Network Counts On Collaboration For Growing Good

Monday, August 4, 2008

Bill Strathmann earned his business chops consulting on mergers and acquisitions with BearingPoint. Now, as the chief executive at Network for Good, he's bringing those skills to the nonprofit world.

Based in Bethesda, Network for Good creates online fundraising tools and processes electronic donations for small and mid-sized nonprofit groups. Last week it acquired ePhilanthropy, a nonprofit based in Ellicott City that teaches online marketing and ethics to the same sort of small groups. It's Network for Good's fourth acquisition since 2004. No money is changing hands in the deal, the companies said.

The mergers are part of a strategy to expand Network for Good's reach without draining money from other parts of the nonprofit world, Strathmann said. He said ePhilanthropy's focus on fundraising ethics would complement Network for Good's education programs, and its 20,000 nonprofit contacts would expand Network for Good's reach.

"Nonprofits typically lag behind the for-profit sector," when it comes to business strategies, Strathmann said. "There are 120 new nonprofits created every day, and there are very few mergers."

Network for Good generates its own revenue in lieu of grants and tries to use the tools of corporate management. For a fee, it creates "donate now" buttons for nonprofit groups' Web sites and processes donation transactions. This year it's on pace to gather and distribute $75 million. The company also teaches clients Internet fundraising tactics and has a catalogue of nonprofit groups.

"A lot of small nonprofits I've been with have had trouble getting a functioning Web site going, much less a comprehensive marketing and fundraising strategy," Strathmann said.

Online giving, though growing, still makes up a tiny fraction of the philanthropy world -- 2 to 3 percent, according to a study this year by Keystone, a nonprofit consultant. Until recently it has mostly been the terrain of large charities like the Red Cross.

Organizations like Network for Good and GlobalGiving have been crucial in spurring more small and mid-sized charities onto the Web and bringing in more donors to their Web sites, said Rachel Mosher-Williams, assistant director at the Aspen Institute Nonprofit Sector Research Fund.

"When you have aggregated opportunities, it's kind of like shopping," she said. "Donors respond to being able to browse."

When ePhilanthropy's founder left, the board realized the organization didn't have a solid funding plan and began courting merger partners, said Bob Carter, who just stepped down as chairman of ePhilanthropy.

"It would be good if the nonprofit sector took a good look at it itself and said, 'Gee, shouldn't more organizations combine and collaborate rather than compete,' " Carter said. "Many funders would really like to see that."

-- Jordan Weissmann

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