The Monthly Donor Lockup Problem: When Platforms Hold your Donor Data Hostage

And the sad part is I've seen nonprofits literally in tears saying they won't release the tokens. I'm going to lose the monthly donors that I've been building up for the last five, ten years, and they literally cry about it. That's the part that I think we can resolve by just knowing up front.

Welcome to the Using the Whole Whale Podcast, where we learn from leaders about new ideas and digital strategies making a difference in the search social impact world. This podcast is a proud production of Whole Whale, a B corp digital agency. Thank you for joining us. Now let's go learn something. This week on the Whole Whale Podcast, we have a real live guest who's here to rant on a topic that opened my eyes to an area of fundraising that frankly was a blind spot for me. But the more I poked at it, the more I was pretty, pretty shocked at what was going on. We have Sal Salpietro, the chief community officer at Fundraise up. Hey, Sal, how's it going?

How you doing? George, thanks for inviting me to be on this. I know you're like what, three, 400 episodes deep? I made it. Well, you know, I'm here.

We, we had you scheduled for the first 100. I just don't know how we got. We lost track in the second hundred, 300, I blacked out. I don't know what happened. Look, I have three kids. I'm doing my best.

I hear you, man. Your best is great. Appreciate it.

So you are an outspoken member of the folks that care about fundraising, the folks that care about best practices. You know, we trade blows occasionally on LinkedIn, which I deeply love, appreciate, look forward to. And you made this like little post. You're like, why aren't you so frustrated about this data processing for donors? And maybe in a nutshell, can you explain what is going on when a nonprofit needs to move their donor base from one platform to another, which seems like a click, a clicky clicky on the thingy to export, but no, got it.

Right. So clicky clicky on the dashboard. Yes. To export a CSV. What we're talking about specifically are the what are called payment tokens. That is a small encrypted file that sits on a payment processor that holds your donor's financial information, the credit card number, Apple wallet id, expiration date, ccv, all the stuff that allows a payment processor to execute the payment. Without that, obviously you don't have donors. So what we found now, you know, at fundraiser, we don't have in platform payment processing. But what we found is that orgs that were outgrowing a solution or looking to get a specialized solution for one thing, and looking to move their monthly donors, we found they were coming up against a lot of resistance and friction from the incumbent platform. And I came from the nonprofit space prior to this, prior to that, E commerce and for profit tech. And that was kind of shocking to me. And in a nutshell, what we saw was nonprofits would say, hey, can I get my monthly donors? And the platform would say, no, you can't. You're stuck with us. And if you want to change platforms, you have to restart your monthly donor base. Or they were saying, sure, X thousands of dollars to release those payment tokens to you wherever you want to take them. Now, in our case, the only thing that we are asking them to move to is their own stripe account, not to fundraise up to their own stripe account that they own and will have ownership over going forward. So that's the premise.

This seems like such a big thing hiding in plain sight as a problem because my understanding of I own my donors, right? And I walk in, I see it plastered on the website of my choice that I'm choosing for, you know, platform, I sort of assume when it says, you know, you own your own donors or like I own my own donor information when I go to certain platforms that actually there's, there's an asterisk and there's a lot hidden in the asterisk of do you own your own donors? You mentioned that there is one wall, one one side of the fence, which is here's a bucket of contact information, happily export this thing, no problem. There's first name, last name, email, zip code, blah blah blah blah. Preference, sure, go all day. But good luck trying to charge that without this other bucket of payment data. Can you explain this a bit more? This payment data, does that live on like PayPal? Does it live on a separate SQL database? What is this separate bucket that apparently nonprofits don't own for their donors?

They don't own it if they're using payment processing that is integrated in the solution that you're using for your digital fundraising. So if it's called insert platform name payments or whatever, then essentially what that platform is doing is that platform, which is not a payment processor by brand, right? That's not their core work. They are subleasing out payment processing to you and white labeling it through some other supplier. That other bucket of data is the credit card and all that information that because they're processing the data, they own. That financial data, the nonprofit does not. Unless you own the payment processing account. When you use a platform with integrated payment processing, they're creating a sub account for you under their main account. Okay. And they own that. And they say, that's our data legally. Which is correct. Now what the frustrating part for me was why. And I'm talking about organizations that are multinational, huge organizations, George, that will be blindsided by this. And go, what do you mean I can't move my tokens? Right. I worked with one that had. That had monthly donors across seven different payment processors because none of them would let them go. And they had. They'd have to keep sending out emails back to their donor base that they lost saying, hey, we changed tech. Can you restart your monthly gift? Of which 20% of them do. And the rest of them go, I found an easy out or whatever it might be, right? So that's the part that I wanted to pull the covers back on, was why are. Not. Not. Why are nonprofits not asking before they sign a contract, what happens to my monthly donors if I need to change technology for whatever reason? Not necessarily because I'm unhappy. Maybe I'm still using your platform for everything else except this. But what happens to that data? Is it mine? What are the fees, et cetera?

It seems like the most important question a nonprofit should ask when they're about to sign on with a vendor is, do I own my monthly donors? Which is a backdoor way to say, do I own the payment data and the ability to continue to charge my monthly donors and accept donations should I need to move?

I would even be more prescriptive in the question, do I own the payment tokens for my monthly donors? Should I ever need to move? Right. And the answer likely will be no. But there's a fee or a cost, which is okay as long as you know up front. And the sad part is I've seen nonprofits literally in tears saying they won't release the tokens. I'm going to lose the monthly donors that I've been building up for the last five, 10 years. And they literally cry about it. That's the part that I think we can resolve by just knowing up front when you get in. And if you say, look, no shade to payment in platform payment processing, no shade at all. It lets nonprofits get up and running quickly.

It's convenient to manage that. It's a security question as well. Let's say someone. There's credit card information in there. We run our own stripe accounts for a lot of customers like for our own tools. Like there's real data in there.

Exactly. So there's pros and cons to both, right? I think the cons can be eliminated just by asking the question up front. What happens if I need to change platforms? Can you tell me what that will cost me? Now, I just spoke to our head of migrations this morning to get a bit of an update for our conversation. And one nonprofit recently, a very large one in Canada, was charged $30,000 to get their monthly donors. And it was a $10,000 flat fleet, flat fee, plus a $36 per token. So they had about 20,000 monthly donors to move. Right. And what budget's that coming from? Is that coming from the. Oh, shit bucket?

Like, yeah, we all have that, like, giant $30,000 of break this just in case, right next to this, like, you know, giving tree of money that's been showering us with donations.

And I know you've been on the Microsoft tip these days. And, you know, Clippy, rest. Rest in peace. Maybe he's back with a vengeance. The ghost of Clippy. This is a thing too. Like, this is 30 grand that they have to cough up, you know, which is quite a disruptive number in the budget as well.

I want to pull back because right now in your mind, you're listening and you're like, well, this is probably just a handful of things. And just to call it out, you know, like, fundraise up is a competitor to some of these things. But there's an article I'm looking at that you've collected objectively. There are 30ish platforms that you've just gone and looked at. And bar none, there's always going to be a fee. There are some, and I'll just go alphabetical order, like ActBlue that says transfers not allowed. That means if you have monthly donors that you have built up with ActBlue, known progressive donation platform. Your. Your SOL, I think is the technical term.

Right.

It's really surprising. So the most important question that a nonprofit should ask before wandering in and even with an existing provider is, do I own my payment token for my donor?

Correct. And be prepared that the answer is no. And how much will you charge me to get that? Now, the list that you're looking at there, George, that's a list that we compiled and put onto our documentation for our migrations requests. And it's not a list of competitors of ours per se. Those are payment processors. Fundraiseup doesn't payment process. We do not. Right. We are the tech that you Plug your Stripe account into. Now, Stripe is not on that list because you can leave Stripe and go to Braintree or worldpay or anybody and they will not charge you. They don't charge for tokens to come in or out.

I want to make sure that those words made sense. So let's take a step back. There is a Stripe account associated potentially with one of these payment processors or maybe they're using Braintree. Right. But all roads lead to one of those probable payment processing. Is that fair or no?

If it's in platform payment processing like a rebranded white labeled. Yes, that is correct. They are running on a Stripe or a Braintree or a something. Some of the others in there that you see, like part of the terms.

Of service that is like they are obliged to do is that they will allow for the export of tokens. Because one question is, to be fair, like I deal with a lot of tech and moving stuff around and exporting like that could be a lot of work. What is. So like the hard cost is technically most likely if it's Braintree, if it's PayPal, if it is Stripe $0 charged for the export of my payment tokens.

That's correct. They will facilitate that.

I'm required to go log in and press export for client 7235.

Yeah, we have a six person migrations team that, you know, they guide and facilitate this. We can't do it for anybody because that's. We're. We don't have any right to any of that data and we don't want to, but it is, it's a little bit more than just click a button and done. It's, you know, export the file, PGP encryption, put it on a sftp, pass the key over. Like there's a bit of. It's like it's like an armored truck. Right. It's not just a pizza delivery where they're just dropping a.

What do you think, a reasonable transfer fee. Cause like that does seem like it would take some time and finesse.

Let's say it's a couple hours of work. And what's more or less true is regardless of the size. So if it's 100 donors or 100,000, it's still a couple hours. Right. It's an export of a file.

It's not a function of size, it's a function of process.

Correct. And there's a number of platforms out there that Bloomerang is a great example. They're very transparent. It's 500 bucks or whatever it is. And we'll do the thing. It's just to cover our time and the tokens are yours and no problem. And you can take that same stripe account and plug it into your Bloomerang dashboard and everybody's happy. So not just, not all platforms are as nice about it. Some will make it really difficult, some then will put you at risk of losing them, saying you have 24 hours to get your tokens or the tokens get it right and they're going to delete them. But again, it goes back to. For me, ask the question up front. I told you this. $30,000, 2000, 5000. These are not uncommon numbers that we see ransoms that nonprofits have to pay to get their tokens. If they only had their own stripe account at the outset, that would have been eliminated.

Yeah. Or up front, as we're saying, have that question and realize that as you sort of assume you own your own data, you really don't. And there's a lot of this that we are uncovering as we wander through this new iteration of, you know, tech platforms, moving into our data that we realize we don't actually own this kind of stuff. We actually can't use it the way we thought. But this is particularly pernicious because it is, like you said, a ransom. It is lock in. I, if I wanted to start a, the most profitable fundraising thing, I would make it fundraising platform. I would make it cheap to come in, I would practically give it away, but I would make it about reoccurring, giving and make that my focus. And then all I have to do is like once nonprofit has a certain amount of reoccurring giving in there, they're locked in. And I just put in the contract is it costs $30,000 to leave and I just can continue to increase my price because you can't leave. It would be silly. I would just guaranteed make money. And that's how I create a super profitable fundraising system platform.

Sure. And I think there's one player in the space that's, you know, a publicly traded company and the behemoth of the space. And they're going one step further than what you're suggesting. And they're saying we're going to charge you a lot of money for the software upfront. We're going to lock you into a three year contract and we're going to require that at that price that we're going to discount for you, you're going to have to use our embedded payment processing. So without ever saying upfront, if you ever choose to leave. These are not going with you unless we talk about it and come to an agreement of how much you're going to pay us.

So when you're picking a donation platform, maybe like, till death do us part isn't the best policy. You should be paying attention to the donor processing tokens because you're sort of building up this massive liability. Is what I see on your books of saying, no matter what, as we improve as much as it is, we are essentially beholden to anywhere that our donations are being processed through on a monthly basis. And by the way, there's been a huge push to get these, like, monthly donors, right? Like this, like, sustained giving happens with monthly donors. Like, I actually only donate through monthly giving. Yeah, that's like, what I do. I'm like, it's great for nonprofits, but not if I didn't realize, like, I'm being like, potentially part of the problem by locking them into their payment processor.

Right. You just got to get in front of it. Right. Look to death to us part. No. I hope every nonprofit either outgrows their current platform and needs to change or you can put that in there, or goes out of business because they solved the problem that they set out to solve. Like, it should be one of those two things altruistically, as a human citizen of Earth, either outgrow your tech because you're doing so well at attacking the problem or. Or put yourself out of business because hunger's been solved. Right? So, yes, but that portability of your monthly donors to allow you to do that. Now, I guarantee you Netflix knows exactly what the charges would be if they change payment processor.

Right?

They're asking that question up front. Any business that has a high dependency on subscriptions and subscription economy food boxes, hellofresh, whatever, right? Guaranteed they know to a T and they're negotiating their rates and they know what happens if we need to change tech and what those terms are. Like I said, very large orbs in this space are not taking that much care with knowing about what are our options should we need to change platforms for any positive or negative reason.

Always feels like the. The total takeaways for me are like, own your own data. Are you sure you own your own data? Like, have as much as possible that stack. Because somebody. That's where the. That's where the skeletons are. Are hidden. Frankly, it looks when we're in this and there's probably a reason why, like, you know, PayPal and Braintree and Stripe, they're all competitors. They're all sort of bid against each other in the sense. So they're like, yeah, no, if you want to, like, leave, you can export your data. You own it. But that layer, right, the place where the door is left open a crack for all manner of sin seems to be in that secondary layer of here's our platform layer that lives on top of your payment processing of choice. And that is where mistakes are made. And it's incredibly sad that. Let's just say somebody is inheriting systems like this. And like, what is your advice? Like, here's the worst case. I'm ransomed. Like, here's 30k at what. What can. Because, like, I do have the donor information. I have my reoccurring donors. What is my recapture rate for, like, you know what? I'm going to call the bluff. You can burn it. I will just move over. I've got 100 monthly givers at $25 a month. Of those 100, how many can I recapture? And is there, like, what is the best case scenario?

We've had to go down that route and we'll build out, like, you know, recapture campaigns. We'll import all the data, but it'll flick off an email and it'll say something like, there was a problem with your payment method. Click here to update. Right. And that's one way, but you're getting maybe 20, 30% of them, so.

No. Are you serious?

Sure, sure, sure.

Yeah.

I mean, you're looking at least half of your donor base getting wiped out if you don't transfer the tokens. Look, especially if you're, if you're aggressively growing your monthly donor base, you're targeting mobile users that are actually more likely to give monthly at lower amounts. Lower. What's the word I'm looking for a lower intent to give. But they. Folks that are on the fence and say, you know what? Apple pay, I'm on my phone watching my kid at the park on the swings. I'm going to give the gift. Those are the ones that gave because you piqued their interest and they were on the fence and you got them at 51, 52% of a. Yes, and they'll give. Those are the ones that will not move heaven and earth to reinstate a gift. So the gap between when you get the monthly donor and you cultivate them to be superfans, all those that are not yet there and loyal. Like, not every donor is a loyal donor.

Of course not.

I give, you know, 10 bucks a month to some orgs that I go, cute. I like that mission move heaven and Earth for them, probably not, but I'll give them 10 bucks a month. And if a problem comes up and you're sending me a bunch of emails about you change tech and you need me to redo that, I'm probably not going to come back. So that's. Those are the ones you lose, the ones that were your lower intent versus your long term loyal.

Well, Sal, thank you for bringing this to my attention. I can't wait to dig into it some more and really make sure nonprofits are frankly just more aware of owning their own data in this respect because this seems to be a growing problem as, as nonprofits push to subscription, push to monthly donors, but do it on platforms where they don't own their own data and they're sent. They're simply setting up for this type of really sad, you know, ransom situation for sure.

Look, the article was really just to start the conversation that nonprofits need to have and asking that question, pros and cons to both solutions.

But.

But let's not be blindsided and just get in front of it. And I think that's what we can. If we all can do that, we can push the industry to be a bit more nice about how we handle this.

Yeah. This is a policy change. This isn't a technical limitation, to be clear. Not a technical limitation at all.

Correct.

Yeah. This is a choice to lock in nonprofits. Sal, thank you so much for joining us. I do always have my standard outbound list of rapid fire questions, so if you don't mind, we got a little rapid fire for you. Okay.

I didn't think I knew about this, but I love it. Go for it.

Yeah. Well, even better. What is one tech tool or website that you or your organization has started using in the last year?

One tech tool or website I've been using, if I can throw that in there. And the success Team mail. Tester mail.

Okay. All right. What tech issues are you currently battling with?

Is it okay if it's a recently overcome battle?

Sure. You could slain the dragon.

Okay. WIX doesn't allow you to upload Apple Pay verification files, so you can't ever have Apple Pay on your WIX website. And that's been a thing for seven years. And now you can add Apple Pay to WIX through server side authentication. So that's really nerdy and deep, but that's the thing that popped to mind.

I love it. What is coming in the next year that has you the most excited?

Which context? Fundraise up or me personally or for Fundraise up Yeah.

Professionally.

This is something we've been waiting for for a long time. We are rolling out two way donor portal. So we'll pull in gifts that happen offline and in other places and show it in the donor portal even if it didn't happen on the platform. So that's a big thing coming.

Can you talk about a mistake you made earlier in your career that shapes the way you do things today?

Yeah. I was vocal about a particular issue on LinkedIn. LinkedIn gets me into more trouble than it's worth, I think. Look at it. It threw me here with you, George. That's where I ended up. Where I had the CMO of a multinational UN organization call me up and complain about what I had written.

Do you believe nonprofits can successfully go out of business?

Great question. This is the best one. I hope so. I hope so. I hope they can. I hope they go out of business through merging with another organization that where the power of the two is greater than them alone. Or I hope that they do it by solving a problem that no longer needs to be addressed. Those are my hopes. Do I think it's possible I know the former is the latter. It's a tough one.

If I were to throw you in a hot tub time machine back to the beginning of your work at Fundraise up, what advice would you give yourself?

Pace yourself a little more. It's going to be a longer ride than you thought.

What is something you think that you should stop doing?

Going to bed so late and reading more.

If you had a Harry Potter style wand to wave across the industry, I feel like I can guess what it would do. But what would your magic wand do?

You want me to get rid of this policy with the migration tokens? Is that it?

I feel like you were going to wave the wand for increased mergers, but.

In the nonprofit space in that regard, if I could wave my wand, I would try to replicate more of the energy I feel at a conference that is a technology conference, which is ambitious problem solving and hopeful for the future. And apply that more to the nonprofit space where I see more concerns with the challenges we're having and a bit more of a defeatism mindset. So ambition over defeat.

What advice would you give college grads looking to enter the social impact sector?

Do that after the for profit sector and take that skill and apply it to the nonprofit sector. The nonprofit sector needs more individuals with business mindsets.

What advice did your parents give you that you either followed or did not follow?

My dad always told me, which means think. Think about the bad so that you can avoid it and bring the good. So that's the translation of it. That's what I follow all the time. I try to plan ahead.

All right, how do people find you? How do people help you?

LinkedIn Salvatore Salpietro how do you help me share things that are on your mind? You know, DM me, add me on there. If you're using Fundraise up or if you're not, give me a message. I'm happy to help with whatever contacts in my network within the company. Anything you need.

Well, Sal, thanks for bringing this to the top of our attention and hopefully folks will share this particular bit of information and it protects the next next round of nonprofits making key decisions about their donation platforms.

Hopefully. Thanks George.

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