What’s next is that Blackbaud can finally blog about the acquisition. The most important in my mind is in regards to Kintera and Raiser’s Edge. Here’s the Q & A:

Will Blackbaud integrate the Kintera CMS (Sphere) to The Raiser’s Edge?
Yes. Blackbaud plans to develop an integration solution from Sphere to The Raiser’s Edge that is the best in the industry. Nonprofits place a high value on having a truly integrated solution combining online and offline interactions in a single database. This is one of our highest priorities now that the acquisition is complete and will be available before the end of the calendar year.

So there you go… no specifics as of yet. Again, the issue of having a roadmap from CRM vendors is raised. Send Steve MacLaughlin some questions. I suggest you send him scans of old Route 66 maps with suggested destinations such as “Open API” and “Open Platform”. And oh yeah, will the custom entities in the Kintera API survive the acquisition?

Let’s go through some recent developments that have occurred over at Kintera, Convio and MPower. It’s been a cascade of announcements all about the new platform strategies of what is rapidly developing into the Blackbaud and Convio camps.

Despite the self-imposed quiet period due to the acquisition of Kintera by Blackbaud, Kintera issued a press release on June 6th touting the ability to add custom entities (database tables) to Kintera and have them automatically exposed through the Kintera API. Yes, you can now develop unique third party apps in Kintera that have nothing to do with fundraising (even though everything has to do with fundraising).

A week later, on June 13th, MPower sends out their press release touting the appearance of MPower on Sourceforge under both a GPL v3 license or a license that allows you to develop code without sharing with the rest of your community (I call this the Ebenezer Scrooge license). That’s right you can download MPower off of Sourceforge the same way you can download many popular open source products.

And then yesterday, on the 17th, Convio issued their own press release, heck their own mini-website about a new CRM they’ve developed for nonprofits using Salesforce.com as the underlying platform.

It’s an impressive series of wins for those of you who signed the Integration Proclamation so many moons ago. Each of these developments are unqualfied wins for openness but as always, not all these wins are equal. In fact, they can be described as an open API, an open platform and open source.

The Open API: Kintera’s custom entities is mighty impressive but it does keep you locked to the Kintera platform. On the other hand, the automatic exposure of new tables through the existing Kintera API means that once you build a custom table in Kintera, other applications can see it through web services. This is a Good Thing. And it has some unusual implications as well… If this new feature set in the Kintera API survives the Blackbaud acquisition, we potentially have a new way to interact with Blackbaud data once Kintera is fully merged into the Blackbaud product set. It’s unknown if this feature will survive but let’s hope that this tiny window into Blackbaud isn’t automatically shut by the powers that be.

The Open Platform: Convio’s new offering on Force.com is another evolutionary step for the nonprofit world. Remember that Force.com is an open platform with great APIs but is NOT open source. Frankly, this level of openness is more than enough for many non-profits. It remains to be seen what exactly the pricing model is for this new product codenamed Aikido. As you know, I’m a big proponent of salesforce.com and its use for nonprofits but I’ve been a little disillusioned by the lack of fundraising logic in salesforce.com itself. If what Convio is offering this Fall erases those problems, I can see salesforce.com really penetrate the nonprofit sector even faster than it already has. This announcement seems to be directed at generating FUD (fear, uncertainty and doubt) with existing Kintera customers trying to decide whether or not to stay with Kintera or to move over to Convio. No pricing information or even a release date has been offered which I interpret as a FUD move on Convio’s part. Nevertheless, this is a welcome development for those of us simply looking for a SaaS platform that has better fundraising logic.

The Open Source: MPower Open is on Sourceforge. Repeat after me — MPower Open is on Sourceforge. And they have it under a GPL v3 license. You can’t ask for more. OK, you’re right, you CAN ask for me. MPower Open is written in .Net which isn’t exactly my cup of tea but for those nonprofits that are heavily standardized on Microsoft products (and most are) this isn’t really a barrier to entry. Hiring good .Net programmers is the barrier. On the other hand, if you’re not looking to modify MPower right now but might in the future, it’s still a viable option. Keep in mind that I haven’t done a thorough review of MPower so I’m just waiting until the hosted version is available for me to look at it. What’s great about MPower being on Sourceforge is that there are statistics available for the project. They’ve already had 86 downloads since they released five days ago. Next up: getting more community members willing to add code to the project.

A reader wrote this to me the other day:

Cannot understand the big deal about MPower. Right now ASI’s iMIS software has fundraising, segmentation, RFM analytics, a data warehouse, and email marketing that is far greater in scope than Convio….They have been doing this a while now so yeah, M Power is a developer’s dream and maybe nice for the resume, but why re-invent the wheel when sophisticated software already is in use?

Indeed, why re-invent the wheel? I think the reader is missing a couple of issues that are a result of looking at fundraising software within the silo of a fundraising department.

Firstly, there should be no more silos. You see, dear readers, there’s a problem when one assumes that fundraising logic only exists between the screen and keyboard of a data entry person caging checks or when someone is looking at a LYBUNT list for their next mail merge. What about your web site? Wouldn’t it be nice to have some fundraising logic there? Or if you want to integrate fundraising logic with your accounting data?

Secondly, you want leverage on your vendor. Openness not only gives you choices. It is about setting up a competitive marketplace where an existing contract coupled with proprietary software does not determine whether or not you stay with a vendor like Blackbaud or Convio. In other words, legalistic and technological strategies have been designed to keep us paying our vendors. That’s THEIR side of the game. We should try to break those bonds whenever possible.

We don’t accept vendor lock-in in many aspects of our daily life and we shouldn’t accept it at the very heart of nonprofit line of business applications, fundraising tools. It’s a fundamental obligation on the part of IT directors to constantly push for openness of architecture in both hardware and software purchases. This doesn’t necessarily mean you stop buying Microsoft. Instead, you help foster a marketplace where Microsoft feels COMPELLED to compete with open source vendors to provide you with the best bang for your buck. Notice the quick number of revisions to Internet Explorer the minute Firefox hit 15% of browser market share. And in the same way, this doesn’t mean you move from iMIS or Blackbaud or Convio tomorrow. Hey, over 70% of computers still use IE to browse the Web. However, it’s clear that the changing marketplace and concerted action by nonprofits have engendered a new environment where there is now more choice than ever before. And our choices shouldn’t be dictated to us by vendors who say that their application can’t do what we want it to do.

Those of you looking for more information regarding the purchase of Kintera by Blackbaud may want to check out the recent EDGAR filing by Blackbaud. It contains FAQs that were sent out to Blackbaud and Kintera employees. Many of these questions are pertinent to nonprofits such as:

A customer is raising issues that are specific to them that are not covered by the generic messaging. Who do I contact for more information?

Should any of your customers raise Kintera-Blackbaud issues that are specific to them, contact a member of the Integration Leadership Team so they can be involved. You should contact the person from your company below based on the product the customer has questions about:

• Sphere – Shaw Drummond (Blackbaud); Rich LaBarbera (Kintera)
• P!N – Chris South (Blackbaud); Ian Gruber (Kintera)
• Fundware – Scott Butler (Blackbaud); Scott Bechler (Kintera)
• Other issues – Bob Hughes (Blackbaud); Rich LaBarbera (Kintera)

UPDATE (6/2/2008): Thanks to EDGAR, we now have access to e-mails sent from Blackbaud and Kintera management to their employees. Check it out!

There’s also a webcast available that was hosted by Marc Chardon and Timothy Williams. The questions were inevitably financially-related but I’ve distilled some of the more technically relevant pieces for those of you looking for more information.

The webcast starts out with a prepared statement from Marc and Timothy. They went on to state that they believed that Kintera Sphere is the most advanced and the best Internet fundraising software in the sector. They went on to say that 2300 nonproifts use Sphere.

They said that the acquisition is intended to accelerate Blackbaud’s move into online fundraising. They will continue to use Blackbaud NetCommunity for solutions requiring tight integration with Raiser’s Edge but KNTA will be for those customers who aren’t looking for Raiser’s Edge integration.

What was interesting to me is that it looks like they bought Kintera primarily for Sphere. Per seat licensing fees are what makes up Kintera Sphere revenue whereas Fundware is associated with renewable maintenance contracts. Fundware has 1700 customers whereas Financial Edge has 4300 customers. Apparently, KNTA made $45 million in 2007 with the majority of it from Sphere. The purchase for Kintera was at 1x annual revenue which makes the purchase pretty close to a fire sale. Apparently, Kintera was still operating at a net operating loss this year and that will drop the purchase price even lower to around $36 million.

Blackbaud wants to improve profitability of Kintera by sharing the costs of building online fundraising and CRM. Also, people were concerned about KNTA’s sustainability and it weighed on decisions to purchase KNTA. BLKB is guessing that with its backing KNTA will have a better reputation in regards to sales.

There was a question and answer period as well. Here are some snippets from the Q&A period with the timelines inserted so that you can follow along in the Web cast.

25:00
eTapestry is donor management more similar to RE than to Sphere or BBNC. They don’t expect to see any integration between eTapestry and Kintera Sphere.

Sphere had very strong online fundraising characteristics and was on .NET platform. Blackbaud believes that makes for much easier integration. I forgot that Kintera was .NET but now that I hear it again I think this acquisition makes a lot more sense for Blackbaud.

Blackbaud will have a roadmap out in next three months and they think that Blackbaud NetCommunity and Sphere will integrate in the years ahead.

28:30
Are KNTA transaction processing fees continuing?
Yes.

You’ve got to listen to this question being asked of Blackbaud management as the analyst asking the question mentions that Blackbaud once thought of Kintera’s transaction fees as “mercenary” which is something that Blackbaud immediately backed away from. I don’t think I’ve ever heard that criticism of Kintera by Blackbaud but it was funny to hear.

30:05
Blackbaud was asked about the previous integrations with Target Analytics and eTapestry. Blackbaud is claiming that the integration between Target and Blackbaud’s Analytics groups has gone well and that they think eTapestry and Kintera integrations will proceed similarly.

41:45
The question is asked as to why did BB stop with Scorpio and think of purchasing Kintera.
They say that 18 months ago stock prices were different. Blackbaud NetCommunity is still not really finished and not yet connected to infinity. As a result, Scorpio (the recent improvements to NetCommunity) wasn’t really wasted if Blackbaud bought Kintera. There would be very little duplication of engineering.

44:45
An analyst asks about Kintera’s restricted cash line item?
Blackbaud responds that restricted cash and donations payable are offsets to one another.

Here’s an interesting item I didn’t know about. I believe this restricted cash line item on Kintera’s quarterly statement is the float that Kintera carries in order to insure that donations are paid. It was $7 million in Kintera’s last quarterly statement. This means that Kintera is earning interest on that $7 million before it gets disbursed to nonprofits on their system. It’s a nice job when you can get it

UPDATE (6/2/2008): Don’t Tell the Donor has posted Gene Austin’s response to the acquisition. It’s a bit strange in that there’s a call from Convio to have Blackbaud open up its API despite the fact that Convio’s own API is problematic at best in its inability to provide multiple records in one call. In fact, if Kintera’s API gets adopted into the Blackbaud codebase there’s a good chance that Blackbaud itself will have the more open API vs. Convio’s. Sometimes, I have to wonder if Convio’s strategists ever bother to check themselves before they wreck themselves. I concur with Don’t Tell the Donor in that it’s highly unlikely that people will believe Convio’s new stance as an advocate for open APIs since they themselves were late to the game in this respect.

Blackbaud, Inc. Announces Acquisition of Kintera

Charleston, S.C. – May 29, 2008 – Blackbaud, Inc. (NASDAQ: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, announced today that it is acquiring Kintera, Inc. (NASDAQ: KNTA), a pioneer and leading provider of a Software as a Service (SaaS) solution to the nonprofit and government sectors. Under the terms of the agreement, Blackbaud will pay an all-cash purchase price of approximately $46.0 million. Blackbaud expects to finance the deal with cash and borrowings from its credit facility.

Kintera’s principal offering is its online Sphere® technology platform, which is used by such leading organizations as American Lung Association, Big Brothers Big Sisters of America, International Fund for Animal Welfare, Lance Armstrong Foundation and Sesame Workshop to manage online fundraising events and in 2007 processed over $400 million in online gifts. The company also offers wealth profiling and screening services as well as an accounting software solution, both similar to offerings of Blackbaud. With approximately 4,000 customers, Kintera is recognized for the proven capabilities of its Sphere® SaaS offering that has allowed nonprofits to effectively grow their base of supporters and expand their online fundraising initiatives. The company reported $44.9 million in total revenue for 2007.

Marc Chardon, Blackbaud’s President and Chief Executive Officer, said, “The acquisition of Kintera is very exciting for us and for the nonprofit industry as a whole. Expanding Blackbaud’s online offering in this way further establishes Blackbaud as the leading solutions partner for nonprofit organizations. The online solutions of the two companies have historically served different segments of the market and this acquisition gives us the ability to broaden our addressable market with proven and rich online product functionality.”

Chardon continued, “Our core capabilities are complementary and we expect to continue to offer a full range of solutions that effectively meet nonprofits’ needs for donor acquisition and cultivation that are intergrated with our suite of CRM solutions, including The Raiser’s Edge®. Kintera’s “Friends Asking Friends®” team fundraising and advocacy solutions are well suited for organizations that use these programs to grow their base of supporters. Similarly, Blackbaud’s NetCommunity™ offering is ideally suited for enriching the online experience of current donors enhancing the value of data that already exists in the CRM system.”

Chardon added, “We are also pleased to offer new options to Kintera’s accounting and wealth data customers. P!N™ has been innovative in coupling traditional wealth screening services with online offerings and we are excited about the potential of combining these offerings with Target Analytics’ current product portfolio. Likewise, Fundware® has long met the fund accounting needs of many nonprofits and we expect to work closely with Kintera and their partners to enhance the range of solutions available to this important set of customers. Combining these solutions with Blackbaud’s current offerings will allow us to continue to grow these important segments of our business.”

Kintera will continue to be led by its current President and Chief Executive Officer, Richard LaBarbera, a high tech industry veteran with more than 30 years experience working with such leading software providers as Sybase, Siemens/Nixdorf, Storage Technology and IBM. Kintera operations will continue to be directed from their existing offices in San Diego.

LaBarbera said, “Joining with Blackbaud gives us a way to leverage our capabilities with those of the industry leader and thus significantly improve the customer’s experience. Importantly, this move also means that nonprofits will be able to choose Kintera solutions confident in the knowledge that they are backed by Blackbaud’s robust corporate infrastructure and that the partner they have selected will be there to serve them for many years into the future. Our focus will now turn exclusively to better meeting the needs of our customers and collaborating with Blackbaud to leverage the investment they are making to better serve the nonprofit sector. We are very excited about the potential to offer more compelling solutions that enhance the donor experience and increase nonprofits’ abilities to raise more money.”

Tim Williams, Blackbaud’s Senior Vice President and Chief Financial Officer, stated, “In addition to the strategic reasons supporting the acquisition of Kintera, we believe the acquisition is attractive from a financial perspective as well. Subscription revenue was already the fastest growing source of revenue at Blackbaud and it was expected to become larger than license revenue at some point in the second half of 2008. With the acquisition of Kintera, this will become a certainty as we will add another significant source of subscription-based revenue from an on-demand service offering. The evolution of Blackbaud’s business model toward new revenue sources with ratable revenue recognition has been a significant and positive development over the past several years, and it complements the very strong cash flow profile of the company.”

Blackbaud’s acquisition of Kintera is structured as an all-cash tender offer for all of the shares of Kintera at a price of $1.12 per share. The company is expected to formally launch the tender sometime next week and close on or around July 2.

Kintera comes a step closer to NASDAQ delisting (from the 5/21/2008 Business Wire):

Kintera® Inc. (NASDAQ:KNTA – News) (the “Company”), today announced that on May 15, 2008 it received a notice from the Nasdaq Stock Market (“Nasdaq”) indicating that it no longer complies with the requirements of Nasdaq Marketplace Rule 4450(a)(3) for continued listing on the Nasdaq Global Market. The rule requires that the company maintain minimum stockholders’ equity of $10,000,000. As reported in the company’s quarterly report on Form 10-Q for the period ended March 31, 2008, the company’s stockholders’ equity was $9,806,000 as of March 31, 2008.

Kintera has until the end of this month to comply with the requirements. You too, can save Kintera from delisting. Just get you and your friends to buy shares! Perhaps we can put this on Causes

Sorry for the late report on this, my RSS feed for Kintera always looks the same (delisting here, losses there) so I can’t always differentiate when the news actually changes. Those of you who follow stocks and such. What happens when a public company delists? Does Kintera end up on the OTC market? I assume the reporting guidelines would be much less robust than the ones they have now…

There had been a lot of speculation concerning the eTapestry API and now we’re finally getting some news. eTapestry’s API will be offered for free next week! That’s pretty exciting news for developers I’m sure. While Blackbaud isn’t offering Raiser’s Edge’s (say that three times fast) API for free yet, the eTapestry API will be free to developers. However, eTapestry’s own API documentation admits the API cannot:

• Allow mass entry of accounts or journal entries – must pass data one at a time.
• Update existing gifts or pledges.
• Delete accounts or journal data.
• Add or modify relationships.
• Query and return large data lists

It’s crippleware, meaning that it’s intentionally underpowered to prevent the wholesale export of your records to another provider. It’s similar in that respect to Convio’s API although Blackbaud is honest about the limitations. Convio doesn’t even bother to mention that.

At this point Kintera’s API is still the best in terms of capabilities but you couldn’t tell that by the most recent filings from Kintera.

And so the story continues with Kintera as their stock asymptotically approaches zero…

On April 2, 2008, Kintera, Inc. (the “Company”) received a notice from the Nasdaq Stock Market (“Nasdaq”) indicating that the Company has failed to comply with Nasdaq Marketplace Rule 4450(a)(5), which requires a minimum $1.00 per share bid price for the Company’s common stock for continued listing on the Nasdaq Global Market, for 30 consecutive business days. Under Nasdaq Marketplace Rule 4450(e)(2), the Company has an initial period of 180 calendar days to regain compliance with this listing requirement. If at any time before September 29, 2008, the minimum bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, Nasdaq will provide the Company with written notification that it has achieved compliance with this rule.

That said, I still think their open API is superior to Convio’s but I don’t see any way they can turn their ship around fast enough without a radical overhaul of their business model.

…Kintera shareholders would have been overjoyed to trade at one-fifth Bear Stearns.

Today, they got there. Current valuations:

Kintera $0.66
Bear Stearns: $3.82

Actually, Jason, it looks like Bear Stearns got bought for $2 a share by JP Morgan last night. So Kintera shareholders are doing even better now — trading at one-THIRD of Bear Stearns stock.

Convio has announced its new open API. They have the documentation up too just like Kintera. It’s very good news so I’m not going to bother too much with what was said yesterday but with the actual experience of trying to participate in the open API programs of Kintera or Convio. I’m going to say it right now — too many bloggers who talk about open APIs are unwilling or unable to research the documentation and I’m one of them. Today, I’m going to address that. I think I’m a little more gun-shy these days about proclaiming openness and here’s why.

I write code. It’s a seemingly minor difference but it’s a difference with a very large distinction. And if you happen to be one of those people who like to write code, you’re going to want to sign up for Kintera or Convio’s open API program.

Guess what? You can’t get in. I tried. Really, I did. I tried to go to open.convio.com and I couldn’t get past the registration wall. Kintera has a registration wall too. There are problems with both Kintera’s and Convio’s developer support philosophies that belie their attempts at openness. You have to buy their software in order to understand the way their systems work. In other words, without a working sample of Kintera and Convio that you can play with in a sandbox, it’s incredibly difficult for a coder to understand the context of the API calls that she is supposed to make. The worst part is that neither Kintera nor Convio will even allow you into their community forums. Now how is your average coder going to learn from or add to the discussion?

Again, this is a lesson in Web 2.0 transparency both for the sector and the vendors who serve it. Control? Let it go. I really mean that. From both a business point of view and from the point of view of how our sector should work to heighten transparency in society at large, there’s no reason to limit the ability of coders to learn about and discuss the API at hand. And the big guys have already done this work, check out the way Google and Amazon distribute their APIs. Those shine as industry-standard examples of how open APIs need to be distributed.

We now have the API documentation but quite a bit of the support infrastructure is still missing. Asking developers to have access to a nonprofit’s copy of Convio5 or Kintera Sphere is clearly a wrongheaded approach. Developers and nonprofits won’t necessarily have such a tight relationship and frankly, with a total installed base of less than a few thousand nonprofits (if that) for both Kintera and Convio, you’d think both companies would want to expand their developer base quickly. The clearest solution would be to create sandboxes of both Convio5 and Kintera Sphere. Reset the data every few hours and let the coders have at it.

At this point, with so little information that I could glean from what’s been given out, I have to give Convio compliments on the choice of REST as their API implementation. It’s easy to use, easy to understand and very easy to build libraries for. On the other hand, Kintera seems to have picked the older horse to run in the API races. I don’t quite understand the usage of SOAP when it’s more difficult to program for and harder to debug.

When I first thought of open APIs for CRMs, I had thought that one of the most basic applications would be the classic progress bar widget for a particular donation appeal to be placed on a nonprofit’s web site. This progress bar widget would be just like the one used on the ChipIn widget.

Convio’s API is weaker than Kintera’s in the sense that it does not allow for pass-through queries to be sent to the Convio data store. Kintera’s API has a method called “query” which looks like it will let you pass SQL or SQL-like queries into the data store. This may allow for aggregate queries of the entire data store. You can basically build custom reporting tools with this method. Also, it doesn’t look Convio’s API has a method for doing more than just retrieving one user’s data at a time. Frankly, this is going to drive developers nuts. At this point, you cannot create simple fundraising mashups with the Convio API as you cannot retrieve that data. It’s simply not allowed as there is no basis for extracting donation data on more than a per single-user basis using Convio’s API. Indeed, Convio’s API looks like you can ONLY retrieve user-related data one user at a time. It’s not even clear if you can extract donation data but there seems to be a provision for a MONEY type in the response to the listuserfields method. There’s also a getuser method that might return specific pledge information but it’s locked away in a Wiki that seems to be inaccessible right now (10/17/2007 12:13 AM).

In other words, you can build a progress bar widget with Kintera’s “query” method but it would be very difficult to do the same thing with Convio’s API. In order to sum up a campaign’s pledge total, you’d have to have as many getuser calls as you have users. This is simply impractical for larger databases that may have thousands of users.

On the basis of utility, Kintera’s API is just simply more powerful than Convio. It’s also a remarkable amount of trust that the company has placed in its users and in its own viability as a company. Clearly, Kintera’s API is so wide open that extracting your entire database as a prelude to the porting of that data to another Kintera competitor is within your grasp. Sorry Kintera users, I let the cat out of the bag! In terms of TRUE openness, Kintera is beating Convio hands-down.

Ok, so we’ve got problems of API openness here. Are they insurmountable? Absolutely not. I expect that both Kintera and Convio will still have to match evolving expectations of what coders mean by open. With the exception of a poor choice on the SOAP interface, Kintera is on the right track. Convio needs to implement a “query” and a “retrievemultiple” method just like Kintera in order to really match a reasonable definition of openness.

Kintera® Inc. (NASDAQ: KNTA) today announced that Kintera Connect™, the company’s open application integration platform, is available for clients and partners to integrate directly with Kintera technology. As a result, best of breed solutions are now available through the Kintera Connect Partner Program, providing organizations with the freedom to select solutions to best meet their unique needs.

Looking at the list of methods and what they call “entities”, it looks like Kintera allows for true read-write access to the Kintera Sphere via the API. I simply don’t have time today to give it a more thorough look but I hope the readers here will fill us in with more details as time goes by.

UPDATE (10/12/2007 3:33 PM EST) Check out more details about the API over at the ForumOne blog.