Let's say you want to donate to a nonprofit that's meaningful to you. But you don't have the extra funds to do it now. So, you might wait until later in the year or not donate at all.
A new fintech platform has created a way for you to donate and then pay the commitment later.
B Generous created the aptly-named Donate Now, Pay Later. It enables nonprofits to get money upfront, rather than it dribbling in over the course of a year in monthly installments or future pledges.
It enables point-of-donation loans, so nonprofits receive the donations immediately, and the donors get their tax receipts right away. But donors pay nothing out of pocket at the time of donation. Instead, they pay over time — with no interest, costs or fees.
It's all made possible through the backing of Drake Bank, a community bank in St. Paul, MN.
"Making the decision to partner with B Generous was not only strategic, but natural," said Nichol Dehmer, chairwoman of Drake Bank. "The insights into nonprofits that B Generous can offer pairs well with the financial experience and processes we can bring to the table. The potential impact of point-of-donation loans on (the) donation landscape is monumental."
Need for More Liquidity
In 2021, $484 billion was donated to U.S. based nonprofits, which translates to more than $1 billion per day
But, 40% of those donations came in the last quarter of the year.
As a result, in the first three quarters, many nonprofits weren't getting the cash they needed.
Donate Now, Pay Later alleviates the liquidity issue by enabling donations to be spread out over the course of a year.
"This service provides nonprofits with liquidity right away and also increases the average donation value substantially, since most donors who use it end up giving a lot more," founder Dominic Kalms told LA Inno.
Kalms is a philanthropist and fintech expert, who previously was the CEO of GVNG.com. That platform enabled anyone to set up a nonprofit project in five minutes or less.
With Donate Now, Pay Later, donors can finance amounts from $75 to $50,000, while paying no interest, transaction or late fees.
"By allowing donors to pay over time at their convenience, for free, we allow the 66% of Americans who want to give more to give more, at no cost to them," Kalms said, citing Fidelity Charitable’s latest giving report.
"This is why I started B Generous, to help solve some of these intractable problems in the nonprofit space and to help create a product that was mutually beneficial for donors and nonprofits alike," he added.
Confidence in Donors
Kalms is confident that donors will follow through on their commitments to pay later, "because philanthropy is deeply personal to people and donors really aren't in the business of promising donations and then not following through to the organizations they care deeply about," he said.
He noted that philanthropic donors, on average, tend to have better credit scores, higher incomes and lower debt- to-income ratios, "so those who use our product are likely in a better income position to make their payments."
"We are confident in our user base and the value we are providing for donors and nonprofits," he said.
Support from Leading Nonprofits
While Kalms declined to disclose clients who are using the fintech platform, nonprofit executives who publicly support it on B Generous' website include leaders from Susan G. Komen, Planned Parenthood and UNICEF, among others.
All of the featured executives — such as Mariam McIntosh, a United Way Worldwide board member — are advisors to B Generous, and some are investors as well, Kalms said.
Business Model
B Generous does not charge nonprofits subscription fees, Software as a Service fees or integration fees. And, the product is completely free for donors.
So, how does it make money? By charging a "success" fee that nonprofits pay if and when a donor chooses to contribute. That fee ranges from 8.25% to 15%, and can depend on a variety of factors, like the size of the organization and transaction volume.
B Generous also offers donors an option to cover any portion of the nonprofit’s transaction costs. So far, opt-in rates for this are quite high — above 75%, Kalms said.
"Given our model, we predict, on average, nonprofits who use Donate Now, Pay Later will end up paying about 10%," Kalms said, noting that amount is approximately in the middle of what most donation platforms charge today.
B Generous has raised $10 million to date from several investors, including 116 Street Ventures (part of the AVG Fund), Canaan Scout Fund and the Husseini Fund.
Partnering with Other Social Good Programs
The company recently was accepted into the Blackbaud Social Good Startup Program. Blackbaud is a cloud software company powering social good.
B Generous will receive some grant funding as part of being accepted.
