Nonprofits and philanthropy are a topic of conversation lately. This week it was announced that Mark Zuckerberg is America’s Top Philanthropist in 2013, with $970 million in donations last year.
Unfortunately for most nonprofits, though, it can be hard to recruit donors, and even harder to keep them.
That’s where Indiana startup Bloomerang comes in. They help nonprofits retain donors, which saves money that can be used to actually fulfill the mission.
Check out our Q&A with Bloomerang below:
What is your startup called?
Who are the founders, and what are their backgrounds?
Our Co-Founder & CEO is Jay Love, a 30-year veteran in the technology sector and a legend in the nonprofit sector. He created eTapestry in the 1990s, the first ever cloud-based donor management product, which was acquired by Blackbaud in 2007.
The three remaining co-founders were lead product managers and engineers at eTapestry, so they brought a unique perspective on user experience and functionality to Bloomerang.
What’s the story behind your idea?
Jay Love was attending sitting in the audience at a nonprofit conference keynote luncheon. The speaker was Dr. Adrian Sargeant, the Robert F. Hartsook Professor of Fundraising at the Lilly Family School of Philanthropy at Indiana University and one of the foremost exerts on donor loyalty in the world.
Following the presentation, Jay asked Adrian out for lunch. During their discussion, he asked Adrian whether he thought all of his research on donor retention was making a difference in the nonprofit world. Adrian paused before finally answering “No, I don’t believe it is.” That’s when Jay knew that his next nonprofit technology venture needed to have a focus on retention and loyalty.
Where are you based?
What’s the startup scene like where you are based?
Indianapolis has always been supportive of startups. Monthly Verge meetups attract hundreds of startup enthusiasts, who now have homes to call their own at Developer Town. We have The Speak Easy, one of the premiere co-working spots in the state, and TechPoint, an organization dedicated to economic development and advocacy. ExactTarget, Compendium and Aprimo, three of the most recent tech success stories, got their start in Indianapolis, while a recent Startup Weekend Indianapolis winner went on to place 2nd in the Global Startup Battle.
What problem do you solve?
In 2013, the Fundraising Effectiveness Project released the findings from their yearly study on year-to-year fundraising results. They found that nonprofits, on average, only retain 39% of donors. In other words, six out of every ten donors who make a gift in year one do not make a gift in year two. Because the cost of acquiring those donations is typically greater than the donation amount itself, nonprofits with low retention rates find themselves on a gift acquisition treadmill with ever-diminishing returns.
Further exacerbating this problem are the technology options currently available to nonprofits. The three leading donor management applications on the market facilitate and encourage a culture of acquisition, rather than retention.
Because our software is focused on retaining your current donors, rather than acquiring new ones, our customers are able to increase their donor retention percentages and bring in more revenue annually.
When you combine a lack of donor retention insights, high subscription costs and feature homogeneity, many nonprofits feel trapped by their current providers and unable to unlock the true potential within their databases. We felt the time was right for a new entry to the marketplace, and so far the response has been overwhelmingly positive.
What are some of the milestones your startup has already reached?
In January, 2014 we signed our 250th customer and hired our 19th employee. Our revenue growth rate in 2013 was over 5,000% of 2012 ($6,700 to $395,232.40).
What are your next milestones?
We expect to have 34 employees and 500 customers by the end of 2014.
Where can people find out more? Any social media links you want to share?