Blackbaud: Nonprofit Fundraising Out of the Box

 
 
By Baselinemag  |  Posted 2005-12-06
 
 
 

Unlike its customers, Blackbaud is unabashedly out to make money. The company boosted net income 60% in the first nine months of 2005 by peddling financial management software to nonprofit organizations, including churches and other faith-oriented groups.

Blackbaud has two core applications: The Raiser's Edge fund-raising system, which tracks data such as donor information and pledge amounts, and The Financial Edge accounting package. The company takes a cookie-cutter approach, tweaking those applications for different nonprofit sectors, including schools, hospitals, museums and churches. For example, alumni associations can opt for a reunion-management add-on.

Key to Blackbaud's success, say its customers, is that it delivers software that works right out of the box. "In the nonprofit world, I don't have the skill set or the budget to build a system like this," says Tim Kobosko, vice president of information services for the U.S. Naval Academy Alumni Association and Foundation.

The 25-year-old company also has a roster of 13,000 customers to back up its claims. "They have a proven record of working with other nonprofits," says Paul Vitanza, director of fund-raising for the Catholic Diocese of Dallas.

The University of North Florida converted from its older fund-raising system to Blackbaud's in six weeks. Rod M. Grabowski, the university's associate vice president for development, says software from a bigger vendor like Oracle would have required extensive customization to provide things Blackbaud includes as pre-built functions. For example, The Raiser's Edge includes a wizard that steps someone through processing a donation.

But sometimes the one-size-fits-most model misses the mark. For example, the World Gospel Mission tracks 2,500 individual fund-raising projects for its 350 missionaries and support staff worldwide, whereas The Raiser's Edge is geared to handle about a dozen large campaigns. "Some of their paradigms don't track to our fund-

raising style," says Tim Rickel, the organization's vice president of communications, though he adds that Blackbaud has been very receptive to customer feedback.

Charlie Cumbaa, Blackbaud's vice president of products and services, acknowledges that the company's top challenge is establishing expertise across diverse nonprofit sectors about such nuances in business processes. Blackbaud, he says, is hiring more sales and services personnel with experience in different nonprofit fields.

"Being an expert in how a given nonprofit operates," Cumbaa notes, "is a different skill than understanding the internal workings of our software."

Fund-Raising Software

Blackbaud
2000 Daniel Island Drive
Charleston, SC 29492
(843) 216-6200
www.blackbaud.com

TICKER: BLKB (NASDAQ)

EMPLOYEES: 950

Marc Chardon
President & CEO
Hired from Microsoft in November to replace retiring CEO Bob Sywolski. He joined Microsoft in 1998 as general manager of its French division.

Charlie Cumbaa
VP, Products & Services
Joined Blackbaud in May 2001. Previously headed sales for InterTech Information Management, a document management software firm.

PRODUCTS
The Raiser's Edge fund-raising management software; The Financial Edge accounting software; The Education Edge software for schools to manage student records; The Information Edge business intelligence application.
Reference Checks

U.S. Naval Academy Alumni Association and Foundation
Tim Kobosko
VP, IS
tim.kobosko@usna.com
Project: Alumni group expects to have raised more than $240 million by the end of 2005 using The Raiser's Edge, after a five-year campaign.

Catholic Diocese of Dallas
Paul Vitanza
Dir., Fund-Raising
(214) 528-2240
Project: Catholic diocese tracks donations and manages direct-mail solicitations to 130,000 donors and prospects using The Raiser's Edge.

University of North Florida
Rod M. Grabowski
Associate VP, Development
rgrabows@unf.edu
Project: University in Jacksonville, Fla., converted to The Raiser's Edge in May to manage fund-raising; it used Blackbaud's analytics service to compile financial data on 50,000 alumni and other donors.

Ligonier Ministries
Tim Dick
President & CEO
tdick@ligonier.org
Project: Christian products distributor in Orlando, Fla., which expects to generate $14 million in revenue this year, maintains a 500,000-person mailing list in The Raiser's Edge.

World Gospel Mission
Tim Rickel
VP, Communications
tim.rickel@wgm.org
Project: Missionary organization in Marion, Ind., uses The Raiser's Edge and The Financial Edge to manage contributions from 30,000 active donors and 120,000 prospective ones.

Wheat Ridge Ministries
Beth Chase
Dir., Development
beth@wheatridge.org
Project: Lutheran charity in Itasca, Ill., maintains a 220,000-donor database in The Raiser's Edge; it used Blackbaud to analyze assets of its 5,000 top donors.

Executives listed here are all users of Blackbaud's products. Their willingness to talk has been confirmed by Baseline.

BLACKBAUD OPERATING RESULTS*

2005YTD 2004 2003
Revenue $123.36M $138.75M $118.09M
Gross margin 70.5% 70.8% 66.7%
Operating profit $37.01M $19.16M $5.70M
Net profit/loss $27.11M $12.64M -$478K
Net margin 22.0% 9.1% -0.4%
Earnings per share $0.58 $0.27 -$0.01
R&D expenditure $15.64M $17.88M $15.52M
Sales & marketing $25.09M $27.44M $21.88M
* Fiscal Year Ends Dec. 31; Ytd Reflects First Nine Months

OTHER FINANCIALS**

Total assets $141.64M
Stockholders' equity $63.21M
Cash and equivalents $20.70M
Long-term debt None
Deferred revenue $60.95M
Shares outstanding 45.02M
Market value, 11/25 $714.93M
**as of Sept. 30, 2005, Except as Noted