Taking Stock: There's Profit In Nonprofit Groups - InformationWeek

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IoT
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Software // Enterprise Applications
Commentary
6/6/2003
03:35 PM
William Schaff
William Schaff
Commentary
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Taking Stock: There's Profit In Nonprofit Groups

GetActive lets the tech-illiterate develop fund-raising efforts.

Reading the news lately has been pretty depressing. The economy is struggling, the dollar is declining, and IT spending remains bleak. World peace would be nice, but I'm not going to hold my breath. Maybe I can settle for trying to improve the world I live in. If this sounds like you, find out more about GetActive Software Inc., a Web-based relationship-management service for membership organizations, with a strong emphasis on large nonprofit groups such as the ACLU, AFL-CIO, American Lung Association, Environmental Defense, and PBS.

The critical issues for most nonprofits are to get their message across to interested parties, have effective advocacy, and raise enough funding to maintain and expand programs. Most of the larger nonprofits have a federated business model with a large national organization and many local chapters. Many local chapters don't have the resources to maintain large enterprise software applications. Little wonder that the market for online member-relationship management software was only about $100 million in 2001. According to GetActive, it should increase to more than $1 billion by 2005. Even if you cut that growth projection in half, that's still a fivefold increase in four years.

Web-based application GetActive Suite 3.7 is easy to use. The app lets even the technology-illiterate readily develop advocacy and fund-raising campaigns, manage member lists, and compile reports. Though competition exists, conventional customer-relationship applications don't readily fit into the nonprofit membership framework. For example, GetActive Suite has federal and state legislative databases that support E-mail campaigns for policy change. Other uses include integrating advocacy and messaging campaigns to help launch fund-raising drives. The basic modules are specifically set up for nonprofits. The company's biggest competition comes from custom Web-based development shops, but custom shops aren't the answer for low development or maintenance costs.

GetActive has 170 clients and uses an ASP business model. Its primary offerings are Web-based services for coordinating online member communications, advocacy, and fund-raising. It also works with partners that can help with marketing and content development. Initial setup fees can range from $5,000 for small organizations to $50,000 for larger ones. Monthly service fees range from $1,000 to $10,000 or more. Larger organizations can negotiate fees for satellite offices.

The company was spun out of the IT group at Environmental Defense in the spring of 2000. The fact that it survived the tech-stock meltdown shows its resilience. It helped that GetActive received a $1 million contract from Environmental Defense to start. As part of that initial contract, GetActive gave up less than 20% of the total equity in the company. GetActive recently raised another $1 million in a second round of financing. The company generated more than $2 million in revenue in 2002 and reached profitability. The company projects it will be profitable this year as well. GetActive has 30 employees, all with equity interest. The largest shareholders remain CEO Sheeraz Haji and chief technology officer Bill Pease.

William Schaff is chief investment officer at Bay Isle Financial LLC, which manages the InformationWeek 100 Stock Index. Reach him at [email protected]. Bay Isle has no affiliation with nor does it receive compensation from GetActive or Environmental Defense. Bay Isle's current client portfolio does not hold GetActive- or Environmental Defense-issued securities.


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