In this episode of the Whole Whale podcast, host George Weiner speaks with Sal Alpietro, Chief Community Officer at Fundraise Up, about a critical issue affecting nonprofits: the ownership and transfer of payment tokens for monthly donors. Sal shares alarming stories of nonprofits facing exorbitant fees and resistance when trying to move donor data between platforms. They discuss the importance of asking the right questions before signing contracts with donation platforms and the potential financial and operational risks of not doing so. Sal also shares advice on best practices and offers insights into recent developments at Fundraise Up.
Learn more about what Monthly Donor Lockup is.
Transcript
[00:00:00] And the sad part is I’ve seen nonprofits literally in tears. Saying they won’t release the tokens. I’m gonna 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 upfront
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 shocked at what was going on. We have Sal Al Pietro, the Chief Community Officer [00:01:00] 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. Uh, I made it, uh, well, you know I’m here. We, we had you scheduled for the first 100. I just don’t have we got, we lost track in the second hundred. 300. I blacked out. I dunno 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. Uh, you know, we, we trade blows occasionally on LinkedIn, which I deeply love, appreciate, look forward to.
And you made this like little poster. You’re like, why aren’t you so frustrated about this data processing for donors? Mm-hmm. 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 [00:02:00] 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. Uh, 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, you know, 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 [00:03:00] me. And BA 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 wanna 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, um, are asking ’em 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. ’cause 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 [00:04:00] own donors or like, I own my own donor information, uh, 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? Yeah. 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, 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? Mm-hmm. What is this separate, 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 are using for your digital fundraising. So if it’s called insert platform name payments or whatever. [00:05:00] 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 of that information that because they’re processing the data, they own that financial data. 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 [00:06:00] 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, 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 ’cause 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 [00:07:00] 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 I. 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 upfront. And the sad part is I’ve seen nonprofits literally in tears. Saying they won’t release the tokens. I’m gonna 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 upfront when you get in and if you say, look, no shade to payment.
Uh, in platform payment processing, no shade at all. It lets nonprofits get up and running quickly. It’s convenient. I wanna manage that. It’s a security question as well. Let’s say somebody log in. Absolutely. There’s credit card information in there. We run our own stripe accounts for a lot of customers.
Like for our [00:08:00] 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 upfront, 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 fee.
Flat fee, plus a dollar 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, like what happened? Yeah, because we all have that like giant $30,000 of break this just in case right next to this like, you know, uh, giving tree of money that’s been showering us with donations.
And I know you’ve been on the Microsoft, uh, tip these days [00:09:00] 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 uh, uh, number in the budget as well. I wanna pull back.
’cause 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 30 ish platforms that you’ve just gone and looked at and bar none.
There’s always gonna be a fee. Mm-hmm. There are some, and I’ll just go alphabetical order like ActBlue that says transfer’s not allowed. That means if you have monthly donors that you have built up with ActBlue known progressive donation platform. Mm-hmm. Your, your SOLI think is the technical term. Right.
It’s really surprising. So the most important question that a nonprofit should ask before wandering in and [00:10:00] 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? Mm-hmm. Now the list that you’re looking at there, George, that’s a list that we compiled and put onto our, our, our documentation for our migrations, uh, requests.
And it’s not a list of competitors of ours. It’s per se those are payment processors. Fundraise up, doesn’t payment process. We do not. Right. Gotcha. We are the tech that you plug your Stripe account into now, Stripe. It’s 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 wanna 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, like, but all roads lead to one of those probable payment processing.
Is that fair or no? If it’s in [00:11:00] platform payment processing, like uh, 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 a, and part of the terms of service that is like they are obliged to do is that they will allow for the export of tokens.
’cause one question is, to be fair, like I deal with a lot of tech and moving stuff around and export, import, 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. So it’s just the time required to go log in and press export for client. Yeah. 7, 2, 3, 5. Yeah, we have a, 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 [00:12:00] just click a button and done.
It’s, you know, export the file, PGP encryption, put it on a s st SFTP, pass the key over, like, there’s a bit of it. It’s like, it’s like an armored truck. It’s not just a pizza delivery or they’re just dropping a away cash. Do you think a reasonable transfer fee, ’cause I like that does seem like it would take some time and finesse, let’s say it’s a, it’s a couple hours of work and what’s more or less true is regardless of the size.
So if it’s a hundred donors or a hundred thousand, it’s still a couple hours. Right. It’s an export of a file. Mm-hmm. It’s not a, it’s not a function of size. It’s a, it’s a function of processing. Correct. And there’s a number of platforms out there, um, that Bloomerang is a, is a great example. They’re very transparent, like, you know, 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, not, not all platforms are, are as nice [00:13:00] about it. Some will make it really difficult. Uh, some then will put you at risk of losing them, saying, you know, you might, you have 24 hours to get your tokens or, or the tokens get it right and they’re, and they’re gonna delete, delete them.
Um, but again, it goes back to, for me, ask the question upfront. I told you this, $30,000, 2,005,000. These are not uncommon numbers that we see, uh, ransoms, that nonprofits have to pay to get their tokens if they only had their own straight account at the outset. That would’ve been eliminated. Yeah. Or upfront as we’re saying.
Like 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, um, 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. Correct thought. But this is particularly pernicious [00:14:00] because it is, like you said, a ransom. It is lock-in. Mm-hmm. I, if I wanted to start a, the most profitable fundraising thing, I would make it, uh, a 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 a nonprofit has a certain amount of, uh, 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. Um, because you can’t leave. It would be silly. I would just guarantee 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 gonna charge you a lot of money for the software upfront. We’re gonna lock you into a three year contract, and we’re gonna require that at that price that we’re gonna discount for you.
You’re going to have to use. Our embedded [00:15:00] 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 gonna 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. Gets books. That’s like what I, I do, I’m like, it’s great for nonprofits. 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 gotta get in front of it, right? Um, look to death to [00:16:00] 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 outta business because they solve 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, at attacking the problem, or put yourself outta 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 changed payment processor, right? They’re asking that question upfront. Any business that has a high dependency on subscriptions and subscription economy, food boxes, HelloFresh, whatever, right?
Guarantee 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. [00:17:00] 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, that’s where the, that’s where the skeletons are, are hidden. Frankly, it looks like when, 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 if they’re like, yeah, no, if you wanna 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 ransom, like here’s 30 k at what, what can, because like I do have [00:18:00] the donor information, I have my reoccurring donors.
What is my recapture rate for like, you know what, I’m gonna call the bluff. You can burn it. I will just move over. I’ve got 100 monthly givers at, uh, $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 will build out, like, you know, recapture campaigns, well, 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, of your donor base getting wiped out if you don’t transfer the tokens.
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 [00:19:00] 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 gonna give the gift. Those are the ones that gave, because you peaked their interest and they were on the fence and they, and you got ’em at 51, 50 2% 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 super fans, all those that are not yet there and loyal, like not every donor’s a loyal donor.
Of course not. I give, I give, you know, 10 bucks a month to some org 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 changed tech and you need me to redo that, I’m probably not gonna 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 [00:20:00] 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 in asking that question. Pros and cons to both solutions, but let’s not be blindsided and just get in front of it. And I think that’s, um, 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 rotation correct. At all. Correct? Yeah, hundred percent. This is a, this is a choice to lock in nonprofits. Sal, thank you so much for, for joining us. I do always have my standard outbound list of rapid fire [00:21:00] questions, so if, if you don’t mind, we got a little, 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, and the success team. Male tester. Male test.
Ooh, 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? For fundraise up? Yeah.
Professionally, [00:22:00] 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. Um, 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, 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. Uh, do you believe nonprofits can successfully go outta business?
Great question. This is the best one. I hope so. I hope so. I hope they can go. I, I hope they go out of business through merging with another organization that where the, the power of the two is greater than them alone. Or I hope that they do it by solving a problem that, um, no longer, 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 [00:23:00] tough one. If I were to throw you in a hot tub time machine, back to the beginning of your work at fundraise op, what advice would you give yourself? Pace yourself a little more. It’s gonna 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? Uh, 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? Oh, you want me to get rid of this policy with the migration tokens?
Is that, is that it? You could do, I feel like you were gonna wave the wand for, uh, increased mergers, but in the nonprofit space, in that, in that regard. Oh, yeah. I, 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, you know, concerns with the challenges we’re having [00:24:00] and a bit more of a defeatism mindset. So ambition over defeat. Uh, 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 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, Salvato, Pietro, how do you help me? Share things that are on your mind, you know, DM me, add me on there. Um, if you’re using fundraise up or if you’re not, gimme a message. I’m happy to help with whatever context in my network, within the company.
Anything you need. Well, Sal, thanks for bringing this to the top of our attention and hopefully, uh, folks [00:25:00] will share this particular bit of information and it protects the next, uh, next round of nonprofits making key decisions about their donation platforms. Hopefully. Thanks George.
