Salesforce.com offers disappointing outlook

Shareholders reacted negatively today to news from Salesforce.com, Inc.'s disappointing outlook. Shares were down more than $10 at $55.15 (about 16%) in early trading on worries about the software-as-a-service company's future sales growth amid macro economic concerns.

A lot of nonprofits use Salesforce.com - so, here's the part that should serve as a warning to fundraisers:

Analyst Charles Di Bona of Bernstein Research said the shaky economic environment may be hurting Salesforce.com's business as some of its key customers, small and medium-sized companies, reel from the slowdown.

"We are concerned that SMBs, which make up 2/3 of Salesforce's customer base, may suffer more markedly than their larger counterparts amid any ongoing economic weakness, and that this may in turn impact Salesforce's bookings, new and renewal, and ultimately Salesforce's top line," Di Bona wrote. "Indeed, Salesforce appears to have had some softness in its deferred revenues and bookings in the quarter, perhaps giving fuel to this concern."

This is what I would call a leading economic indicator. That's right folks... we've been saying it at Don't Tell the Donor since late 2007. Smaller and medium sized nonprofits are going to feel this pain a lot sooner than the big dogs.

Oh yeah, and by the way... Goldman Sachs said today that half of the world's economies are in or will be in a recession within the next year. So much for our "second half recovery," huh?

Four CRM case studies

Reed over at the AFP blog pointed out a great article yesterday by Anthony Pisapia and Brett Bonfield from Idealware:

"Managing Constituent Relationships: Four Case Studies" tries to explain how four organizations have implemented CRM and what their experiences can offer others. The authors take a complete look at the product, the cost, the implementation, the challenges, and the words of advice.

The examples they cite are the NY-NJ Trail Conference, which used a database software called ebase; Hispanics in Philanthropy selected Microsoft CRM 3.0; Washington Toxics Coalition recently migrated from ebase to Salesforce and finally, Easter Seals uses a combination of Convio and Team Approach.

The rest of the article is on the TechSoup website.

Bloggers challenge Gene Austin from Convio to announce his over/under goal for the year

On June 5th of last week, Tom over at The Agitator posted this article:

Courtesy of Don’t Tell the Donor blog, I just saw Convio’s reaction to Blackbaud’s purchase of rival Kintera. In it, Convio CEO Gene Austin comments that in April alone, Convio processed over $41 million in online contributions for its clients.

So here’s my question for you, Gene…

Are you ready to predict a $500,000,000 (that’s a half-billion for you creatives) online fundraising year for Convio clients? That’s getting to be big money!

Even though it was this site that originally posted the number, Austin must have decided not to post to Don't Tell the Donor directly. Instead, Austin posted this challenge to a bet on the comment thread at the Agitator:

Gene Austin on June 5th, 2008 10:53 am
As we all know there is a fair amount of seasonality in fundraising (Spring, October and the end of year), but I actually think $550M is achievable this year. Remember that this is only actual online giving and many of our clients will testify that their offline results are significantly impacted by their online communications and strategy.

If you are a “betting man” Tom we could put a little wager together on $550M. If we don’t hit it, I will fly you to our Summit and pay for your registration….now what do I get if we beat it?

When I read the bet Austin was making, I couldn't wait to offer my own Vegas-style lines on what Convio's expected donation processing total will be for 2008. At first I thought the SEC might be supisicous if I was to publicly comment on how many donations I thought would be a reasonable over/under... but my urge to gamble made me get involved.

I assume the first stated over/under number of $500 million was determined because Tom multiplied $41 million from April by 12 months (that would be $492 million for you math geeks). So, part of me thinks if Gene's bravado is ready to drop a number like $550 million as an even higher over/under... that means he's holding back his real estimate.

But how much higher should the real over/under be?

First, we need to set some realistic benchmarks:

I know a couple organizations that raise 5% of their total online revenue during the month of April. That means their total annual revenue is 20 times the amount raised in the month of April. If we apply those metrics to this bet, the over/under should be $820 million. That would be an impressive accomplishment.

So, I'll tell you what. If Convio can process over $820 million for their clients in 2008, I will reveal my secret blogger identity on the Agitator's blog. Live. What do you think about that challenge Gene?

Bloggers react to the first year of fundraising numbers from Facebook Causes App

I've been reading several blog postings about the fact that May 30th marked the first anniversary for Facebook's toolkit that enables the development of 3rd party Applications (Apps) that integrate directly with Facebook user data.

The Giving in a Digital World blog provides some interesting statistics on the biggest non-profit Facebook App, ‘Causes’ from Project Agape (now also available on MySpace). The allure to nonprofits is strong since they now have a total of 12 million registered users supporting over 80,000 US and Canadian non-profit organisations.

Over the last 12 months, $2.5 million has been raised through Causes for 19,445 organisations - equating to an average of just $126 per organisation. No donations at all have been made to 75% of the 80,000 organisations being ’supported’.

This leaves blogger Bryan Miller wonders if there is a greater potential. Caroline Preston at the Chronicle of Philanthropy's Give and Take blog also wrote about the underwhelming response to the news from people over at TechCrunch.

Adam Hyman points out on TechCrunch that the $2.5-million total works out to being only $0.21 per user. “How can anyone call this a success?” he asks.

The TechCrunch reaction is likely to shape the industry's reaction to the fundraising news because Michael Arrington published this article at the Washington Post. However, Allan Benamer at the Non-Profit Tech Blog took issue with the idea that the fundraising revenue was low. Benamer reminds readers:

"...the amount is actually greater than the first year revenue for Kiva, GlobalGiving and DonorsChoose COMBINED."

My own personal reaction is that the success of the Causes App should not be judged based on the dollar amount raised. Rather a more important metric should be the number of users who agree to share their name and contact information with their favorite nonprofits through this feature. That's why this is a revolutionary development.

For too many years, nonprofits have settled for the "cash bucket" mentality of fundraising where they failed to see the future value of collecting the names (and contact information) from people who threw donations into a bucket.

I'm happy to see social networking sites recognize that it's not enough just to raise money as a one time donation... the question for me will be whether nonprofit fundraisers figure out how to develop appropriate follow-up strategies to continue engaging this new breed of donor.

Convio responds to Blackbaud acquisition of Kintera

Gene Austin, the CEO of Convio, sent out his response this morning to last Thursday's announcement that Blackbaud would be acquiring Kintera.

No doubt you have now heard the news about Blackbaud's proposed acquisition of Kintera. This is certainly an interesting, but not entirely unexpected, development in our rapidly evolving market.

The Software as a Service approach we have led in the industry has driven tremendous success for organizations like yours, and we believe this approach causes challenges for legacy software providers. Blackbaud now faces the task of addressing the well-publicized operational challenges at Kintera, while rationalizing a roadmap that includes multiple eCRM and donor management products from four companies (Blackbaud, Target Analytics, eTapestry and Kintera). It will be interesting to watch this integration play out over the coming quarters and years.

My hope is that this acquisition will convince Blackbaud to listen and respond to the growing demand from nonprofits for interoperability and an open approach to integration. We would like to see Blackbaud make their APIs freely available, following Convio and other leading vendors who have worked with clients and the market to drive improved results. Better data integration benefits the nonprofit market.

We are increasingly excited about the success our clients are achieving and the growth in our business. We processed over $41M in online gifts for our clients in April alone — making this our largest month ever. Our business remains strong, with over 30% revenue growth in Q1 2008 compared to the same quarter in 2007 (on a proforma basis including our acquisition of GetActive). You will also see announcements from us in the coming months that highlight our continued investment in providing solutions that help you get more value from every constituent relationship.

We remain committed to your success — keep up the great work!

Regards,
Gene Austin

A lot of that stuff sounds like spin to me... but you have to admit, it takes a certain of amount of chutzpah from Austin to give Blackbaud pointers on the need for them to "rationalize a roadmap" to integrate multiple eCRM and donor management platforms.

Make no mistakes, this is high stakes poker. Austin's use of this communique response to call on Blackbaud to "make their APIs freely available" seems designed to position Convio as an advocate on behalf of nonprofits against the newly created Blackbaud monster.

Blackbaud announces acquisition of Kintera

...and then there were two.

In news just hitting the wires... Blackbaud announced today they are buying Kintera as an all-cash tender offer for all of the shares at a price of $1.12 per share.

Tim Williams, Blackbaud's Senior Vice President and Chief Financial Officer, stated, "In addition to the strategic reasons supporting the acquisition of Kintera, we believe the acquisition is attractive from a financial perspective as well. Subscription revenue was already the fastest growing source of revenue at Blackbaud and it was expected to become larger than license revenue at some point in the second half of 2008. With the acquisition of Kintera, this will become a certainty as we will add another significant source of subscription-based revenue from an on-demand service offering. The evolution of Blackbaud’s business model toward new revenue sources with ratable revenue recognition has been a significant and positive development over the past several years, and it complements the very strong cash flow profile of the Company.”

While the press release seems almost giddy, I'm not so sure nonprofits will be thrilled that their viable options for major providers continues to shrink. If I was a shareholder in BLKB, I would be concerned that $46 million is too much to pay for a provider that seemed destined to go out of business anyway.

Although, the only people who will suffer more than nonprofits looking for competition in the marketplace will be the folks at Convio who must be shitting themselves.

Kintera will continue to be led by its current President and CEO, Richard LaBarbera. The company is expected to formally launch the tender sometime next week and close on or around July 2.

UPDATE: 1232AM = Steve MacLaughlin at Blackbaud's Connections blog points out that:

Because both Blackbaud and Kintera are publicly traded companies there are very specific Federal Trade Commission rules about what can be said and done until the deal officially closes. This may take as many as 30 days and until then both companies will perform as separate units, competing with each other as they did prior to this announcement.

He goes on to say:

* Blackbaud becomes the leading provider of online solutions and services to the nonprofit industry with over 4,500 clients

* Both Kintera Sphere and Blackbaud NetCommunity are strong Internet solutions that largely serve very different segments, including The Raiser’s Edge, Team Approach, eTapestry, and non-Raiser’s Edge customers.

* Blackbaud plans to continue to support and invest in both products.

* Kintera’s other offerings, FundWare, P!N and certain capabilities within Sphere (e.g., Friends Asking Friends) are well-recognized and respected in the marketplace.

Hmmmmmm. Interesting.

MPower announces "database connector" with Convio

I got an email press release today about how Convio and a company called MPower announced the availability of a "Database Connector" to integrate Convio's online constituent relationship management (eCRM) suite and content management system (CMS) with MPower's offline donor management solution.

This isn't the first time the two companies have worked together. Back in 2005 they announced a partnership to do basically the same thing... although back then it wasn't called "database connector" it was called "Optimizing Online and Offline Data Integration for Joint Customers."

Back then MPower bragged that they had "more than 225 leading Christian organizations, including Insight for Living with Chuck Swindoll, Walk Thru the Bible, and Habitat for Humanity Orange County." MPower also listed Fellowship of Christian Athletes, Mothers of Preschoolers, East-West Ministries and Voice of the Martyrs as clients at that time and the press release from 2005 said that Turning Point Ministries was a joint customer of Convio & MPower as well.

MPower's website says that they have "hundreds of nonprofits of all sizes with diverse missions and constituencies, including some of the world's largest and most sophisticated direct marketers." Although they don't carry offer a client list on their website. If any readers know of any nonprofits that use their system, let us know in the comment section.

I saw that MPower's CEO, Randy McCabe, runs his own blog called "Freedom to Fundraise." It looks like a decent site... although he doesn't post that often. I recommend this post about how the stock prices of vendors to charities are getting battered.

Report: Kintera to annouce layoffs

Breaking news over at The Nonprofit Times:

"One month after Kintera received notice about potential de-listing from NASDAQ, widespread layoffs have begun at the San Diego-based software provider to nonprofits. The cuts are ahead of the firm’s quarterly earnings call slated for this afternoon.

Company insiders said more than 40 people were cut starting Tuesday, although Kintera officials declined to comment in advance of today’s 4:45 p.m. Eastern conference call to discuss first quarter financial results. The department losing the most people was finance, followed by marketing and product development, according to insiders.

Roth Capital, one of the few analysts still tracking Kintera, downgraded the stock from “buy” to “hold” on Monday, 15 months after making it a “buy.” Kintera, which trades on the symbol KNTA, ended 2007 with almost $16 million in losses, down from $33 million in 2006 and almost $42 million in 2005. For the first quarter of 2007, losses were $8.2 million.

An insider told The NonProfit Times the earnings report “is not expected to be good” but that the layoffs were more “matching expenses to resources.” Another insider was less optimistic, saying, “This doesn’t surprise you, does it? You had to see this coming.” Neither source would disclose the number of people losing their jobs.

You can read the entire story here.

Do you have a "jilted donor" program?

DonorsChoose continues to receive lots of positive attention for creating a philanthropic marketplace where public school teachers are connected with individuals making direct contributions. The donors can fund a specific school project for varying amounts and they are supposed to receive thank you letters from the students that received the money.

...but that doesn't always happen.

Who knows why, but no matter how much oversight the staff performs, there are bound to be a few deadbeats who never send thank-you letters to their donors. Unfortunately, donors who are left with a yucky taste in their mouth may direct their ill-will toward DonorsChoose for the bad experience.

They seem to know this and have created a "jilted donor" program to deal with those contributors who never hear from the recipient of their donation. I've heard that if you complain about the bad experience, they will give you a "gift certificate" which can be designated to another project.

That's so cool.

This fundraiser thinks it is absolutely critical for nonprofit fundraising staff to be honest with their donors and say: "Hey, sometimes mistakes happen despite our best efforts to prevent them. We're embarrassed by the experience you received as a donor and we want to make it up to you."

If I was to ever give a donation using DonorsChoose, I would designate that my money be used specifically to fund the "jilted donor" program.

The Search For Sneezers

A reader emailed me this morning to say that I had forgotten to mention another interesting session for the AFP conference that dealt with social networking. An excerpt of her email is below:

Philip King, from Artez Interactive, gave a great presentation called “The Search For Sneezers,” about how organizations using social fundraising need to identify, motivate and care for their “sneezers” – the folks who are acting as fundraising hubs, bringing in first-time donors in huge numbers. Philip’s presentation pairs some excellent insights about technology with some of the theories about idea epidemics made famous in The Tipping Point. Very interesting stuff.

In case you missed the session, he’ll be reprising this presentation in a live webcast next Wednesday. Registration is free and it will be recorded: http://www.marketingpower.com/webcast457.php

Thanks for the tip.

NTEN Conference kicks off in New Orleans

More than 1,000 of the cool cats in the country are descending on New Orleans for the 2008 Nonprofit Techology Conference hosted by NTEN over the next couple days.

David Pogue, the personal technology columnist for the New York Times will be speaking at the plenary session at 8:30am... although given some of the festivities on Wednesday night, I doubt that all of the attendees are going to drag their butts to that event on time.

Beth Kanter was one of a couple dozen honored colleagues to be recognized by NTEN at the member's luncheon. Her award was "Most likely to have an account on every social networking site."

Nancy Schwartz has already posted to her Getting Attention blog that she is thrilled with the focus on how attendees can make connections with other nonprofit fundraisers and marketers.

They even have an official widget to track updates from the conference and they have a cool syndication feature for blogs that post to their own sites with the tag 08NTC.

How did a "relative unknown" win $50k on Facebook?

This is an excellent article about how Love Without Boundaries won the top prize in an online contest sponsored by Facebook and Parade Magazine.

LWB provides medical treatment, nutrition programs, foster care and education for orphans and impoverished children in China... but they also do a damn fine job of recruiting volunteers like the Green Family.

Like many others, I am occasionally guilty of thinking of the web 2.0 social networking trend in fundraising as being geared toward younger supporters. I was blown away to read about how a 56 and 63-year-old couple runs LWB's eBay operation and recruited all those Facebook volunteers.

"Our biggest challenge came from the Students for a Free Tibet group," Green said. "Students are very computer-savvy and they're on them all the time. We're a 40-plus age-group organization and it was more work for us to get people on computers."

Thanks to Marge Neal at the Fredrick News-Post Online for bringing us this story.

My new column in The Nonprofit Times

The NonProfit Times asked me to write a column using my anonymous alias "a fundraiser" which will appear as a monthly feature on their website.

Apparently someone over there thinks I'm running, "one of the hottest blogs in the sector" and since I'm such a sucker for flattery - I told them I would be honored to share my thoughts.

So, a couple days ago I sat down and thought about a topic that worries a lot of my fundraising colleagues... and I began my first post by asking a scary question:

How would you feel if you discovered that 500 of your donors had created a group on a social networking Web site like Facebook to publicly discuss their experiences donating to your organization?

I suspect some fundraisers would panic with a sense of fear...

Continue reading the rest of this thought-provoking article titled "Our Donors Are Talking - What Are We Afraid Of?" on the NonProfit Times website.

Facebook causes contest drawing to a close

Stephanie Strom proves once again she really does have her finger on the pulse of the fundraising world by putting out a story in the New York Times on America’s Giving Challenge and the contest being run on Facebook's Causes application.

Strom points out that smaller charities are kicking larger charities butts.

Love Without Boundaries, which raised just $1.2 million in 2006, has attracted the most donors in 10 different 24-hour periods, winning $1,000 each time.

Compare that to Amnesty International:

Amnesty established a presence on Facebook in May and has raised about $15,000 from 200,000 Facebook members. They were the first people Amnesty contacted when it decided to participate in America’s Giving Challenge, and they were asked to work to get five friends to donate at least $10. If they succeeded, they would get a copy of the CD “Instant Karma.” But no one has claimed the prize yet, and Amnesty had garnered just $540 by Wednesday afternoon.

It's an interesting article... but maybe an even more interesting question - are smaller organizations really better positioned to raise money in these forums or are the larger organizations simply making rational decisions to focus their efforts on bigger revenue goals than a $50,000 popularity contest?

A big blog called "a small change"

Congratulations to Jason Dick for cultivating an excellent conversation about how small nonprofits can successful implement online fundraising programs. Check out A Small Change for a multi-part interview with folks from: PaySimple, Firstgiving, DonorPerfect Fundraising Software, GiveStream, Click and Pledge, and EchoDonations.

Obama's win drives fundraising spike

Matthew Mosk and Jose Antonio Vargas at the Washington Post had an interesting article last night on the unbelievable fundraising spike that followed Obama's win in South Carolina.

A source inside the Obama campaign says the candidate's web site has seen one of its best hours tonight, raising $525,000 in one hour. A senior aide inside the Obama campaign said the candidate's site saw its "highest peak" tonight in both online donations and traffic, "bigger than after Iowa, bigger than after New Hampshire."

By my math, that comes out to $8,750 a minute.

LA Times profiles Ron Paul fundraiser

Trevor Lyman is a 37-year-old musician and Internet entrepreneur who didn't finish college.

He was running a website called musicsubmit.com that enables artists to bypass major record labels and market their songs. He was a political novice who never bothered to vote in the past.

However, when the new Democratic majority in Congress didn't pull the troops out of Iraq, Lyman was drawn to Paul because of his promise to end the war immediately.

Despite the fact that he has never met Ron Paul, he was profiled by Dan Morain at the Los Angeles Times as "the man behind Paul's fundraising curtain" who helped the Republican candidate raise millions in online donations.

Much has been written about Ron Paul's surprising fundraising success... and given the early results from his Tea Party event on Sunday, plenty more attention will be directed toward the maverick's campaign.

I believe viral online fundraising can really work for all nonprofits... but it's not simply the technology that makes it work, it's a willingness to allow a decentralize structure... and a willing of fundraising staff to understand what motivates people like Lyman.

What if Google made a play at Guidestar

For years, Guidestar has been the accepted source for information on nonprofits. Sure, they make it a little difficult to get a .pdf of 990s from several years back... but if you (or your organization) has a login, it is has always been the "leading source of information."

In fact, recently they even launched a way to donate directly to your favorite nonprofit.

One reader emailed me over the weekend to say that she was searching for information on the American Red Cross and she was surprised to find this page on the Google Finance website. The profile contains a summary, top news stories, top staff listing, a simplified balance sheet, and a list of similar organizations.

I did a quick search and found several dozen other nonprofits... and I must admit... I never knew these pages existed.

Meanwhile, I saw Trent Stamp linked to an article by Ben Gose at the Chronicle of Philanthropy which reports:

Mark W. Everson, the former president of the American Red Cross, did not improperly use the charity’s money while having an affair with the head of a Red Cross chapter in Mississippi, the Red Cross has announced.

The review of Mr. Everson’s spending focused on travel costs and expense reports, according to Carrie Martin, a Red Cross spokeswoman. It was conducted by the charity’s office of investigations, compliance and ethics, under the direction of the general counsel.

“This was just a matter of due diligence,” Ms Martin said. “We started looking into this as soon as we heard the news. It’s a question that is immediately raised in any kind of situation like this, and the Red Cross has a responsibility to determine that there was no misuse of donor dollars.”

Interesting to note that the Chronicle dedicated not to publish Paige Roberts name.

Brothers get 8 years prison for Katrina donation scam

Two Houston brothers were each sentenced this week to more than eight years in prison for wire fraud and aggravated identify theft in connection with operating a Web site that purported to raise money for the Salvation Army to help Hurricane Katrina victims.

The brothers were convicted in June after a four-day trial. According to the U.S. Attorney's Office, they registered a Web site called www.salvationarmyonline.org on Sept. 3, 2005 - less than a week after the hurricane hit the gulf coast.

More than 250 people donated over $48,000 before the corresponding PayPal accounts were frozen because of reports of fraud, according to the prosecution.

U.S. District Judge David Hittner sentenced Steven Stephens, 24, to 63 months each on six convictions of wire fraud, prosecutors said Wednesday. U. S. Attorney Don. DeGabrielle told the Houston Chronicle that Hittner sentenced Bartholomew Stephens, 27, to concurrent 57-month prison terms on each of his six wire fraud convictions.

Blackbaud CFO exercises option and sells $1 million of company stock

In a Form 4 filed with the SEC last Friday, Timothy V. Williams (chief financial officer and senior vice president of Blackbaud Inc) reported he exercised options for 40,000 shares Wednesday for $4.80 apiece and then sold all of them the same day for $28.02 to $28.31 apiece.

Ironically, while Williams was cashing in, Blackbaud Chief Executive Marc Chardon gave an extensive interview which appeared in Investor's Business Daily and CNN Money this week.

The company started in 1981 as an early accounting program for educators. Today, Blackbaud has 19,000 customers. They include the National Baseball Hall of Fame, the Chesapeake Bay Foundation, the Make-A-Wish Foundation of Michigan, and the Catholic Diocese of Dallas.

Blackbaud's year-over-year sales growth has risen each of the last three quarters, from 15% to 27%, 32% and 36%. Analysts expect 38% growth this quarter.

When asked who else competes in their market, Chardon said this:

Today there are three main kinds of fundraising. In high-touch fundraising, one competitor for us is the BSR part of Sungard Data Systems. Occasionally, the largest organizations might use Siebel (a unit of Oracle ORCL) or Salesforce.com CRM.

The second kind of fundraising is direct marketing, like for the March of Dimes or Easter Seals. Those groups raise smaller funds, but from a huge database of donors. In January we acquired a company named Target Software, which is a leading provider of that software. Our competitors there include service bureaus (database marketing firms) such as Merkle in the U.S.

The third kind of fundraising involves online fundraising from family and friends for events such as walk-a-thons. In this area, our Blackbaud NetCommunity product competes against Convio and Kintera.

Previously, this blog has reported on rumors that Oracle might be interested in buying Blackbaud... however, I have no reason to think there is any specific truth to that rumor.