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Unusual Wave Of Changes At Vendors To Nonprofits

The winds of reorganization within fundraising vendors to charities hit near hurricane force between late December and the first two weeks of January. A half-dozen changes, from C-suite transitions, to acquisitions to layoffs, kept the sector gossip buzz humming.

Here’s a quick scorecard:

* TrueSense Marketing acquired the rest of One & All Agency
* Moore bought Merkle Response Management Group from Merkle, Inc.
* Bonterra reduced its workforce by 10%
* Bloomerang introduced a new CEO
* RKD Group also unveiled a new CEO

* Data Axle reorganized its list management division with several layoffs

The flurry was often fueled by reorganizing or jettisoning companies brought together by private equity firms or international firms previously unacquainted with the charitable space in the United States.

For example, Bonterra is the marriage of four brand names in the nonprofit vendor space. Its layoffs came a little more than a month after CEO Erin Mulligan Nelson left the company and was replaced by Mark Layden. Mulligan Nelson had been CEO at Social Solutions and Layden had been head at CyberGrants, two of the four firms. The other two firms are EveryAction and Network For Good.

The acquisitions were funded by several private equity firms, with Apax Partners now in control having bought parts from Insight Partners and Vista Equity Partners.

One & All Agency was created when DAS Group of Companies, a division of international conglomerate Omnicom Group, purchased foundational agencies Grizzard and Russ Reid in 2017 and rebranded them One & All in 2018. The acquisition of One & All brings TrueSense’s headcount at the agency to roughly 300, not counting staff at its 100,000 square-foot printing facility used exclusively for the agency’s work, said Steven Busheépresident of TrueSense, which acquired One & All.

“We did have a relationship in spring (2022). Continuing later in fall there was some discussion as to what they wanted to do in 2023. It was two very separate arrangements,” Busheé said. The earlier arrangement will make the transition “much easier than if we acquired someone we didn’t know anything about. Their people fit in the same structure as our people, immediately forming a quick bond,” said Busheé.

Omnicom still has Changing Our World and ONEHUNDRED Agency in the nonprofit space. Insiders at Omnicom told The NonProfit Times that fundraising profit margins are thinner than at the other marketing agencies and that Omnicom kept One & All on a tight leash. The other companies bill on a retainer-based model, similar to traditional advertising agencies, thus giving Changing Our World and ONEHUNDRED more leeway. A message to the Omnicom nonprofit leader was not returned.

At one point One & All’s clients included more than 70 humane societies and at least 250 rescue missions and food banks. There had been issues at One & All since the merging and rebranding of the Russ Reid and Grizzard agencies. There had been at least three chief executives since 2017 and several senior people left to join competitor agencies. There was also a substantial reduction in force.

Tom Harrison was Russ Reid’s chief executive from September 2001 to August 2013. He joined the firm in September 1986 and retired as chairman in September 2015. “I think we’re all seeing that it’s just much more difficult to successfully manage and grow an agency than it looks,” said Harrison. “Leadership matters. Culture matters. Strategy matters. And given the important causes that agencies represent, the stakes are very high. When dissecting a failure, it’s fascinating how just a few bad decisions can lead to disaster.”

Harrison said that not all private equity money is a challenge. “The venture people who bought RKD Group appear to have done well by allowing the RKD leadership to run the agency,” said Harrison, who consulted on an RKD acquisition a few years ago, but was paid by the agency being acquired not by RKD.

Tim Kersten moved from chief executive officer at RKD Group in Dallas into the chairman’s chair. Chris Pritcher is the new CEO. Pritcher has 15 years of executive nonprofit marketing leadership experience and joined RKD after eight years at Merkle, Inc. BV Investment Partners (BV), a private equity firm, sold its stake in RKD Group this past August to Incline Equity Partners. BV had acquired a majority stake in RKD in 2019.

Meanwhile, Merkle, Inc., sold its Merkle Response Management Group to fundraising, technology and branding firm Moore, headquartered in the Washington, D.C. suburb of Lanham, Maryland. The deal had been rumored for more than a year. Terms of the deal were not disclosed.

Marketing and fundraising are going through massive change. Technology is changing the way we communicate to all constituents: donors, volunteers, and recipients of aid,” said Gretchen Littlefield, CEO at Moore. “Some investors are better than others. There are PE (private equity) firms that have historically made quick turns on their investments, often taking bigger risks. Those types of firms can hurt an industry like ours if their bets don’t pay off.”

Technology and the need to be more efficient often push the investments. “The nonprofit sector is certainly not immune to what’s happening across the tech and logistics industries. The question we’re all asking is whether this consolidation and workforce right-sizing is what’s needed to improve results for nonprofit clients,” said Shannon McCracken, CEO of The Nonprofit Alliance in Washington, D.C. “In theory, we should see a trifecta: better technology solutions at moderated costs that improve fundraising results.”

According to McCracken, “the three-prong outcome requires a competitive market to drive innovation, price moderation, and investment in talent. We’ll know in a few months how these early calendar year reorganizations are cascading to nonprofit success. In the meantime, there are exceptionally qualified individuals in the job market, perfect new hire candidates to hit the ground running for tech and data marketing companies planning for growth.”

Private equity is involved with Bloomerang, where the last of the Indianapolis acquaintances who launched the fundraising platform stepped down. Ross Hendrickson turned over the CEO’s corner office to Dennis Fois.

Bloomerang raised $33.9 million in four rounds of funding. There was the seed round in August 2012, an angel round of $930,000 in October 2012, and a venture round in September 2020. The firm received $33 million in debt financing in February 2021.

“There’s tremendous demand from nonprofits for easy-to-use technology that frees up time and increases their impact,” David Greenberg, Bloomerang board member and general partner at JMI Equity, said via a statement.” JMI Equity is one of three major investors in Bloomerang along with the founders and CIBC (Canadian Imperial Bank of Commerce ), which handled the debt financing.

“Smaller boutique firms will still thrive if they understand how to harness the power of technology and data specifically. Partnerships between companies will become more important than ever before and especially supply chain choices,” said Littlefield, the Moore CEO. “As automation becomes critical to performance of fundraising, your supply chain partner must have the pipes built to automate all channels and that includes print. Direct mail is now digital.”

Acquisitions often eventually force charities to migrate to the new owner’s platform when the known technology is retired by the new owners. It can also usher in advances that enhance process and result in more money raised. “When I say we are entering the golden age of fundraising, I’m referring to the opportunity to seamlessly communicate in a relevant way, across all channels to donors,” said Littlefield. “Many of us have spent our careers hoping to reach this point. That day has finally arrived.”