Donation platform Flipcause is set to be sold in bankruptcy court for $400,000, barely one percent of the more than $29 million Flipcause owes to nonprofits nationwide.
Software4Nonprofits only Flipcause bid
Software4Nonprofits was the only company to submit a bid, according to bankruptcy filings.
Flipcause co-founder Emerson Ravyn valued the company at $15 million in bankruptcy filings, about 40 times the sale price.
‘What is owed far exceeds $400,000’
Oakland-based Mu’eed, Inc. is one of more than 3,260 nonprofits that used Flipcause to raise funds for their cause. Amelah El-Amin, executive director of Mu’eed’s Eating Rights Project, said its unfortunate nonprofits are unlikely to receive the money owed.
“What is owed far exceeds $400,000,” El Amin said. “A whole lot of people aren’t going to get money.”
Although Flipcause still owes money to the Eating Rights Project, El-Amin is grateful. Flipcause owed her organization nearly $50,000 last year, but she received a long awaited transfer last fall.
“By the grace of the Lord, we got all but $2,000,” she told Oakland Voices while tabling outside Oakland’s Lighthouse Mosque. “We didn’t have a place for our donors, so we moved to LaunchGood to maximize on this month of giving in Ramadan.”
Trustee ‘pleased’ with Flipcause sale
The bankruptcy court appointed an independent trustee to oversee Flipcause in January. In a March 2 letter to customers, Trustee Jeffrey Testa said he was “pleased” with the agreement. With one sole bidder, Testa cancelled an auction scheduled for March 3. Testa’s letter did not explain what would happen next to nonprofit customers or share how much nonprofits could expect to receive, if anything.
Testa did direct customers to file a Proof of Claim on the Flipcause bankruptcy webpage. As of March 9, 266 nonprofits have filed claims.
What will nonprofits recover?
In bankruptcy, funds are distributed through a waterfall process. Administrative and professional fees will be paid before creditors. Nonprofit organizations that used Flipcause to collect donations are now considered “unsecured creditors”, meaning they are paid last.
Testa approved two continuing contracts totalling $21,283, which included $17,845.50 for web hosting with Weebly, and $3,437.50 for Numeracle, an IT/phone system. These must be paid before Software 4 Nonprofits assumes the contracts. This comes out of the sale price. The buyer will own Flipcause free and clear of debts and liens.
The bankruptcy court approved a $200,000 minimum fee for SC&H, Inc, the investment banker that managed the Flipcause sale.
Additionally, there will also be payments for Testa, his counsel, and fees to the U.S. Trustee.
The court also appointed a Creditor’s Committee to represent nonprofits. That committee hired two law firms whose hourly legal fees would be paid from the estate, further reducing what could be paid to nonprofits.
It remains unclear how much, if anything, nonprofit organizations can expect to recover.
Who is buying Flipcause?
Software4Nonprofits is a Canadian donor management software company founded in 1998 by Dan Cooperstock. He offered software for free until 2007 when he switched to a paid version.
Cooperstock sold the company to Scott Rassatt and Danny Vivier, co-founders of Evermore Ventures, in 2022.
S4NP boasts big names in philanthropy, including Habitat for Humanity, Hope International, and Big Brothers Big Sisters of America. The company provides donor management and accounting services to more than 8,500 churches and nonprofits, according to its website.
Rassatt and Vivier did not respond to questions about why they purchased the company or what’s next for existing Flipcause customers.
“We’re learning more about the situation and how we can best help the nonprofits as quickly as possible,” Rassatt told Oakland Voices in an email.
Next steps in court
Objections to the sale must be filed with the court by March 10. Queen Anne Helpline, a group that works to prevent homelessness in Washington state, filed an objection on Feb. 3.
The court will consider approval of the sale at a March 19 hearing.
Editor’s Note: Amelah El-Amin graduated from Oakland Voices 2019 class.
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