Ribbon announced it has closed $2.7 million in venture capital funding “to enable the Austin-based startup to roll out its unique fiscal sponsorship model for the burgeoning nonprofit industry.”
The company’s fiscal sponsorship model “allows individuals looking to conduct charitable work to partner with existing 501c3s to help them accomplish their goals while enjoying the sponsor’s tax-exempt status.”
Ribbon CEO Braden Fineberg said:
“We believe starting a new charity should be quick, easy, and effortless. We already have 1.6 million registered nonprofits in the U.S. In a crowded market, there is growing demand for a platform that makes charitable work more accessible without the need to create a new 501c(3).”
Salen Churi, General Partner at Trust Ventures, remarked:
“You can start a company in a day for a few hundred dollars, but a nonprofit can take years and thousands of dollars, not to mention countless hours working through legal red tape. Ribbon helps those in the nonprofit sector move at the speed of business, spending their time and resources doing good rather than on tax lawyers.”
Annually, organizations in the U.S. “spend $12.8B and 240M hours to become 501c(3)s, and another $8B annually managing their charitable status.” In time, Ribbon estimates “that about 20 percent of new organizations will eventually need their own 501c(3) status; the rest will be Ribbon customers who benefit from the sponsorship model.”
Fineberg added:
“Imagine the good that could be accomplished if people who wanted to do charitable work could, in effect, create a nonprofit in minutes, enable tax-deductible donations instantly, and not have to manage their nonprofit status. With IRS backlogs and the acceleration of Open Banking APIs, the industry is ripe for this product.”
Open banking is “a system under which banks make their application programming interfaces (APIs) accessible for third parties to develop new apps and services.”
Ribbon’s fiscal sponsorship model “will be the first product to allow this to happen in the nonprofit sector,” Finberg explained.
As noted in the update, you can “use Ribbon to save time, money, and effort when you start a charity by connecting with a fiscal sponsor.” Their all-in-one platform “gives you the banking, accounting, fundraising, and organizational tools you need to build a successful charity under the umbrella of your fiscal sponsor.”
As mentioned in the announcement, Trust Ventures is “a venture capital fund that helps innovators navigate policy barriers in the world’s largest industries and bring life-changing technologies to market.”
Trust Ventures has “helped portfolio companies unlock access to their innovations for hundreds of millions of Americans.”
