‘Inc.’: Making Profits From Nonprofit Groups

Largely inspired by the “transformative powers of the Internet,” a growing number of businesses are based on the idea of “making money off of those who give it away,” says Inc. magazine (October).

“The nonprofit community is no longer seen as incidental but as a major line of business,” Jimmie R. Alford, founder of the Alford Group, a fund-raising consulting company, tells the magazine. “The new economy has ‘discovered’ that the nonprofit sector represents more than 6 percent of our gross domestic product.”

The magazine offers short profiles of three companies that are “trying to tap into the vast philanthropic kitty.” The companies are:

• DonorNet, a Denver company founded in February 1999 to help nonprofit groups automate day-to-day business functions such as membership renewals, product sales, and special fund-raising event management. The company predicts that it will be profitable in 12 to 18 months.
• Givenation, a Medford, Mass., company started by Steve Grossman, a philanthropist and entrepreneur, to allow people to give easily online. Givenation started its site in February and projects that it will attract 165,000 donors making an average of 4.5 contributions each in its first year, according to the magazine.
• TAG Executive Services, which Mr. Alford spun off from his consulting company. The spinoff recruits and places nonprofit workers and offers an online bank of resumes for employers and lists of openings for job seekers. The magazine says TAG “opened its doors with six-figure angel funding and 10 clients right off the bat, making it profitable from day one.” Mr. Alford tells the magazine he projects that TAG will be a multimillion-dollar enterprise within three years.

The article is available at http://www.incmagazine.com.