Business Plan
Version 3.1

For Further Information, Contact:
Ian Hughes, Chief EEO - eCharity.com inc.
196 Trumbull Street, Hartford, CT, 06103

Office (860) 548-1355 
Fax (860) 548-9185 
 E-Mail: Ian.Hughes@echarity.com 
Web Site: http://www.echarity.com

Index
Executive Summary	3
History	4
Concept and Competitive Analysis	4
Funding Requirements	4
Market Overview	5
Business Strategy and Financing	6
Key Components	8
Charities	8
Donors	11
Sponsors and Advertisers	12
Associates	14
Competitive Analysis	15
Keys to Sustaining the Competitive Advantage	16
Operating Plan	17
Architecture	17
Site Development	18
Development Activities	18
Testing and Release Model	19
Quality Assurance	19
Support	19
Corporate Equipment Requirements	20
Management and Key Personnel	21
President and Chief Executive Officer: Ian Hughes	21
Chief Financial Officer: Andrew Sullivan	21
Chief Technical Officer: John Pearce	21
Business Development Officer: Jeremiah Cronin	22
Chief Marketing Officer: Lisa Baldwin	22
Head of Talent: Scott Thibeault	22
The eCharity.com Advisory Board	23
Financials	24
Revenue Streams	24
Costs of Sales	24
Forecast Profit and Loss Account	25
Cash Flow Forecast	26
Funding Phase Requirements	27
Appendix	28
Basic Assumptions	28
Advertising	29
Calls	29
Mail Handling	29
Sponsorship	30
Treasury	30
Labor	30
Technology	30
Marketing Costs	31
Space	31
Staff Costs	31

Executive Summary

Motivated by genuine altruism (as well as a desire to cut their tax bills), Americans donate about $200 billion every year to U.S. charities -- but $60 billion of that amount goes toward the of, Inc.has the answer
eCharity.com marshals the power of the Internet toward a most admirable end: helping charities deploy more of their donations toward the causes they represent, rather than to the expense of raising and collecting the money in the first place. It provides an easy and safe electronic way for people to give money, and for the charities to receive it, at absolutely no cost to the donor or the recipient.  

Profits are generate by the advertisers who buy space on the Web site, money from treasury activity and the sale of value added services to charities and donors The site, by definition will be visited by an affluent sector of the population. This affords advertisers an unmatched opportunity to target their messages to a very attractive market.  In addition, the treasury management function of having billions of dollars flow throw our control every year, creates revenue.

The web site has an established reputation in Europe, this business plan seeks to build on that success in the US market.  This market is 20 times larger than that experienced in Europe.  As a result it has been decided to capitalize on the opportunity by creating a separate business in the US.

In the first four weeks of operation, the company has received expressions of interest from 500 charities.  250 of these have been presented to.  These charities represent $1.2 billion a year in giving.

To develop the model and to build the brand, the company needs a further two round of funding.  The first is for $10m in 2000 and the second is for $12m in 2001. 

History

, has provided the initial start-up funding and management for eCharity.com. Ian Hughes, president and chief executive officer of eCharity.com, was formerly the Group Marketing Director of MM Group, which has been processing charity donations for nearly 25 years. MM currently processes as many as 35,000 transactions a day, via mail, telephone, and Internet, representing more than $300 million per year for charities around the world.  This adds up to a huge amount of credibility, buying power, and experience that virtually no competitor can match. For the past four years, the eCharity model has been tried, tested and trusted in the European market; now, it is being launched in the United States. The Web site is scheduled to go live at the end of May 2000.

Concept and Competitive Analysis

As acceptance of the Internet has grown, so too has its use for a wide range of transaction processing - including charitable donations. It is estimated that about $30 billion will be donated on-line to U.S. charities by 2004, and eCharity.com aims to capture the majority share of this market. 

Furthermore, the company will also offer a number of traditional products - namely, telephone and mail processing -- to help ease the transition between the current method of charitable giving and the way of the future. This combination of Internet, phone and mail services is unique in the market, and will relieve charities of the entire burden of transaction management.

There has traditionally been little advantage to be gained from branding in the charity-services market, because the service supplier is generally invisible. As a result, most suppliers are undifferentiated, and the market is not highly competitive. eCharity.com will change this, by creating a trusted brand for charitable giving based on excellent customer service and its years of experience in this market. 

Funding Requirements

The eCharity.com development plan has been broken into three key phases: recruit charities and launch the Web site; build a donor base; and recruit sponsors.

The cost of resilience creation and marketing will require an investment of $10 million through January 2001. In the year 2001, further development of the service will require an additional $12 million. This final round of funding will secure the business into profitability, which should occur within three years.  Subsequently, the model will be highly cash generative.

An exit strategy of IPO would be the most likely way for investors to maximize returns. It is anticipated that an IPO will allow investors to liquidate (should they wish) during 2002, prior to the major giving season.

Market Overview

The charity market sector is enormous. The American Association of Fund-Raising Council estimates that in 1998, $174.52 billion was given to charity in the United States. (Source: Giving USA 1999/AAFRC Trust for Philanthropy.)

And, it is growing dramatically.  According to the AAFRC, charitable giving has been growing consistently at 10% per year, and is almost certain to break the $200 billion mark in the year 2000.  Of this total, individuals give 77.3%, 9.8% comes from foundations, 7.8% comes from bequests, and 5.1% comes from corporations. 

According to a study done in 1988 at the Social Welfare Research Institute at Boston College, another $41-$136 trillion in wealth will be transferred over the next 55 years. In fact, the authors of this study foresee a “golden age of philanthropy,” based on the following factors:

1) The material resources available for charitable giving are large, and are growing more than was previously understood;
2) People perceive themselves to be more financially secure - and are more secure;
3) Incentives to devote financial resources to charitable purposes increasingly shape the moral sentiments of wealth holders; and
4) There is a new values-based approach to financial planning that encourages wealth holders to increase their charitable giving by guiding them through a planning methodology in which they discern their potential donations; the people and causes for which they care; and the financial, family and philanthropic strategies best suited to implement their objectives.

But more money could be going directly to the cause. Currently, in a traditional charity fund-raising campaign, only 36% of the money raised goes directly to the cause. The rest of the funds are allocated in the following way: charity administration costs, 23%; the method of delivery (mailing costs, etc.), 19%; advertising agency creative fees, 8%; printing and production, 6%; the donation processing bureau, 5%; and credit card costs, 3%. 

Research indicates that many donors question how much of their contribution is actually spent on the good works of the charity.  Although most say a 25% cost of fundraising is understandable and acceptable, they also suspect that the cost is actually closer to 50%.  What’s more, studies show that donors are more likely to give a larger gift if a charity can demonstrate an administrative cost of 40% or less 

(“Fund-Raising Costs: Societal Implications for Philanthropies and 
Their Supporters,” Business and Society, 1988).  This becomes a “virtuous circle.”

The Internet will help. Forrester Research says that by the year 2004, 10% of all transactions (including charity donations) will be conducted on-line. Capitalizing on the Internet’s enormous power to drive down cost, eCharity.com offers a way to make the process of giving more cost-effective for both charities and donors.

Business Strategy and Financing

At the current giving rate, about $30 billion will be donated on-line by 2004. eCharity.com aims to capture the majority share of this market.  In addition, the company will provide a range of traditional products (that is, telephone and mail processing) to help ease the transition between the current method of charitable giving and the way of the future. All the money that is processed by eCharity.com will flow through escrow accounts, where interest will be collected.  This combination of Internet, phone and mail services makes eCharity.com a unique player in the market.

The process of spreading the word about eCharity.com began at the National Society of Fund-Raising Executives conference in New Orleans in March 2000. Since then, nearly 600 charities -- collectively accounting for well over $1.3 billion in donations per year -- indicated a desire to learn more, and to see how they could sign up.  And this group represents only 0.5% of all the non-profit institutions in the U.S.  The Web site will go live at the end of May 2000. 

The immediate goal is to have a large number of charities in place for the fourth quarter 2000 giving season.  To achieve this, funding is needed to finance the systems and marketing development for charities.  Although much of the technology has already been built, the huge anticipated growth demands further development and automation. 

During the peak giving season, a major press campaign will be launched to announce the formation of eCharity.com and to explain how it works.  The cost of resilience creation and marketing will require an investment of $10 million through January 2001.

In the year 2001, further development of the service will require an additional $12 million in funding.  This final round of funding will secure the business into profitability, which should occur within three years.  Subsequently, the model will be highly cash generative.  An exit strategy of IPO would be the most likely way for investors to maximize returns. It is anticipated that an IPO will allow investors to liquidate (should they wish) during 2002, prior to the major giving season.

Key Components

Charities

Why do charities need eCharity.com?

Forrester Research predicts that by 2004, 10% of all money donated to charity will be processed electronically.  However, very few charities have the technology or skills to process these kinds of transactions, nor can they justify the expense of in-sourcing Internet hosting and transaction processing.  

Transaction processing can be time-consuming and complicated.  According to the CEO of one of the top 10 United Way organizations in the United States, “Processing transactions takes up nearly 50% of our discussion at board meetings.  It gets in the way of our core mission of community development.  If you can take that away, you will make it possible for us to focus on that mission.”

eCharity.com eliminates these problems, with a free service by which charities can raise funds over the Internet.  Thanks to the 25 years of experience at the MM Group, the founder of eCharity.com, this new Web site is being launched with the benefit of already knowing what can go wrong with a process - and what can be done to address it. The ability to streamline the workflow leads to dramatic cost reduction.  And, marginal costs for Internet transactions are so low, they can be covered through advertising and sponsorship of the Web site.

With lower administration costs, charities can deploy more of their funds to the causes they represent - which means that more people throughout society will benefit to a greater degree from philanthropy.

What does eCharity.com offer to charities?

eCharity.com provides a full transaction and marketing support service to charities, which helps the charities focus on their own core competency - helping their cause. Services include the following:

Free Internet Giving
•	Charities can take donations over the Internet at no cost to them (transaction costs covered by advertising revenues)
•	 Unique Web page for each charity on the eCharity.com site
•	 Free directory listing Free E-mail acknowledgement to donor (another cost reduction)
“Ticketmaster” Telephone Service 
•	Less expensive method of getting telephone donations
•	Set-up fee of $500
•	Transaction fee of $3 paid by the donor
Lockbox Service
•	Highly efficient handling of mailed-in donations
•	Transaction fee paid by charity
Payroll Giving 
•	Corporate Intranet services in association with United Ways and others
•	More effective way to raise money
Stock Transfer Service 
•	Simple, efficient way to make donations of stock
•	Fully tax deductible
•	Broker friendly service
Credit Card Points/Miles
•	Points or miles are converted to cash and donated
•	Efficient for financial services company and donor
•	No cost to charity; financial services companies pay fee
eDisaster.com
•	Web site specifically for rapid-response disaster relief 
•	Paid for by sponsorship

Value-Added Services

The value-added services are built upon eCharity.com’s experience and enormous customer database, which records every processed transaction. From that, charities can glean information about patterns of giving in different geographic areas, or in different donor categories, which in turn will help them assess how well their own marketing strategies are working.

In addition, small and medium-sized charities (those that collect less than $5 million annually), which may not be able to afford a full-blown contact management system, will be able to use eCharity.com data to refine their fund-raising efforts.

Finally, some charities may hire eCharity.com to build their Web site; fees for this service begin at $5,000.  These value-added services will be developed during the second half of this year. Revenue from these activities, estimated at about $1,500 per charity, has been included in this plan.

What will be the charges?

Basic Internet service is free. Costs are covered completely by advertising and sponsorship.  eCharity.com does pass on its consolidated credit card rates of 2%, but as volumes rise and these rates fall, eCharity.com passes the benefit directly on to the charity.  Our long-term objective is to eliminate this charge altogether.

Telephone services will be set up under the “Ticketmaster” model. Charities pay a set-up fee of $500, and donors then pay a charge of $3 per donation made over the phone (just as they do when they order tickets in this way). However, while waiting to make the donation, the donor will hear a taped reminder that donations can be made for free over the Internet at the eCharity.com Web site. This should help to encourage the migration to electronic giving. (By comparison, charities typically pay a $5,000 set-up fee, minimum monthly charges of $2,000, and cost per call minute of $1.00 for the telephone services available from other vendors.) 

The processing paper transactions is charges at a 40% margin cost.

In addition to these functions, funds which flow through eCharity.com are held in escrow accounts for periods of around 45 days.  This mitigates against credit card charge backs and creates valuable treasury revenue.

The stock trading service carries at registration fee of $250 per charity, with brokers paying a small processing charge out of their commission.

The points/miles conversion service also carries a $250 registration fee per charity.

How will eCharity.com attract charities?

At the NSFRE conference in March 2000, eCharity.com was able to interact with 3,500 professional fundraisers. More than 250 charities attended a booth presentation and registered an interest to proceed further. Among these charities alone, the combined annual giving is more than $1.3 billion. Another 330 charities contacted eCharity.com after the show to find out more information about the company. 
 
Experience at this conference and from visiting with individual charities indicates that 10% of prospects can be converted after a 10-minute demonstration of eCharity.com.  The cost per lead at the NSFRE conference was $40 (270 leads).  

Attendance at these events will continue, and will be supported by a full electronic and telephone-based sales effort.  A budget of $400,000 in the base year will easily saturate the market. The Customer Development Group will do this work. About 20% of their 
effort will be in development, with the rest focused on retention and development.

To approach this market most effectively, eCharity.com has developed a strategy based on categories of charities. According to Form I9-90 submissions to the Internal Revenue Service, there are 620,000 charities in the United States.  Of these:
•	5,643 have annual revenues above $20 million
•	36,000 have annual revenues of $1-$5 million
•	579,000 have annual revenues under $1 million

The top 200 charities will be placed in the “Platinum” category; the remaining charities with $20 million or more in revenues are considered “Gold,” with the other two categories designated as “Silver” and “Bronze.”  Give this stratification, sales and support processes would be broken down as follows:

Sales and Support

Category		Lead Contact Type		Quantity Per Individual
Platinum  	 	Personal Relationship			2 - 10
Gold 			Relationship, Call			10 - 20
Silver 			Call, Direct Mail			20 - 30
Bronze 			Direct Mail				30 - 50

Customer service staff will back up the development group in this area, forming a bridge into operations.

Customer Service

Category		Lead Contact Type		Quantity Per Individual                           
Platinum  		Personal Relationship			2 - 20
Gold 			Relationship, Call			20 - 30
Silver 			Call, Direct Mail			30 - 50
Bronze 			Direct Mail				50 - 100

Donors

Why would donors use eCharity.com?

Research shows that donors want to know that their gift is being used to the best possible good. With eCharity.com, donors will be assured that the maximum amount of money will go to the cause they support, with a minimum of overhead cost.  eCharity.com also provides the convenience of being a single reference point for charitable giving - in other words, the donor can use just one Web site for all charitable donations. And, the consolidated tax statement provided by eCharity.com will help with tax planning.

In addition, eCharity.com also provides donors with the means for giving stock and other securities without many of the hassles normally associated with this process.

What can eCharity.com offer to donors?

eCharity.com makes it easy for donors to give money to the charities of their choice, and to keep track of their donations.  The services include the following:

·	Internet Giving Service
o	Simple, cost-efficient way to give money to charity
o	Satisfaction of knowing that more money goes to the cause
o	Excellent information resource for a wide range of charities, including smaller causes such as local schools
·	Consolidated Tax Reporting
o	eCharity.com provides a single giving statement for all gifts, received via e-mail
o	Printed statements available for a small fee

What will be the charges?

Donations made via Internet are free. However, if telephone donation is preferable, the donor will pay only the $3 “Ticketmaster” fee.

How will eCharity.com attract donors?

The Marketing Group will lead a three-phased approach to generate awareness and interest. 

Phase 1 will feature a “People’s Charity Choice” competition in key media markets, including Boston, New York, Washington, D.C., Los Angeles, Dallas, San Francisco, Atlanta, and Chicago.  eCharity.com will make a $10,000 donation to the charity voted most popular in each area.  This will help to raise the profile of philanthropy in general and of eCharity.com in particular.

During Phase 2, eCharity.com will work with charities to ensure that the eCharity.com logo is placed as prominently as possible on their own Web sites.  This will be the primary draw of traffic to the eCharity.com site.  

A multi-media advertising-based image and brand awareness campaign will be launched in Phase 3.  This campaign is designed to raise the overall awareness of eCharity.com as the most efficient way to give money to charity. It will involve a variety of tools, including print, direct mail, Internet, radio and television.

Sponsors and Advertisers

Why do sponsors and advertisers need eCharity.com?

In addition to the tax advantages, corporations have come to recognize that a philanthropic image is crucial to generating good will with the public as well as with their own employees. Over the past four years, Exxon Mobil has donated $450 million to charity, while the Bank of America has donated $193 million - to name just two examples (NSFRE data).  

But cultivating this image can have problems of its own - for example, selecting certain beneficiaries for charitable donations automatically excludes others, which may alienate some people.  However, eCharity.com sponsorship -- which means that the company’s name would appear in a banner along the top of the Web site -- allows that company to be associated with helping thousands of charities all at the same time. The company can be seen as “philanthropic” in the general sense, while at the same time, can promote itself to the countless potential clients who visit the site.

There are several types of sponsorship: 
·	The logos of “global sponsors” appear throughout the site.
·	“Regional sponsors’” logos will appear next to charities from a particular region of the world.
·	“Category sponsors” can select a particular category to sponsor, such as cancer-related charities.

Advertisers, meanwhile, are always looking for cost-effective ways to reach their particular target markets.  eCharity.com offers advertisers the opportunity to associate their messages with specific causes, geographies or types of charities. 

What services does eCharity.com offer sponsors and advertisers?

eCharity.com’s unique service offers sponsors and advertisers the opportunity to develop or gain access to markets by:

·	Affiliation to a brand
o	Easy way to be associated with many philanthropic causes
o	Different sponsorship levels allow different privileges at different costs
·	Targeted advertising 
o	Highly effective advertising broken down by type of cause (for instance, a pet food company could advertise on the site of an animal charity), or geographic location 
o	Banner advertising space on the Web site 
o	Feedback on types of people clicking through gives good demographic profile 

How will eCharity.com attract sponsors and advertisers?

To build sponsorship, it will be important to deliver on the strong potential market positioning that eCharity.com offers. The group of charities that expressed strong initial interest in the site collectively receives $1.3 billion in donations per year. Test work with potential sponsors - specifically, Merrill Lynch and SAP - confirms that the proposition is very strong, and that they are keen to sponsor the site.  Once the charities are being recruited actively, a sponsorship sales team will also be recruited.  This will be led by the eCharity.com Marketing Group.

Banner advertising opportunities are available on the Web site.  These will be brokered; discussions with DoubleClick and Flycast have already begun.

What will be the charges?

It is anticipated that the following sponsorship costs will apply (values are in thousands):

Level	Quantity	2001	2002	2003	2004	2005	2006	2006	
Global	5	$75	$350	$500	$750	$1,000	$1,500	$2,000	
									
Regional Sponsor	60	$9	$44	$63	$94	$125	$188	$250	
									
Category Sponsor	60	$9	$44	$63	$94	$125	$188	$250	

Total		$1,500	$7,000	$10,000	$15,000	$20,000	$30,000	$40,000	
All values in $ 000's

Associates

By creating a wide portal for philanthropy, eCharity.com creates an exciting opportunity for associates (such as OnMoney.com, Wisecity.com, charitablegift.com, and Merrill Lynch). Some of the possible relationships include the following:

·	Share Donations
o	Currently time-consuming and expensive for brokers, with no revenue upside
o	With eCharity.com, they get the brokerage fee
o	One deal with eCharity.com covers many charities
·	Points/Miles Donations  
o	Currently cumbersome to deal with multiple charities
o	Difficult to administrate, little added value
o	One deal with eCharity.com covers all member charities
·	Credit Card Companies
o	Unique place for sponsorship
o	Consolidation of transactions through single sales channel

How will eCharity.com attract other associates?

In addition to the major alliance with its founder, MM Group, eCharity.com will be seeking other alliances and associations. Those already approached include charitygift.com, The National Charity Information Bureau, Fleet Bank, ASI (part of iMIS), the Direct Marketing Association, and wisecity.com, as well as a number of others. 

Competitive Analysis

The charity-service industry is not highly competitive at the moment, and there has traditionally been little advantage to be gained from branding, because the service supplier is generally invisible. Thus, most of the current services are undifferentiated and unbranded. 

eCharity.com intends to change this, by creating a trusted brand for charitable giving.  This will help to act as a strong differentiator.  In this context, advertising will be crucial, as it will help to crystallize views about the brand.

There are several other Internet start-up companies offering services to charities.  These companies can be roughly broken down into the following categories:

1)	Companies like CAF in Europe, which make money out of tax breaks. These companies are essentially charitable trusts that consolidate payments.  The tax on these payments can be reclaimed and the money passed on to the charities, minus a commission.  This model is very country-specific and depends on the tax system in a given country. 

2)	Companies that make money from sales commissions, including igive.com, greatergood.com and others.  Based on their status as shopping portals, these companies take commissions of between 5% and 15% from merchants and then pass them on to charities as donations. In 1999, igive.com gave $300,000 to charities - but this represented an average donation of only $100 to each of the registered charities. This model is not sustainable, and it can support only a limited number of charities. Furthermore, it will be hard for these companies to justify their margins as price competition among merchants intensifies.

3)	Companies that make money from Internet service provision fees. These are based predominantly in the UK, and the biggest player is care4free.com.  Their transaction management service is free if the charity uses them as a member-based ISP.  

4)	Companies that take a percentage of the donation. The principal company of this type is charitableway.com.  Funded by Softbank and Benchmark Capital, this model is similar to eCharity.com - but they charge the charities a transaction fee of up to 10%, and they do not offer any other value-added services to the charities.  This type of company has yet to make a significant impact in the consumer marketplace. Furthermore, the National Society of Fund-Raising Executives has banned this model. 

5)	Not-for-profit companies that charge charities only credit card fees. These companies, including helping.org and itqnet.com, are privately funded.  They charge 2%-5%. 

Keys to Sustaining the Competitive Advantage

eCharity.com offers five key differentiators that will help sustain its competitive advantage: low barrier to entry; definitive brand; excellent customer service; data warehousing; and the “total solution.”

The fact that there is no barrier to entry - that is, there is absolutely no cost to become part of the eCharity.com universe - will encourage charities to either adopt Internet fundraising for the first time, or switch from other methods of on-line collection.  The charities will 
also be offered a consolidated credit card fee of 2%, which will reduce expense to the charity (even for the larger charities).  

A consumer-focused advertising campaign will introduce the brand to the public. This will help to attract charities, as well.

The well-trained staff of eCharity.com will provide excellent customer service, which will help the charities learn more about Internet fundraising and feel more comfortable with it. The relationship between eCharity.com and the charities is akin to a virtuous circle: For the company to maximize long-term revenue, its customers - the charities - must get the best possible solutions for their own long-term good.

As the number of transactions in the eCharity data warehouse increases, so does the power of that warehouse. People who leave the network do not get access to the information in the warehouse. The ability to offer charities a profiling service is of great advantage.  

eCharity offers charities complete transaction outsource services - calls, mail, and Internet -- which is unique in the marketplace. Most competitors offer either the old model of mail handling or only the new, Internet-based model. No other company bridges the gap between the two. This will remove the entire burden of transaction management from charities.  

Operating Plan

Architecture

The eCharity platform consists of a fully fault-tolerant secure web server, (i.e RAID 5 with mirroring), secure file server, T3 communications gateway, e-mail server, X.21 leased line for card authorization. In addition, there are hot switch able backup servers and communications facilities available in the event of failure. 
The Infrastructure for the first phase will be hosted in the UK, using the following software:
•	Firewall - Borderware version 5.2 
•	Platform - Windows NT version 4
•	Database Software - Microsoft SQL version7 
•	Office Software - Microsoft Office 2000 
•	Database Encryption Software 
•	E-Mail Server
•	Web Software 
•	Server - Internet Information Server version 4.0 (IIS4) - 
•	Development 
•	Active Server Pages using Pearl script 
•	Photoshot 5.5 for graphics images build
•	Adobe Imageready version 2 for graphic optimization

Plans are in place to provide a mirror site in the U.S. by summer 2000. This will provide additional resilience and additional capacity for worldwide expansion.

Site Development

The MM Group developed and released the initial eCharity.com site in 1996. Earlier this year, a full study was commissioned and a site redevelopment program was put in place. 

The deliverables and timeframes are show below.
	 Start	 End	 %   Done	
Feasibility report 	5 Jan 2000	31 Jan 2000	100	
Detailed analysis & design	1 Feb 2000	25 Feb 2000	100	
				
Phase 1: Site redevelopment				
System Build & Test	14 Feb 2000	16 Feb 2000	100	
Integration/Volume/Operability Testing	19 Mar 2000	24 Mar 2000	100	
Site Live	1 Apr 2000	1 Apr 2000	100	
				
Phase 2 : Infrastructure Upgrade	20 Mar 2000	14 Apr 2000	100	
				
Phase 3: Implement Banking Software				
Implement Banking Software	24 Apr 2000	10 May 2000		
Integration/Operability Testing	10 May 2000	12 May 2000		
 Phase 4: First 50 Charities Live				
Configure Charity Web Pages (Support Task)	26 Apr 2000	10 May 2000		
User Acceptance Testing	10 May 2000 	12 May 2000		
Activate Donations Facility	12 May 2000	12 May 2000		
				
Ongoing Support	12 May 2000	Ongoing		

Development Activities

The main site redevelopment effort is complete. This represents 97% of the development and testing effort required for the U.S. launch. This leaves the configuration of the banking software that will be installed in May 2000. 

Ongoing development and site improvements are planned throughout 2000. These include enhanced reporting facilities, corporate Intranet services and a share donation service.

Testing and Release Model

The eCharity.com IT department designs and tests to the highest standards. Our testing methodology uses the V-Model. Specifically, this means that testing is conducted at the lowest level, (i.e. each individual component/program), through to the highest product level, including interfaces with external systems. 

In addition, full Volume, Operability and User Acceptance testing are carried out. 

Before any software is released, a full reversion strategy is defined and the disaster recovery procedures updated (where applicable).

Quality Assurance

eCharity.com believes that building quality into the processes ensures a better product for clients and lower costs to eCharity.com. Quality is built in by ensuring adherence to procedures and a series of QA sessions throughout the development lifecycle. This ensures early identification of issues and resolution, which reduces development timeframes and costs.

Support

Three-tiered support architecture is in place:

·	First line - Receive and respond to simple user queries and technical issues (via e-mail or telephone);
·	Second line - Provide back-up to the first line support team for more complex queries or technical issues; and
·	Third line - Resolve systems issues and implement system solutions

Support Center	First	Second	Third	
Call Center (24x7)	Yes	No	No	
U.S. Technical support	No	Yes	Yes	
UK Development team 	No	Yes	No	

A full 24x7 support line will be in operation. The intention is for most calls to be dealt with by the first-line support team (i.e., call center).  Where necessary, escalation is to the second-line support team in either the U.S. or UK. 

The second- and third-line support teams will be immediately available from 3am - 8pm CET. Outside these hours, pagers will be used to provide a two-hour response time.

Corporate Equipment Requirements

The main eCharity.com development and production sites will continue to be in the UK, served by and supported by the MM Group. Mirror services will be set up in the US during the summer of 2000.

Our U.S. headquarters, located in Hartford, Connecticut, require an internal network and PCs for internal use. Our Intranet will use Microsoft’s Office 2000 deployed on Windows NT to provide internal departmental data.

Management and Key Personnel

President and Chief Executive Officer: Ian Hughes

A Graduate of Bristol and Harvard Business Schools, Mr. Hughes has had a distinguished career in Technology, Retail and Direct Marketing.

His early career was at Marks and Spencer PLC, the UK’s premier retailer.  There he built models for food distribution and site acquisition based upon database mining and statistical analysis techniques.

At  MM Group he was made responsible for using technology to re-engineer much of the Direct Marketing process.  In 1993, in partnership with Hewlett-Packard’s Internet lab, he began working on commercial applications of the Internet, which gave rise to some of the first e-business solutions in 1994-95.  Before joining eCharity.com, Mr. Hughes was the Group Marketing Director of MM Group.

Over the past three years, he has lectured frequently in the U.S. and Europe. He writes columns for four international marketing journals, and he has hosted a weekly radio program on the Internet.  Mr. Hughes graduated from Harvard Business School's prestigious Program for Management Development in 1999.

Chief Financial Officer: Andrew Sullivan

Mr. Sullivan has had as a distinguished career working as a Managing Partner in the Tax Practice of KPMG, the worldwide tax and management-consulting firm.  He specialized in valuations, financing alternatives, mergers and acquisitions, and tax strategies for closely held businesses. In addition, Mr. Sullivan has been a member of the board of many not-for-profit organizations and has acted as Treasurer for a several political and non-political campaigns.  He currently serves as Vice President of the Board of Trustees of the Mark Twain House, Vice Chairman of the Citizens Committee for Effective Government, and the Board of Trustees for The Advancement of Catholic Schools.

Mr. Sullivan offers a depth and clarity of understanding of the non-profit sector that has been built up over many years.  His expert tax insight and his contributions to the financial side of the company will be invaluable.

Chief Technical Officer: John Pearce

Throughout his career in the IT field - which includes 14 years at Marks & Spencer and two more at Andersen Consulting -- he has been responsible for many international networks and for multi-currency systems. The systems he has been responsible for, now provide back-bone architecture for multi-billion dollar enterprises..

Business Development Officer: Jeremiah Cronin

Mr. Cronin has a strong track record in business development gained from 36 years of experience at Memorex, Stratus, EMC and Sun Microsystems.  During this time he was responsible for building many client relationships and other supporting activities.
These will be critical in developing the very tightly integrated relationships we foresee among charities, sponsors and business partners.

Chief Marketing Officer: Lisa Baldwin

Ms. Baldwin has worked in marketing for the past 15 years. Following stints at Ketchum and Chiat Day, she joined SAP Software four years ago.

Ms. Baldwin has been instrumental in building the once-little-known SAP brand into the world-class household name it has become.  She helped develop and manage the brand and controlled all aspect of marketing.  Her knowledge of high technology advertising and marketing will be essential in building the eCharity.com brand. 

Head of Talent: Scott Thibeault

With the rapid expansion that is forecast for eCharity.com, it will be critical for human resources matters to be addressed quickly.  Mr. Thibeault will ensure that the right blend of culture is put together during the formative years of the company.

From his eight years at Aetna, Oxford Healthcare, Priceline.com and OnMoney.com, Mr. Thibeault brings excellent experience at blending the issues of a large workforce with those of a smaller eCommerce business.

The eCharity.com Advisory Board

eCharity.com is fortunate to have a number of experienced businesspeople as members of an Advisory Board set up to help oversee the company’s development. The Board includes the following:

Robert Fiondella, CEO, Phoenix Home and Life Insurance Company, Hartford, CT

In addition to being the CEO of a Fortune 500 company, Mr. Fiondella is a well-known philanthropist.  His insights are critical to steering eCharity.com on the right path for success.

Jennifer Moseley, Director, International Development, National Geographic Society, Washington, DC

With experience in marketing and the non-profit sector, Ms. Moseley brings a great depth of understanding about the issues concerning this industry.

Andrew Mandell, CEO, Data Mail Inc, Newington, CT

With many years of experience at a very successful direct marketing company, Mr. Mandell is a valuable mentor to the eCharity.com team.

John Hughes, Chairman, MM Group, Bristol, UK

A well-known philanthropist, direct marketing leader and Chairman of eCharity.com’s founding investor.

Ian Page, Head of Technical Foresight, Hewlett-Packard Labs

An early participant on the Internet, Mr. Page has excellent foresight about possibilities for on-line development.

Colin Lloyd, CEO of The Direct Marketing Association in the UK, and Worldwide Chairman of the International Federation of DMAs

As a leading figure in direct marketing and an on-line proponent, Mr. Lloyd also offers excellent foresight about links with government and quasi-government organizations.

Financials

Revenue Streams

The revenue streams of the business will come from the core areas of Advertising, Calls, Treasury, Sponsorship, Mail Handling and Value-Added Services.  

The primary revenue streams identified within the model are Calls, Treasury and Sponsorship.  However, Calls have heavy personnel costs, and it is hoped that as Internet use expands, call volume will decline.  This, in turn, will add to the higher-margin Treasury and Sponsorship/Advertising activity.

Costs of Sales

The primary costs of sales come from the labor required to operate and manage the call center and lock box operations.  The possibility of reducing these costs through technology outsourcing will be investigated.

To gain market share and foster brand awareness, marketing expenses will be significant over the next 24 months.  Down the road, these costs will drop as marketing programs become more generic, aimed at encouraging people to shift their charitable giving into the on-line environment.

The model also assumes a very large allowance for customer support, because quality support will be critical to creating a sustainable advantage.

Forecast Profit and Loss Account

Projected P&L!R6C1:R38C8

For more detail, see Appendix.

Cash Flow Forecast

The following figures are projected cash flow numbers for 2000-2006.
Projected P&L!R44C1:R72C8

Funding Phase Requirements

The eCharity.com development plan is broken into three key phases:

1)	Recruit Charities and Launch by May 31, 2000.  This phase is well under way, with very positive market reaction. The first-year target is to recruit 300 charities; currently, more than 500 leads are in-hand and contracts have been sent to more than 20 charities.  This activity will continue through the summer and into the fall of 2000.

During this phase, support architecture will continue to be built, the conversion to U.S. format will be finalized, and all systems will be prepared for the end of the tax year. 

2)	Build Donor Base.  This will take place in two stages.  The first will be a limited profile-raising campaign during the spring and summer of 2000, designed to raise awareness of eCharity.com.  The second, which will be in the fall of 2000, will be to persuade people to donate via eCharity.com. 

In addition, full-resilience tests will be run on systems and new product lines like payroll giving and stock giving will be introduced into the portfolio.

3)	Recruit Sponsors.  This work has already begun. Two major sponsors, Merrill Lynch and SAP, have indicated that they wish to join eCharity.com.  This sponsorship sales program will start immediately but will ramp up in the first quarter of 2001, following year-end evidence of the success of the site.

This phased-in development plan permits a phased funding pattern.  To achieve the second round of financing to get through to Phase Two, the company will need $3.8 million.  It is suggested that 15% of the equity will be made available in order to accomplish this.

During Phase Two, another $10 million in funding will be required. This will be exchanged for a 20% stake in the company.  If an IPO does not seem imminent by Phase Three, a further trench of equity (amount to be determined) will be released in order to achieve the final funding of $12 million.

Appendix 

Basic Assumptions
Error! Not a valid link.
It is assumed that the number of customers will build over the next few years.

Customer volumes are as follows:
Error! Not a valid link.
It has been assumed that these charities will achieve the following average transaction volumes:

And those charities will buy these services in the following proportions
Error! Not a valid link.

Advertising
Each Web page carries an opportunity for banner advertisers.  It has been assumed that a cost per impression rate of $40 per thousand is possible, and that there will be two advertising opportunities per donation.  Total numbers of page impressions are forecast as follows:
Error! Not a valid link.

No marginal cost is associated with this activity

Calls
It has been assumed that the volume of calls, and the revenue they generate, will increase over the next few years.  These projections assume that the call center is in-sourced.  Therefore, the costs of staffing and technology are higher, but there are no subcontracting costs.  The decision to build versus outsource call center services will be reassessed constantly, especially during peak giving periods.
Error! Not a valid link.
Figures are based upon the assumption that the following call charges will apply:

It has been assumed that each operator will be able to answer or transcribe up to 150 calls per day and that they will be paid a total package of $34,000 per year.  There will also be one supervisor for each 20 operators.

Mail Handling
It has been assumed that all mail handling will be in-sourced.  This, too, will be reviewed in terms of efficiency.
The estimated value attributed to each item of mail processed is as follows:
Error! Not a valid link.

It has been assumed that each employeewill be able to process 150 transactions per day, and their total compensation package is $32,000.  There will be one supervisor per 20 employees.

Sponsorship
Value for sponsorship has been calculated based upon the figures shown in the pricing section.  It is assumed that sales in this area will be subcontracted and will cost of 10% of the value of sponsorship.

Treasury
It has been assumed that eCharity.com will hold on to funds in an escrow account for an average of 45 days.  This generates treasury income and mitigates against charge backs on credit cards.
The APR assumed throughout is a (conservative) 4.5%.

Labor
There are three main sources of labor:  Contact Center (mail and telephone), Customer Support (sales and customer service), and Management.  The following fully loaded rates have been assumed.
Annual Costs		
Technicians	$70,000	
Operators	34,000	
Mail	32,000	
Supervisors	80,000	
Management	100,000	

Technology
It has been assumed that the company will lease most technology. The costs have been calculated on a per-capita basis.  They are estimated at $12,000 per capita in the first year, $4,800 in the second, $4,200 in the third and $3,000 thereafter.

Marketing Costs
Error! Not a valid link.
A provisional marketing budget has been made.  In this budget, the following figures have been projected.

Space
It has been estimated that 200 square feet per person will be used, at a cost of $23 per square foot.  Actual footage required varies during the year and at some times temporary space will be sought.

Staff Costs
These are the Executive Director’s costs. Error! Not a valid link.

Pay raises are set at 4% per annum.