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Donate Now!Talkin' Blackbaud Blues
I’ve been following the online discourse (e.g. NTEN-DISCUSS, Information Systems Forum, Progressive Exchange and Nonprofit SalesForce) around Blackbaud’s announced acquisition of Convio.
As some express optimism and positive spin about that merger, I feel the need to speak up on behalf of the organizations and activists we serve. Please pardon me if I sound a tad strident, these thoughts have been years in the making.
Aspiration exists to help nonprofits gain access to the software tools they need to meet the mission and magnify their positive impact. We are passionate about free and open solutions that give social justice organizations greater control of their long-term technology destiny. Anyone who follows nonprofit software understands how hard it is for 501c3’s to acquire and maintain affordable, friendly tools to manage fundraising and constituent relationships.
I’ve watched with concern as Blackbaud and Convio have assimilated competitors, including GetActive, eTapestry and the karmically-challenged Kintera. This latest development continues an unhealthy pattern of market consolidation.
Blackbaud makes tens of millions of dollars in annual profits by charging nonprofits usurious rates for mission-critical software.
Their sales tactics and licensing terms are among the most aggressive and ruthless I have seen, even in my hardest-core Silicon Valley days.
And their executives receive multi-million-dollar cash and equity compensation packages.
I understand the counter-argument is that their tools help raise funds and manage information to achieve impact, and those tools are indeed powerful. Not to mention “free-market” capitalism is good for yadda yadda yadda.
But I don’t buy any of that as a legitimate rationalization for greed.
For-profits should not thrive at the expense of nonprofits. People should not get rich selling products and services to charities, nor by selling the vehicles that deliver the same. Some might argue such business success manifests an American Dream, but from where we stand it is closer to a nonprofit nightmare. And one that is not done unfolding before our eyes.
Blackbaud’s profits and executive compensation represent donated and granted monies not put toward nonprofit mission and positive social change.
A talking point in the analyst call for the Convio acquisition focused on how soon Blackbaud would be a $500M company.
Is that what we want our nonprofit software vendors focused on? And are they going to achieve that goal by providing more affordable tools in a less competitive market? I think not.
Loss of consumer choice is never a good thing. Loss of consumer choice that favors Blackbaud truly scares me. We don’t need any more monopolies.
Here’s to diversity, freedom and choice in nonprofit software markets.
Here’s to affordable, open, integratable tools that empower orgs, users, and movements, not that enrich vendors, executives and investors.
Let us not resign ourselves to anything less.


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Aquisition Blues, Does it mean blue skies though?
Ok, so a different spin than some of the comments. I remember when GetActive first showed up at the NTC conference. I remember when Convio & GetActive were the two biggest competitors that my company had to deal with. They had millions to spend on marketing and we had maybe $10,000. Then something strange started to happen. Then Kintera shows up. Not a new company, but they make a big slash in the nonprofit sector. Great, more competition. People thing that bigger must be better, even though on the Nonprofit Technology Report we kicked their ass in usability and ease of use.
Then even odder things happen. Convio acquires GetActive and almost as it if planned Blackbaud eats Kintera. So isn’t it the next logical step that Blackbaud consumes Convio?
What I don’t understand is why folks continue to use inferior products and pay through the nose for them? Blackbaud is huge, they have the support and the conference and the staff but the product is the problem.
I saw in one of the posts here that someone said maybe Blackbaud hopes that acquiring Convio will give them a new or better platform but the amount of people unhappy or complaining about Convio are equal, though I can’t say that I have seen as many tweets hating on Convio as Blackbaud. But… I do remember back when Convio got slammed for saying they would only support organizations who missions did “no wrong” and well that did not turn out so well so policy change in lieu of money.
Isn’t that what this is all about? Antharia is celebrating 19 years in business this May but according to an Antharian (what we call a supporter) he feels we don’t do as well as our competitors as we just don’t market cut throat and we are not in your face. I guess with the economic downturn I have some choices to make. Get in people’s faces and make them know that the FortyFourFish Suite has and does the same thing as the other products on the market, and better… or I can go quietly to the wind.
I am a bit nervous about this acquisition as a business owner and leader in the sector. I see so many people here touting open source and CivicCRM but these solutions also have costs, they just may not always be so clear.
Love your show babe, see you all at #12ntc. Jordan
NTEN Conversation
Hey Gunner-
Wanted to thank you again for participating on the NTEN Community Call about the acquisition yesterday; always great to have your voice in the conversation.
If anyone is interested in the recording, you can access it for free at: http://www.nten.org/events/webinar/2012/01/25/community-call-your-perspectives-on-the-blackbaud-and-convio-acquisition-announcement
Thanks again!
When you're falling into a hole, grab the biggest thing you can
Great post and ultimately I see this as a massive positive for the sector. As has been pointed out change is constant and the speed of it now in the technology world is unprecedented.
I see this as a desperate move when looking at the world ahead the execs at Blackbaud can’t see a future. Just like RIM, the tectonic plates are shifting in ways that Blackbaud have no response to.
Having spent a fortune on developing a platform which is likely to be defunct soon enough, how do you make the move into the new world? They’re mistaken in thinking Convio represent that, their toolset does not represent the new wave of technologies that are cropping up now. Just like the iPad wins partly because it has no technology baggage, so will the next generation of tools for organisations.
I’m talking my own book for sure but I believe in it passionately. Our friends at Blackbaud came knocking on our door last year but I’d watched what they had done to the likes of eTapestry and expected it to happen.
In an open market up against quality platforms priced fairly I don’t think they stand a chance over the long run - people really don’t want the hard sell in this sector but they’ve never had an alternative to go to. That’s all changing and I can see the next few years being a downslope for them and many other older-style companies that aren’t used to playing in an open, honest playground.
My thoughts after the event were up on http://appiboss.wordpress.com
Amen!
As a former Director of Blackbaud I had an inside view of the very ugly side of their corporate greed and draconian approach to employees. By far one of the greediest and ugliest places I’ve ever worked and they do it with a smile to the public and an iron hammer in the board room. I have no love for their true character. Make no mistake, they care not for anything other than lining the pockets of the executives. I have first-hand knowledge of that. I pity the Convio employees… there will be massive layoffs.
Lots of Smoke
Yes, transition is hard. But all of us reading this are likely technology buffs, and change is in the DNA. How long can we expect a current product to last?
The best we can do is learn how to surf.
If my implementation of platform XYZ is clean, and if my procedures and business rules are well defined, the day I need to say goodbye to one platform and hello to another will be bearable.
The question is: does your organization understand this? Is your compensation structured to reward it?
Thank You
Thanks for your stark analysis. I’m glad someone has had the conviction to state what some of us are feeling. While I don’t agree with each point, your overarching message is in line with my feelings.
About 1 year ago I led a search for a new CRM solution to replace our antiquated inhouse solution. For many reasons I selected ROI Solutions. Today I’m even more grateful that our thoughtful analysis led us to ROI.
Thanks again.
As a former Kinteran...
Thanks for recognizing the “karmically-challenged” Kintera! Having gone through (painful) acquisitions while at the Big K, and having resigned shortly after the BB acquisition of Kintera, I feel for all of the nonprofits who agonized and spent time (and money) on deciding between B and C, who now will have to wait to see what shakes out. If history is any predictor, the “integration” of the two companies will take a LONG time, if any integration happens (and if the deal really does go through). I also feel for the many well-intentioned professionals - the ones who work where they work because they actually do care to do something good with their skills - who will also go through the painful process of waiting to see what shakes out for them. Again, if history and experience is any predictor, this will take a SHORT time for some types of personnel and a longer time for others. This is ultimately a business transaction, and will be treated as such to preserve/enhance shareholder value.
Fortunately, there are numerous alternatives to both B and C - cheaper, better, faster, IMHO. Full disclaimer: my husband is on the board of Affinaquest, an affordable donor-management system built on Salesforce. We live in an app world now, and the more nonprofits adopt app-buying habits, the less and less choices B or C actually matter (soon to be just choice B in that regard).
Thanks for your post! Great insight! And you are absolutely correct about the sales tactics and licensing terms.
Blackbaud Acquisition
Allen, I appreciate the post and I appreciate you reading mine!
I agree with your passion for mission. I also agree with your point about the power of choice, although I think there’s actually more choice than ever before. I disagree with most of your other points.
Consolidation. I disagree consolidation is necessarily a bad thing. It can be a bad thing. It can be a good thing. In and of itself, it is predicts little. It strikes me that there’s a lot of hand-wringing about Blackbaud getting larger, which is odd to me because this certainly isn’t a new development. It is a strategy they’ve pursued for years. Further, it is a strategy that many nonprofits themselves are currently pursuing. Consolidation in an of itself doesn’t mean anything positive or negative.
Scale. I also disagree that scale is a bad thing. In fact, in our sector (and I think, every sector), scale is a significant positive force. The greater the customer base, the more useful the tool — and the more powerful the voice of the customer. There are countless examples of this, but in the nonprofit sector I’d point to the success of Network for Good as one example. Scale also provides opportunities for smaller players to come in and serve disenchanted customers.
Profit. You lost me here. Putting aside the fact that the distinction between the nonprofit and for-profit sectors continues to blur, which I’m guessing is also a concerning trend to you, I don’t understand the argument about greed. I’ve heard this argument picking up steam over the last day, and I can’t tell if people are annoyed that Blackbaud has the potential to make more money, or just that Blackbaud is going to make more money than they themselves are going to make. I make money, you make money — right? You deserve to; from looking at your site, my guess is that you work hard to earn it. So is the problem making money, or is the problem that Blackbaud makes the “wrong” amount? Who decides what the “right” amount is? I guess I don’t really see the relevance. It sounds like sour grapes to me. If their profit model is concerning, there are lots of other choices.
I’d argue that Blackbaud has grown large not through usury or manipulation, but because they’ve made a product that nonprofits have wanted and purchased. There are COUNTLESS low and no-cost alternatives — as Holly Ross pointed out, more than ever before, actually. As I wrote in my post, I think this acquisition will actually open up space (mental space as well as market space) for many of the smaller companies and open source tools to gain traction.
The world keeps changing, and the space keeps changing. I am completely certain that we haven’t thought of all the implications of this change. I have a feeling that it will be good for Blackbaud and good for the space — although perhaps not necessarily in the same way. I am very sure that it will be extremely good news for the many like you who are trying to advocate for alternatives!
Best wishes and thanks again for reading and commenting.
Allen, Thanks for your post!
Allen, Thanks for your post! And Jeff, thanks for yours as you give me a foil against which to focus my points.
Consolidation. I disagree consolidation is necessarily a bad thing.
When the consolidation results in fewer choices and stronger lock-in to the non-profit client, then it can be a bad thing, indeed. In my experience helping several clients move from Blackbaud/Convio/Kintera to an open source solution (Drupal and CiviCRM) I have learned that the two main reasons for leaving the closed-source solution were 1) high cost and 2) lack of flexibility. Unfortunately, I know of several other potential clients that would also love to make the jump to open source, but have not because it’s not a cheap, off-the-shelf migration. They don’t call it ‘lock-in’ for nothing.
Scale. … The greater the customer base, the more useful the tool…
This is exactly why more non-profits should help fund free and open source solutions like Drupal, Joomla and CiviCRM because the dollars will go not only to help them but also to help others in the activist ecosystem.
Profit. You lost me here.
Not me! I totally agree that I’d like to see more non-profit dollars go to the activism they are promoting and not to closed systems that exist primarily to make money and only secondarily (if that!) to help the causes of their clients.
I’d argue that Blackbaud has grown large not through usury or manipulation, but because they’ve made a product that nonprofits have wanted and purchased.
It helps that Blackbaud has a marketing budget that dwarfs the entire operating budget of such orgs as CiviCRM. When a new non-profit starts out looking for a web-based constituent/donation management system, it’s likely they don’t even know about orgs like CiviCRM. And with CiviCRM they then also have to find a development team to build what they need. Blackbaud and their ilk will give it all to them with low startup costs. Then as the org grows, they will get charged more and more for new features (or told that such features can’t be had). This is how lock-in happens.
There are COUNTLESS low and no-cost alternatives
Yes, and that is part of the problem. When you’re a struggling startup, it takes a lot of guts to choose a particular team to be in charge of your on-line architecture. There was an old saying back in the day that you never got fired for choosing IBM. Then IBM became Microsoft. For non-profits, it’s Blackbaud. It’s a difficult cycle to break, but break it we must, as the more dollars that get litterally thrown away to support these megacorps could instead be used to 1) support free and open source solutions and 2) support the very goals of each non-profit.
I am very sure that it will be extremely good news for the many like you who are trying to advocate for alternatives!
I’d love it if this were as true as it should be, but as mentioned above, Blackbaud’s ginormous marketing budget will more than compensate for the few like Allen and myself that will try to raise awareness among the non-profits that we serve.
Two days later...
Fen, I’m always happy to be a foil! Great post.
In the last two days I’ve talked with many of our nonprofit clients and a few technology providers. I’m actually more convinced than I was two days ago that for groups who currently use both systems, this is a good development; and for open source and low-cost developers, this is a fantastic development. My sense is there are a lot more than a few people like you and Allen who want alternatives. I’ll continue to say, the consolidation will accelerate the efforts of those looking for — and engineering — alternatives, because the demand for those alternatives is actually going to increase.
Interesting times for sure.
Jeff you sound like a
Jeff you sound like a capitalist apologist.
Blackbaud is, infact, quite greedy, and that in itself is not the essential problem. The issue is that Blackbaud uses the same tactics for nonprofits as they do for the profit sector. Additionally, Blackbaud and Convio are relentless in their sales approach, but disappear once the papers are signed and the checks are delivered.
Lastly, I would behove Blackbaud to offer anyone with a Convio contract to bail out free of charge at this point so they can pursue more open source solutions that fit with their values and budget. To NOT do so, is GREEDY.
Profiteering loves company
Thanks for commenting Jeff. Knowing that your firm profits by pimping Blackbaud and Convio to nonprofits helps to put your soothing spin into context. Here’s to bigger margins and your phat annual bonus! :^P
cheap shot
Gunner: not cool. People make a living, and when you rely on others to pay the freight you support what your clients want. There is no need for flaming.
Huh.
Huh. I figured you were open to an exchange of ideas. I see you only want ideas that mirror your own!
And for the record — my company earns NOTHING, nada, zilch, zip from Blackbaud and Convio. We don’t sell either system.
not-for-profit as food for for-profit
hey
I don’t follow the nfp software sector as closely as you do and I find this post very enlightening. I agree that the profiteering from NFP sector needs to be watched and kept in check but it also highlights the almost perpetual urgency for continued investment and development of open source solutions. Without open source solutions NFPs are always going to be vulnerable to risks like this.
Calling for ‘good will’ from the FP giants is one approach but also it might be time for NFPs to understand their position and roll out some cash on mass to put into dev of the tools they need. Costly now but it would lessen their financial burden and risk down the road…
adam
tools for non profits, by non profits
Adam, a perfect example of nonprofit organizations funding and iteratively working on tools that satisfy their needs is CiviCRM. It is a robust, open source (AGPL) constituent relationship management system with contribution processing, event management, and mass email.
I chimed in on this issue over on our blog http://civicactions.com/blog/2012/jan/19/freeandopensourcealternativestoproprietarysaasofferings
CiviCRM and Drupal are really strong open source products that have evolved with lots of input from nonprofit organizations using them.