). They get access to this market with Target and it was obviously important because they paid through the nose for it- to the tune of $60 million (plus another $2.4 million in potential bonuses, but who's counting?). This is a pretty incredible number, as it represents more than 2X sales for Target and this multiplier is much higher than when they bought Campagne Associates/GiftMaker Pro last year (for only $6 million).

Finally, Harry Gruber resigned from Kintera. This was probably a good move as well in the fact that you didn't have to do much research on the Internet to find that he had some detractors. Combined with the fact that Kintera's stock dropped from a high of ~ $17.50 to ~$1.70 as of today and has lost 118 million dollars (not a typo!) since they became public makes this decision easier. Again, we have some joint clients, but it's been difficult to integrate with Kintera because their software seems to change all the time. I hope they are able to turn it around as there are a lot of organizations depending on them.

So where does that leave DonorPerfect? Are we going to be the next takeover target?

I really, really don't think so. Though we get offers all the time, we really have no reason to sell or merge. We have a rapidly growing client base, and we've been consistently profitable for over 20 years. Unlike other companies in our space, we have never been dependent on VC money, so there is no pressure to sell or go public. (Companies that accept VC money typically have to pay back that money after 7-10 years by selling, going public or filing for bankruptcy and liquidating (ouch!!)).

In fact, here at DonorPerfect we're thinking about acquiring businesses that share our philosophy and approach- if you know of any, drop us a line!