Infinite OutSource

Fundraising collective to end sharing of services

Originally published in Current, Jan. 13, 2003
By Steve Behrens

Can public broadcasting stations share staff expertise and labors to improve their direct-mail fundraising?

Not this way. Infinite OutSource Inc. (IOS), a Tampa-based collective of stations that was backed by CPB to try the idea, decided last month to shut down in the spring. It started with high hopes and 13 of Florida’s pubcasting stations in 1997 and since then has lost all but two of them as customers. Seven clients from other states are also on the final customer list.

Brian Sickora, a consultant hired as interim president in September to see whether the collective could survive, advised the IOS Board in November that the nonprofit company could not continue without support from a funder. The board controlled by client station executives voted Dec. 2 to shut down after the nine IOS clients finish their March pledge drives.

“The concept makes sense—the idea of consolidating backroom fundraising operations to build economies of scale,” says Sikora, a former executive v.p. of Oregon Public Broadcasting. “What I think happened with IOS is that it’s a model built on volume, and when clients left the organization it could no longer sustain the economic model.”

Losing two of its biggest clients—WEDU in Tampa and WMFE in Orlando—undercut the collective’s economics, Sickora said, though some smaller clients joined as recently as October.

IOS needed the big stations for their volume, according to participants, but the big ones had less need for IOS than smaller stations—they could hire their own database and fundraising expertise. And the little stations with 2,000 or fewer members, which benefited most from IOS expertise and quantity discounts, paid smaller fees and still required nearly as much staff time. For IOS, the “sweet spot” was stations with 10,000 to 25,000 members, Sickora figures, but there weren’t enough of those.

“We oversold the concept and underdelivered the product,” says Stephen Steck, president of WMFE. Though he championed the IOS idea at first, he came to see that Orlando station’s own staff could control its campaigns more closely.

Still, Steck says he’s dismayed that the country’s hundreds of public stations can’t find a way to reduce their redundant fundraising functions and outsource most of them.
While the Orlando station could do without IOS, a smaller station like WFSU in Tallahassee found the service raised its expertise and membership revenues, says General Manager Patrick Keating. His small development staff had neglected direct-mail fundraising and focused on pledge drives. “Infinite OutSource allowed us to get involved in a real, ongoing program, rather than these haphazard when-you-have-a-few-minutes efforts.”

For stations with small development staffs, a great advantage of IOS was that fundraising doesn’t grind to a halt when a staff member takes another job or goes on maternity leave, says Pat Fitzgerald, g.m. of WBGU in Bowling Green, Ohio.

Not nearly enough scale

Though economy of scale was a key selling point for IOS, it didn’t have enough of its own to stay in business. The collective would have done better with 50 or 100 stations, says Chuck Longfield, president of Target Software, co-creator of the PBS Team Approach software that IOS uses. His company, which now serves WMFE and is courting the other IOS clients, has economies of scale in a vastly bigger league, managing the big databases of such nonprofits as the Special Olympics, the American Diabetes Association and UNICEF.

“The bottom line was you could not create a sustainable service at an affordable price with the members who hung in there,” says IOS Chairman Virginia Fox, just retired head of Kentucky ETV. The Kentucky network was the largest of several satisfied customers that hung in.

“It worked real well for us,” says Fox. “We intended to spend more time on [soliciting] major gifts, and that’s what we did.”
The package of services worked best for stations if they reassigned some staff time from membership to other forms of fundraising such as major giving, according to Sickora and Fox.

With CPB backing, consultant Robert Stein offered a package of services to boost their major-giving efforts, but the help came along too late for IOS, Sickora says.

Though IOS did help stations save money on specific services, it’s purpose was never to lower their spending on fundraising, says Doug Weiss, CPB senior v.p. of TV system and station development, who headed the CPB Future Fund when it backed the development of IOS. Many IOS clients would end up spending more on fundraising than they did before joining, Weiss expected, and it certainly would at least seem that way to stations because few are good at tracking their in-house costs.

CPB spent millions on IOS, says Sickora. “They did everything they possibly could, including funding my services as interim c.e.o.”

The corporation asked Sickora whether IOS could be converted into a break-even business within 18 months. “It became clear we couldn’t do it in 18 months,” he told Current. Keeping it going, he estimated, would have required subsidies of $500,000 a year with no guarantee it would succeed.

Gone shopping

The nine IOS client stations are now shopping for other vendors that offer pieces of the IOS service, but observers say none offers the whole package of creative, planning and backroom data-handling and logistical services. Companies such as Target Software in Cambridge, Mass., and Scout Information Systems in Eagan, Minn., offer some of the data services without the strategy and copywriting.

Public radio’s Development Exchange Inc. (DEI), meanwhile, is planning to work with consultant Catherine Harvanko to offer consulting services to a small number of stations along with the Enterprise membership software that DEI offers. At least eight stations are using the software through DEI, including state networks in Minnesota, Colorado and Vermont.

In the late 1990s, DEI was making plans for a radio version of Infinite OutSource, also with CPB aid, initially called Membershop. But the economics didn’t look right, says DEI President Doug Eichten, and the group instead chose to offer online access to the Access International’s Enterprise software. Access International, like Target and Scout, manages databases for clients while letting them enter data online.

When DEI looked at Infinite OutSource as a model, one of Eichten’s biggest worries was that IOS client stations controlled its board of directors. That set up a conflict between the interests of individual customers and of IOS, Eichten says.

A consultant who helped set up IOS, Dale Emerson of Tampa-based Transformation Consulting Group, agrees that the boards of such service organizations should not be dominated by customers.

If the objective is best-practices fundaising at every station, it’s difficult to achieve it by collective action, Eichten says, but impossible if every station must do it on its own.

The basic principles of IOS were right for public broadcasting, he says. “We need another round of taking a look at how that could happen.”