Twenty-nine nonprofits have joined a federal lawsuit accusing Oakland-based Flipcause of withholding donations and defrauding charitable organizations across the country.
The lawsuit alleges Flipcause and its executives ran a “nationwide scheme … to defraud and systematically deprive non-profit organizations of the very funds they raised for their charitable missions,” according to court filings.
Flipcause is withholding $782,992 from the named plaintiffs, who paid $50 to $200 per month for its services, according to the suit.
The lawsuit seeks at least $5 million in damages and suggests that there are “tens of thousands” of other affected organizations and entities.
The plaintiffs’ attorneys are seeking class action status to represent all U.S. nonprofits that have used Flipcause since November 2022. The 18 states stretch from Arizona and California to New York and Florida. No Oakland-based organizations have joined the lawsuit.
Flipcause has harmed numerous nonprofit organizations by withholding their funds, and this harm is ultimately felt by the community members these organizations serve.
Juyoun Han, attorney for plaintifffs
Nonprofits say Flipcause damaged their operations
The amended suit was filed Nov. 11. It alleges the funding delays have damaged the nonprofits. Almost every plaintiff reported spending staff time and resources to pursue missing funds. Half say they have incurred costs to change websites and move donors to new platforms. Several lost donors or paused programs. Some struggled to pay bills, loans, and payroll, the lawsuit alleges. One group said they spent more than 200 hours of staff time to address delayed transfers.
“Flipcause has harmed numerous nonprofit organizations by withholding their funds, and this harm is ultimately felt by the community members these organizations serve,” plaintiff’s attorney Juyoun Han told Oakland Voices last month.
The nonprofits represented include health and wellness groups, social services providers, arts and culture organizations, youth advocates, animal welfare organizations, and environmental nonprofits.
Lead plaintiff, New York-based LMSA-NE, says Flipcause owes it $75,223.71. The complaint lists $88,292.46 owed to the Chicago Coalition for Family Building, which assists families struggling with infertility. Georgia-based Black Girls Smile, which is owed $29,096.60, took out interest-based loans to pay its staff and maintain its programs, according to the suit.
One plaintiff, Sahiyo, Inc., told Oakland Voices that Flipcause owed them $4,149.66. The Massachusetts-based organization works to end female genital mutilation, primarily in India. Sahiyo’s development director said Flipcause did not respond to requests to transfer funds, but when Sahiyo cancelled its account, the company asked it to stay. The complaint says Flipcause transferred the funds to Sahiyo on Nov. 10.
From beloved to beleaguered: Flipcause platform under fire
Flipcause has not responded to inquiries from Oakland Voices. At least 85 nonprofit organizations across the country have told Oakland Voices through our intake form that Flipcause is withholding more than $1.6 million dollars in donations.
Flipcause has until Dec. 12 to respond to an order from the state attorney general’s office. California Attorney General Rob Bonta ordered Flipcause to stop operations because the company was not registered to operate as a charitable fundraising platform in California. The state fined Flipcause $70,000.
On Oct. 8, the Better Business Bureau issued a warning to nonprofits about Flipcause’s “pattern of complaints.” The BBB took action receiving more than 118 complaints in the past year.Flipcause was served with the amended suit on Nov. 24, according to court filings for the federal lawsuit.
The proposed class action suit also names Flipcause CEO Sean Wheeler and co-founder and former CEO Emerson Valiao (also known as Emerson Ravyn).
Flipcause must answer the complaint by Dec. 15. The case is before Magistrate Judge Sallie Kim in the U.S. District Court for the Northern California District of California, although the case is not currently listed on her docket.
Editor’s Note: Oakland Voices is a nonprofit newsroom and media training program. We are connecting Flipcause users but are not involved in this lawsuit. Complete our form to connect with other Flipcause users. Parties interested in joining the lawsuit should contact the plaintiff’s attorneys.
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