Helping Nonprofits Find Hidden Gold
By Bridget Finn

(Business 2.0) – Software company Blackbaud is the matchmaker of the nonprofit world. With a suite of data-mining software and services called Blackbaud Analytics, the for-profit firm helps organizations in need of cash find the donors most willing to cough it up. Its sophisticated statistical model sifts through financial data--everything from donors' stock filings to their charitable and political contributions--and predicts who is likely to give more. "There's hidden gold in every database," says Charlie Cumbaa, VP for products and services at Blackbaud, based in Charleston, S.C.

It's no surprise that nonprofits are ripe for technology upgrades. According to a 2003 McKinsey report, nonprofit groups across the United States lose an estimated $100 billion a year because of operational inefficiencies, and as much as $1 of every $5 earned goes back into raising money. Blackbaud was founded in 1981 to solve that kind of problem, and since then the company has signed on nearly 13,000 clients, including the American Red Cross, Mayo Foundation, United Way of America, and major universities such as Brown and Notre Dame. More important, its customers keep coming back: Blackbaud reports a 94 percent client renewal rate.

Last year Covenant House homeless youth shelter in Vancouver, British Columbia, used Blackbaud Analytics to comb through its 40,000-member database and produce a list of 5,000 donors apt to contribute the biggest bucks. "Blackbaud helped us to see where we should focus our time," says Covenant development director Janice Boyle. For example, the analysis suggested that one retired single woman whose last gift was just $50 was likely to donate more if given extra attention. Boyle corralled her at a dinner for Covenant House's top donors, and the woman upped her contribution to $5,000 on the spot. Thanks largely to Blackbaud, Boyle ended up raising $900,000--nearly double her initial goal.

The software has been lucrative for the software maker too. It launched Blackbaud Analytics four years ago to supplement an existing customer-relationship management product called the Raiser's Edge, which helps nonprofits track donor profiles and manage finances. Since then Blackbaud has recorded three years of double-digit growth, and in 2004 its annual revenues hit $139 million, an 18 percent increase from the year before. Playing matchmaker, it turns out, is a big moneymaker.