Austin-based Ribbon has closed on $2.7 million to help nonprofit organizations.
The company has created a software platform that gives individuals and businesses the banking, accounting, fundraising, and organizational tools they need to build a successful charity under the umbrella of a fiscal sponsor.
Ribbon’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.
“We believe starting a new charity should be quick, easy, and effortless,” Ribbon CEO Braden Fineberg said in a news release. “We already have 1.6 million registered nonprofits in the U.S. In a crowded market, there is a growing demand for a platform that makes charitable work more accessible without the need to create a new 501c(3).”
Austin-based Trust Ventures led the investment round.
“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,” said Salen Churi, General Partner at Trust Ventures. “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.”
Ribbon thinks its sponsorship model will replace the vast majority of new nonprofit organizations. The platform aims to save nonprofit organizations time and money in filing and managing their charitable status.
“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,” Fineberg said. “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 added.
