The first couple of days of a new year generally start off slowly, as people come back to work after the holiday break. That wasn’t the case last month, as commercial firms that work in the nonprofit space merged, bought and partnered in a flurry of activity during the first two weeks of the year.
There were multiple deals announced with millions of dollars spent, some of it venture capital money, although none of those involved in any of the deals would discuss how much cash changed hands.
Participants involved with deals starting off the year included fundraising platforms Bloomerang and Kindful, donation and workplace giving processing firm FrontStream Payments and Salesforce, and direct response and caging firms Moore, Amergent and Washington Intelligence Bureau (WIB).
“2020 as the ‘Year of the Pivot’ created an environment for reconsidering how we’re doing business. It’s not surprising that we’re seeing an uptick in industry M&A’s as a result,” said Shannon McCracken, executive director of the nonprofit trade association The Non-profit Alliance in Washington, D.C. “The real question is whether nonprofits will similarly follow, looking to partners and even competitors to see how they could be more resilient and effective together,” she said.
“There’s a lot of concern about nonprofits that struggled to survive through the past 10 months and might have to shut their doors in 2021,” she said. “Mergers can create long-term sustainability, if nonprofit board leadership doesn’t wait until it’s too late to consider business alternatives to cutting programs and depleting reserves.”
Perhaps the largest deal was cloud-based donor management and fundraising platform Bloomerang acquiring Kindful in Nashville, Tenn. Kindful is known for its third-party application integrations and online fundraising tools.
Leaders at Indianapolis, Ind.-based Bloomerang quickly put to work some of the investment capital that venture investors made back in September. JMI Equity (JMI), a growth equity firm focused on investing in software companies, took an equity stake in Bloomerang. Larry Contrella, David Greenberg and Vinny Prajka of JMI joined Bloomerang founders Jay Love and Ross Hendrickson on Bloomerang’s board of directors.
Hendrickson, Bloomerang’s chief executive officer, said that at least for the “short term” that the Kindful brand will remain intact. Kindful Founder and CEO Jeremy L. Bolls will become Bloomerang’s chief payments officer. The combined company will have 200 employees, roughly 70 of whom are from Kindful, according to Hendrickson.
Payment processing seems to have been the key to the deal. Bloomerang uses third-party processors such as Stripe and Authorize.net for receiving donations and other payments. Kindful has a proprietary system that will integrate with the Bloomerang donor management system.
Kindful’s other strengths are in online donation pages, real-time integrations and reporting tools. Bloomerang’s strength is donor management and fundraising processes. Both firms had good years in 2020 with the fourth quarter, driven by #GivingTuesday, being particularly strong, said Hendrickson.
The firms had very few customers in common, said Hendrickson, but both target small to medium-sized organizations, which he described as $500,000 to $10 million in fundraising revenue. “Our target market has been underserved by legacy tech and manual processes. They deserve much more,” he said. The combination of the firms “can make a combined platform that helps nonprofits acquire new donors, increase donor loyalty, and ultimately affect their mission through thoughtful fundraising,” he said.
Also making a play in the donation processing space was FrontStream Payments, its leaders announcing that it integrated its disbursement services with the Salesforce.org Philanthropy Cloud. It is an enhancement of FrontStream’s workplace giving solutions.
Through the agreement, corporations can let their employees donate through options such as credit/debit cards, checks, payroll, etc., without the company having to disburse funds. It’s a singular aggregated payment from a corporation’s employees on a periodic basis, regardless of the payment methods selected by employees for their donations, according to Kevin Gallagher, general manager of FrontStream Payments. FrontStream Payments is a division of Reston, Va.-based fundraising software firm FrontStream. The providers of the Panorama digital platform process billions of dollars in business and charitable transactions each year, according to the firm. It is Payment Card Industry (PCI) Level 1-compliant and uses tokenization technology to reduce the risk of data breaches and other types of fraud.
The Salesforce.org Philanthropy Cloud is also used by United Way and its affiliates for workplace giving programs. “We will be providing processing and distribution services to corporations that are not affiliated with the United Way. We will also be providing services to some of the mutual clients of both UniteWay and Front-Stream,”said Gallagher.
The move to the Salesforce.org Philanthropy Cloud was made because most vendors don’t differentiate between the front-end solution and the processing and distribution services and corporations must sign up to use the entire solution, whether they needed it or not, explained Gallagher. “We are now able to offer processing and distribution as a stand-alone service and integrate with Salesforce and other corporations to easily introduce charitable giving within their enterprise platforms,” he said.
Moore, one of the largest firms in the nonprofit space, was busy closing deals, some of which started last year. “The marketing and fundraising landscape has been changed by two significant trends, technology and response to COVID-19,” according to Gretchen Littlefield, CEO of Moore. “The marketing supply chain has become increasingly integrated and automated; data and technology are paving the paths between supply chain steps. This promises real true nonprofit one-on-one marketing where each message can be customized for each donor and potential donor based on what the data show about who they are and what they want,” said Littlefield.
COVID-19 showed the dangers of relying on a single plant, person, or location, according to Littlefield. In March and April, for example, there was significant delay at some (non-Moore) caging facilities that left nonprofits without donations and with misinformation about donor behavior during a pandemic. Location diversity was one of the reasons Moore acquired Washington Intelligence Bureau (WIB), one of the oldest donation processing service providers in the Washington, D.C.
Headquartered in Chantilly, Va., WIB will become part of Aegis Premier Solutions, a Moore company with processing facilities in Kansas, Oklahoma and now Virginia. Aegis Premier Solutions provides integrated fundraising solutions for nonprofit donor management and donation processing.
According to Dun & Bradstreet data, WIB generates $13.75 million in sales.
Moore made the investment in WIB as part of its ongoing plan to expand dona tion processing via overall capacity and location diversification. WIB provides caging, lockbox and escrow services, along with document handling and database management services at its PCI Level 1-compliant facility, Moore officials said.
John Robinson, whose grandmother launched the company in 1959, will remain president of WIB reporting to Littlefield.
“We are committed to expansion through technology and facility diversification. We know WIB is a trusted leader with a track record of excellent performance. Their vision for the future aligned with ours. With them as part of Aegis Premier Solutions, we are in an even better position to handle the success of our customers,” said Littlefield.
Aegis Processing Solutions handles caging and lockbox operations, among other financial procedures. The organization’s processing center is warehoused in a 600,000-square-foot facility featuring state-of-the-art security technology and infrastructure, to ensure client data is always safe and secure. Moore has 3,000 employees in 35 locations across the country.
The acquisition of WIB was Moore’s second to be announced in as many weeks. The company previously announced it had acquired fundraising agency Amergent in Peabody, Mass.
The 40-year-old Amergent is a direct response fundraising firm with an emphasis on food banks, healthcare institutions, faith-based organizations, advocacy and conservation groups. It also has a constituent relationship management tool, Amergent Portfolio™ Software.
Amergent uses proprietary analytics tools to cultivate donor relationships and grow programs with multi-channel fundraising campaigns that include direct mail, email and online giving. The firm recently has expanded research into donor-advised funds (DAF).
Jack Doyle will continue as chief executive officer of Amergent, reporting to Littlefield. Rick Hohman will continue to serve as chief operating officer.
“Amergent has some of the best talent and analytic solutions in the industry,” said Littlefield. “The Amergent analytic tools are the best in the industry in identifying where clients should be making an investment and predicting their return on that investment. Amergent is positioned for accelerated growth as we partner our data solutions with their analytic tools,” she said.
