The Flipcause Crisis: How to Protect Your Nonprofit from Donation Platform Failure
A Washington nonprofit requested a $13,000 transfer in September 2024. Months later, they're still waiting. An Oklahoma organization has $4,700 stuck in limbo despite repeated requests. Across 34 states, over 100 nonprofits are asking the same question: Where's our money?
These organizations trusted Flipcause, an Oakland-based donation platform, to process their fundraising. Now they're caught in a crisis involving cease-and-desist orders, a class action lawsuit, and over $2 million in frozen donations.
This post will help you understand what happened, how to evaluate your own platform's risk, and what safer alternatives look like.
What Happened
| When | What Happened |
|---|---|
| Spring 2024 | Fund transfers start getting delayed. Organizations assume it's temporary. |
| Fall 2024 | 105 complaints hit the BBB—95 in the last year alone, spanning 34 states. |
| Nov 2025 | California AG Rob Bonta issues a cease-and-desist, citing ~$500K in withheld donations and failure to register as a fundraising platform. |
| Dec 2025 | Nearly 30 organizations join a federal class action, seeking $5M+ in damages. |
| Dec 6, 2025 | Stripe terminates Flipcause as a customer. |
The lawsuit alleges Flipcause ran a "nationwide scheme to defraud and systematically deprive nonprofit organizations of the very funds they raised for their charitable missions." Flipcause is appealing the AG's order, arguing they're not technically a "charitable fundraising platform."
The financial losses hurt, but the ripple effects are worse: staff time redirected to chasing funds, mid-campaign platform migrations, lost donors, paused programs, and reputational damage. For a small nonprofit on thin margins, this kind of failure can threaten survival.
How to Vet a Platform
Flipcause looked legitimate—professional website, thousands of customers, competitive features. So how did nonprofits miss the warning signs? Attractive pricing that isn't sustainable, rapid growth outpacing capacity, VC pressure prioritizing acquisition over stability, regulatory gaps, and delayed symptoms that surface months later.
The uncomfortable truth: nonprofit leaders are busy running programs, not auditing payment infrastructure. Here's what to verify before committing:
Financial Stability
- 5+ years of consistent service
- Ownership structure (public company, PE-backed, or bootstrapped each carry different risk)
- Acquisition by a stable parent is a positive signal
Regulatory Compliance
- State registration with AGs—California's registry is searchable
- PCI compliance for payment data
- SOC 2 certification for security
Operational Transparency
- Fund transfer timelines in writing (not "up to 30 days")
- Published fees with no hidden charges
- Responsive support—test before you sign
Reputation Signals
- BBB complaint patterns over the past 12 months
- Independent reviews on G2, Capterra, TrustRadius
- References from similar nonprofits
Your Options
Established platforms with demonstrated staying power:
| Platform | Track Record | Best For |
|---|---|---|
| Bloomerang | Founded 2012, PCI compliant | Small to mid-sized nonprofits |
| Classy | Owned by GoFundMe, billions processed | Peer-to-peer campaigns |
| Givebutter | Well-funded, transparent pricing | Simplicity-focused orgs |
| Network for Good | Operating since 2001, $10B+ facilitated | Established organizations |
Going custom is another path for organizations with significant volume. You get direct donor relationships, full data ownership, complete brand control, and tier-one payment processing through Stripe. The trade-off is upfront development investment—but you eliminate platform dependency entirely.
Your Action Plan
If you're unsure about your current platform:
- Verify registration status with your state Attorney General
- Re-read your contract—what are the transfer timelines? Termination clauses?
- Document recent transactions—create a paper trail now
- Test a transfer—request funds and track how long it actually takes
- Check BBB and reviews—look for complaint patterns over the past 12 months
- Identify a backup—know your migration path if needed
The Flipcause situation is painful—but it's preventable with proper due diligence. The best time to vet your donation platform was before you signed up. The second best time is now.
Evaluating your donation infrastructure? We help nonprofits assess platform risk and build custom solutions when the fit is right. Let's talk.