A little digging into the business of Edmonton’s Serenic Corp. (TSXV:SER) reveals some interesting economic trends. Serenic, which makes software that helps international non-profits and NGO’s better manage their resources, appeared poised to benefit from a shift that many hadn’t noticed. As The New York Times reported at the time, the number of charities in the United States rose 60 percent, to 1.1 million, in the decade between 1999 and 2009. In the US, charities now collect nearly a trillion and a half dollars, which is more than the US government collects in income taxes. In Canada, philanthropic donations jumped 127% after a 1996 amendment by the Canada Revenue Agency that ditched the capital gains tax on gifts of securities.
The economic downturn that began in late 2008, however, hit charities especially hard. Midway through 2009, Boston based consulting firm The Bridgespan Group reported that 75% of charities had been hurt by the recession. Newer data suggests long-term trends in charitable giving are now resuming. A study by the Nonprofit Research Collaborative, a coalition of six organizations that study or represent nonprofits and fund raisers, showed that 43 per cent of charitable organizations increased the amount of money they raised in 2010, and 63 per cent of the more than 1,800 organizations studied said they expect private donations to rise in 2011.
Some believe the trend is a demographic one. The Financial Post, recently, described a “a baby boomer approach to philanthropy, with giving starting relatively early in life and being highly attuned to final outcomes.” This trend no doubt gained steam with the “Giving Pledge” an initiative by Bill Gates and Warren Buffett to convince the world’s billionaires to give most of their wealth to charity within their lifetimes. By 2010, half of the billionaires the pair had contacted agreed to pledge more than half of their wealth. The list of names includes George Lucas, Ted Turner, T Boone Pickens, Michael Bloomberg, Barry Diller and Barron Hilton.
Aside from demographics, another trend is helping charities rebound from the economic downturn; technology. The aforementioned report from the National Research Collaborative showed that online giving was experiencing the most growth of any fund raising method. And donations made by mobile phone are exploding; last month the BBC charity event Comic Relief made more than £7m from text message donations.
Fiscal 2009 was a bit of a misstep for Serenic, but the company rebounded in 2010 with record sales of $10.7 million. A concentration on expanding its partner network in the US, Europe and Africa has resulted in significant and recent sales to non-profits such as Human Rights Watch, The League of Women Voters, and to thirteen customers in seven African countries. With its stock now trading near fifty-two week lows, a little number crunching will tell you that Serenic is currently trading close to cash value – despite the recent additons of two new partners to its partner channel.
Disclaimer: At publication date, Cantech Editor Nick Waddell owns shares of Serenic and his company, Cantech Communications, is engaged to provide investor relations services to the company. Serenic is a sponsor of Cantech Letter.