Contagus

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image001 Nonprofit Solutions BUSINESS PLAN

December, 2014 CONFIDENTIAL

No offering is made or intended by this document.  Contagus Nonprofit Solutions will be made only in compliance with Federal and State securities laws.

This document includes confidential and proprietary information of and regarding Contagus Nonprofit Solutions This document is provided for informational purposes only.  You may not use this document except for informational purposes, and you may not reproduce this document in whole or in part, or divulge any of its contents without the prior written consent of Contagus Nonprofit Solutions By accepting this document, you agree to be bound by these restrictions and limitations.

I. Executive Summary

Business Overview

Intense awareness of environmental issues; deep concern about poverty, hunger, homelessness; far-reaching cutbacks in government funding for social services, the arts, education; stringent requirements for professional licensing and continuing education; and a huge generation of baby boomers, having achieved the rewards of “doing well” now interested in “doing good” – the confluence of these and other factors has fueled explosive growth in the nonprofit sector of the U.S. economy.

Contagus Nonprofit Solutions, a Division of Loyalty Networks Solutions, Inc. (LNSI), a loyalty and rewards platform delivering premier turn-key loyalty programs and a digital fundraising platform  was built with hard work and is designed to deliver a seamless, more efficient, customer-friendly fundraising experience. We’ve built a company that all can be proud of, and we are confident that working together we will provide the best fundraising solution for nonprofit and charitable giving institutions throughout the U.S.  We want to be thought of as a powerful source of prosperity for everyone.  Our commitment is to the communities in which we serve, and what we do isn’t nearly as important as why we do it.

Success Factors

Individual donors are a vital component to every nonprofit’s fiscal survival and health. According to Giving USA’s 2010 estimates, individual contributions to charitable causes in this country account for 73 percent of all charitable giving, while foundation giving accounts for just 14 percent of such giving. Nonprofit fundraisers are all too aware that what foundations – private or corporate – give, they can take away, leaving the organization in shambles. Individual charitable giving should be a key element of the funding equation for nonprofits.

Loyal individual donors would like to give more and give more often. However, for three decades almost all gains from economic growth have gone to the top. With so much of the nation’s income and wealth at the top, tax rates on top earners and corporations dropping, and most workers’ wages stalling or declining, tax revenues at all levels of government have fallen precipitously. This has led to a major squeeze on public budgets at all levels of government. The result has been deteriorating schools, less college aid, fewer social workers, and the decline of almost everything else the broader public relies on.

Although individual donors have, by a wide margin, been the largest source of funding for nonprofit organizations; more than 25 million middle class American families are living paycheck to paycheck. They have decent salaries. Many own homes and have retirement accounts. But they don’t have a lot of savings or readily accessible funds, according to a recent economic study presented by the Brookings Institution.

Contagus Nonprofit Solutions enables nonprofit organizations to provide individual donors a donor loyalty program to help mitigate the problem of living paycheck to paycheck. Donors that utilize our program will experience an average savings of $600.00 per year.

Contagus nonprofit solutions is uniquely qualified to succeed due to the following reasons:

  • Products and/or Services: Our Products and/or Services are superior to our competitors because they are specific to our client base
  • Our Team:  Our executive team has over 40 years of combined experience in business development, management, b2b, and consumer relations.
  • Location: Our location will be centralized.  Based in Northern, CA (Virtual initially)
  • Operational Systems: We have the best systems that enable us to provide higher quality products/services.
  • Customers: We currently have access to over 100 nonprofit and charitable giving organizations.
  • Marketing: Our marketing approach is different than our competitors in that we are a nonprofit and charitable giving based program geared to individual supporters, which accounts for over 70% of all charitable giving.
  • Successes achieved to date: We have already accomplished the following which positions us for future success.  We’ve established relationships with top nonprofit organization throughout the U.S.

II. Company Overview

Below is a snapshot of Contagus Nonprofit Solutions since its inception:

  • Date of formation: 2014
  • Legal structure: LLC
  • Office location(s): Virtual Office with Bay Area Address
  • Business stage: New Division of LNSI
  • Prior funding rounds were received (amount/date): NA
  • Products and services launched: Loyalty & Retention Platform
  • Key employees to be hired: 4 BDO over 6mos period
  • Other key events: Green2Gold Launch
  • Other key events: Market and Client base established
  • Other key events: Established relationship with organizations totaling over 2,000,000 supporters

III. Industry Analysis

Market Overview

The market in which Contagus Nonprofit Solutions is operating can be characterized by the following:

  • Industry Revenue: Over $1.6 trillion
  • Other Key Statistics: 70% of Americans support nonprofit organizations. Products and services contributed by nonprofits added over $779 billion to the nation’s gross domestic product; 5.4 percent of the GDP. Nonprofits are also a major employer, accounting for 9 percent of the economy’s wages, and over 10 percent of jobs.
  • Nonprofit funding sources are experiencing difficulties. Government grants to nonprofits are diminishing, businesses in financial difficulties are cutting grants to nonprofits, and individuals in hard times are decreasing their contributions.  Yet at the same time funds are decreasing, the needs of individuals for services are increasing rapidly.
  • Market trend: The nonprofit sector has been growing steadily, both size and financial impact, for more than a decade.  Between 2001 and 2011, the number of nonprofits has increased 25 percent, from 1,259,764 to 1,574,674 today. The growth rate of the nonprofit sector has surpassed the rate of both the business and government sectors.

Relevant Market Size

  • 1,429,801 tax-exempt organizations, including:
    • 966,599 public charities
    • 96,584 private foundations
    • 366,618 other types of nonprofit organizations, including chambers of commerce, fraternal organizations and civic leagues.

(Source: NCCS Business Master File 6/2014)

  • There are an estimated 317,534 congregationsin the United States in August 2014.
    (Source: American Church Lists)

Our relevant market size is calculated as follows:

  1. Nonprofits make up the nation’s 3rd largest industry.
  2. As in previous years, the majority of giving came from individuals.  Specifically individuals gave roughly $240.6 billion (72%) representing a 4.2% increase over 2012.

*Our relevant market is large enough for our company to enjoy considerable success

IV. Customer Analysis

Below is a description of who our target customers are, and their core needs.

Target Customers

Below is a profile of our target customers:

  • Nonprofit Organizations
    • 966,599 public charities
    • 96,584 private foundations
    • 366,618 other types of nonprofit organizations, including chambers of commerce, fraternal organizations and civic leagues.

Customer Needs

Below is a profile of the needs that our target customers have:

When a large grant falls through, a nonprofit’s supporters and donors are quickly asked to come in and bridge the gap, and indeed people can respond in a more nimble and responsive way than foundations can or have to date. Rather than using individual-giving appeals as contingency plans or last-ditch efforts, building a strong and ever-growing individual giving operation is crucial to a nonprofit’s success because it provides security, in several different ways:

First, individual donors are far more loyal and far less fickle than foundations.  Grant-making foundations often change priorities, and most have fairly arbitrary rules that are subject to change at any time.  Individual donors tend to stick with a non-profit until the organization either does something to offend them or something to bore them, both of which are, to a large extent, within the control of the organization.

Second, if a nonprofit has a strong base of mid-level and above individual givers it won’t have to close up shop if one or two of them stop giving.  On the other hand, if one or two major foundation supporters stop giving, it may mean significant trouble for the organization.

·        Our Solution

Today, anyone of the billions of people on the planet can start a movement that spreads like wildfire. Our movement will be about mobilizing people behind a shared financial and social purpose.  We’ll work together to generate ideas that create more involved and meaningful cultural connections.  Drive business and societal decisions which feed back into communities and companies as a virtual cycle of interactivity.  This can leverage the nonprofit’s and Contagus’ position to identify and effect relevant social and financial change.

 

Once the Executive Director and board of a nonprofit organization understand that they are far too grant-heavy, they agree that they need to spend more time growing a strong and sustainable individual giving program.

The plan we recommend for rapidly growing that program is as follows:  First, put the necessary infrastructure in place.  Second, utilize their existing connections to build their network.  Third, put a scalable system of cultivation opportunities into action.

1: Put the Necessary Infrastructure in Place

In order to succeed with individual fundraising, nonprofit organizations need to have a donor communications plan in place.

We recommend a donor communications plan that include donor newsletters, e-updates, an annual “thank you dinner,” and several open houses for donors and prospects.  We also recommend having a donor funnel in place that indicates the correct sequence of communications and asks for prospects that enters the organization’s universe.

2: Utilize Existing Connections to Build The Network

Hands down the best way to grow an individual fundraising program is to build fundraising networks.  (For more information on how to do this, read Building Fundraising Networks

3:  Put a Scalable System of Cultivation Opportunities into Action

Finally, in order to help an organization’s supporters introduce the organization to their connections, as well as move friends into donors, we recommend a series of cultivation opportunities, including non-ask events, volunteer opportunities, and a small seminar series highlighting the organization’s mission.  These functions are placed onto a year-long calendar to allow time for planning and marketing.

Competitive Advantages

Contagus Nonprofit Solutions is positioned to outperform competitors for the following reasons:

  • Contagus is a global digital loyalty and engagement with assets to drive relationships between the consumer and the merchant toward conducting social commerce
  • Contagus serves 5 key verticals (Banks, Telecoms, Education, Associations, Non-profit/Charitable) to drive revenue, relationships and enhanced engagement for the key stakeholders via digital technology of mobile, web and cloud computing with US and worldwide reach
  • Contagus’ key differentiator is our technology platform bridging the digital divide for consumers to interact and shop with merchants, and for merchants to reach their audience via the private/white label loyalty programs Contagus has built for our clients.
  • Contagus Products and/or Services provide a true match for the consumer and the vendor.  They truly match the consumer to the service they require and match the service provider to their core client.  Our price points are very reasonable and the program is mutually beneficial to all parties involved.
  • Human Resources: LNSI
·         Location:  As a web/cloud based company we will be able to operate nationally as well as internationally.  Our corporate address will be in the Silicon Valley (Northern, CA.), allowing us to access many of the greatest minds in the technology world.  It will allow us to stay informed and be aligned with all of the new and upcoming changes in our field.  We will be able to share our experiences and findings with our clients everywhere.
  • Operational Systems:  LNSI
  • Intellectual Property (IP): LNSI

Customers: We have 3 customer categories: individual, group & merchant.

1) Nonprofit/Tax Exempt Organizations 2) Supporters of charitable organizations 3) Service providers/Merchants.

  • Marketing: We have unique marketing approaches that enable us to attract our targeted customers at a low cost.  These approaches include all forms of marketing from print, web based commercials, local presentations, email campaigns, etc.  We’re unique because we have a specific base of client that this program has been designed for.
  • Successes achieved to date: We have already accomplished the following which positions us for success. We’ve contracted with a company that provides us access to over 600,000 individuals via their nonprofit incubator programs.  We’ve established relationships with several large nonprofit directors that agree our program would be beneficial to their employees and the communities they serve.

VI. Strategy

Our approach consists of strategically increasing the impact of consumption by the broader public. Providing services to the community and seeking funding is enhanced when collaborating with other organizations.  Funding is always a priority for nonprofit organizations. Structured as a nonprofit with wide-scale social change as a goal over profit, social entrepreneurs face unique challenges when looking for funding for social ventures. Potential sources vary, but in 2013 again the largest source of charitable giving came from individuals at $241.32 billion, or 72% of total giving. That being the case, every nonprofit and charitable organization needs a best practices strategy for obtaining donations from individuals. For that purpose, one of the tools that we recommend implementing is a Co-Branded Digital Solution enabling organizations to enroll donors in a Donor Loyalty Program that is a lifestyle & productivity membership product for fundraising. Annual cost of the membership:

Local-$35 

State-$60

Regional-$90

National-$120

Forty percent of the cost of membership will be donated to the organization, while the member/donor will receive discounts on many of the goods and services that they routinely purchase every day.  The average annual savings per member is $600.00. Because of economic circumstances, often potential donors aren’t able to donate when they’d like, the amount they’d like, or as often as they’d like.  Enabling donors to make routine purchases, with a discount, will assist in decreasing the financial gap of budget and actual needs of organizations and donors.  Our goal for the first 12 months of business is to help 100 nonprofit organizations have a minimum of 600 individual donors generating a minimum of $1,080,000 million in donations to the organizations.

Promotions Plan

Contagus Nonprofit Solutions will use the following tactics to attract clients:

  • Informational/promotional pages on social media sites to build a buzz.
  • Blimps, Banners, and/or Billboards for name and brand recognition
  • Blogs, Podcasts, will be done per Marketing Directors ability to manage
  • Catalogs on a small scale.  Mostly local
  • Direct Mail may be directed toward our client base
  • Email Marketing will be utilized to its fullest extent
  • Flyers will be strategically placed to promote brand awareness
  • Networking will be a staple.  We will attend many networking events promoting the program
  • Newsletters will be used as we grow our customer base.  It will be a regular form of communication to get current and pertinent information to our clients.
  • Newspaper/Magazine/Journal ads will be used as markets make sense
  • Online Marketing will be a major contributing factor to our brand and company awareness
  • Partnerships/Collaborations are the very foundation of our operation.
  • Postcards may be utilized to introduce us to certain communities
  • Press Releases/PR is a must.  We will introduce ourselves to every community we serve via a press release of some sort.
  • Telemarketing will be utilized to contact our potential client base.
  • Trade Shows will be utilized when relevant
  • Word of Mouth Viral Marketing.

Distribution Plan

Supporters can purchase the Contagus Fundraising Solution via the following methods:

  • Company website: Supporters can register using unique ID associated with the organization they support
  • Organizations website: Supporters can register using unique ID associated with the organization they support

VII. Operations Plan

Our Operations Plan details:

  • The key day-to-day processes that our business performs to serve our customers
  • The key business milestones that our company expects to accomplish as we grow

Key Operational Processes

The key day-to-day processes that our business performs to serve our customers are as follows:

  • Product Development:  LNSI
  • Sales:  Focus on increasing member base of nonprofit and charitable organizations
  • Marketing:  Ensures that our service is properly promoted and the sales team has all the proper ammunition to present our product and its services effectively.
  • Finance:  LNSI
  • Customer Service:  Ensures that all client and consumer questions are handled
  • Administration: LNSI
  • Accounting/Payroll:  LNSI
  • Human Resources: LNSI
  • Legal: LNSI

Milestones

The key business milestones that our company expects to accomplish as we grow include the following:

  1. To Be Completed By: 1st January 2015

Accomplishments:

  • Accomplishment #1: 2 Organizations launched
  • Accomplishment #2: Corporate structure completed
  • Accomplishment #3: Contracts Executed
  1. To Be Completed By: 31st March 2015

Accomplishments:

  • Accomplishment #1: 5,000 Supporters
  • Accomplishment #2: Initiate employment of 2 Business Development Officers
  • Accomplishment #3: 15 Organizations in pipeline for signup
  • Accomplishment #4:  $225,000 Gross revenue

III. To Be Completed By: 30 June 2015

Accomplishments:

  • Accomplishment #1: 40 Organizations signed up
  • Accomplishment #2: New office address selected
  • Accomplishment #3: 15,000 total Supporters
  • Accomplishment #4: $675,000 Gross Revenue
  • Accomplishment #5: Hire 2 additional Business Development Officers
  1. To Be Completed By: 30 September 2015

Accomplishments:

  • Accomplishment #1: 70 Organizations signed up
  • Accomplishment #2: 35,000 total Supporters
  • Accomplishment #3: $1,575,000 Gross Revenue
  1. To Be Completed By: 31 December 2015

Accomplishments:

  • Accomplishment #1: 100 Organizations signed up
  • Accomplishment #2: 60,000 total Supporters
  • Accomplishment #3: $2,700,000 Gross Revenue

VIII. Management Team

Our management team has the experience and expertise to successfully execute on our business plan.

Management Team Members

  • Name: Otis Clay
  • Title: Vice President / General Manager
  • Key Functional Areas Covered:
  • Past positions, successes and/or unique qualities: Successfully established, managed, coached and lead sales teams and divisions for fortune 1000 institutions.  President, CEO of successful mortgage companies.  Successfully positioned mortgage company as preferred services provider to employees of top technology companies and county employers in Northern California.
  • Educational background: Graduate of Chaminade University, Hawaii    MJBS (Master of Japanese Business Studies) Candidate
  • Name: Gary O. Shelton
  • Title: Vice President, Business Development
  • Key Functional Areas Covered: Improve business performance and translating it into sales and earnings growth by increasing customer satisfaction and business capacity.

Past positions, successes and/or unique qualities: Over the past ten years , his team has worked with the Aerospace and Defense industry, Auto industry, Utilities, Transportation , industry primes and tier-ones, to improve the performance capabilities and capacity of their supply chains, transforming them into elite and attractive suppliers to their existing and prospective customers.

Founded  Gary O. Shelton Consulting. Provided supply chain development services to government agencies and large corporations. What differentiates him from many other consultants is the fact that as an entrepreneur he has accomplished what he coached entrepreneurs to achieve. Following are more of his accomplishments:

  • Angel investor, Near Infrared Imaging, Inc. a medical and biometric imaging device business owned in part by UCLA, City University of New York, and Lawrence Livermore National laboratories.
  • Acquired Source One Communications, a long distance reseller, merged with Lightcom International, the only African-American owned facilities-based telephone company in America, and grew revenue to over $70 million, providing telephone service to the Department of Defense, the White House, and Camp David.
  • Member of the Harvest Institute and Strategic Advisor to Claude Anderson Ph.D., author of Black Labor White Wealth, and Powernomics
  • Started Mortgage America and sold it to Ocwen Financial for over $5 million.
  • Became a Tier 1 supplier to General Motors, Ford, And Chrysler by Acquiring E3 Engineering, an electrical engineering firm and increased annual revenue from $8 million to $20 million in one year.
  • Developed Evergreen Estates Apartments (Renamed Renaissance Village Apartments) Detroit Michigan.
  • Provided investment advice and strategic planning consulting to The Lewis Company for the $1 billion acquisition of the Beatrice Companies.
  • Provided strategic planning consulting to Don Barden the first African-American to own a Las Vegas casino and the first to own a major cable TV franchise.
  • Won contract to provide design, marketing, and fulfillment services to the Michigan State Lottery.
  • While still in his twenties: investment advisor to the Detroit Police and Fire Retirement System, a $1 billion pension fund.
  • Educational background: Wayne State University, three years completed.
  • Name: TBD
  • Title: Director of Sales Education and Performance Management
  • Key Functional Areas Covered:
  • Past positions, successes and/or unique qualities:
  • Educational background:
  • Name: TBD
  • Title: Director of Marketing
  • Key Functional Areas Covered:
  • Past positions, successes and/or unique qualities:
  • Educational background:
  • Name: TBD
  • Title: Business Development Officer
  • Key Functional Areas Covered:
  • Past positions, successes and/or unique qualities:
  • Educational background:

IX. Financial Plan

Revenue Model

 

Contagus Nonprofit Solutions generates revenues via the following:

  • Sales of products/services to Individual Consumers through nonprofit and Charitable organizations
  • Additional revenues from consumer and vendor referral programs

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