Philanthropi, a fintech startup that facilitates philanthropic payments, plans to raise more venture capital this summer as it seeks to snag financial services partners and scale with them.
Keith Leaphart, founder and CEO of Philadelphia-based Philanthropi, said the company plans to raise money as it heads into the third-quarter. The startup, focused on “giving-as-a-service,” has raised about $8.5 million since its 2018 founding.
Philanthropi initially sold its services by giving companies the ability to offer the services to their employees. More recently it has begun targeting financial services firms and is working to extend the services to those companies' customers.
Wilmington, N.C.-based Live Oak Bank is one of the startup’s clients, as is Bryn Mawr Trust. Leaphart declined to provide more specifics on clients. He noted that Philanthropi has been working on the technology integration with a yet-to-be-announced major financial services partner for the past several months.
Leaphart was confident in his company’s pursuit of fresh capital even amid economic headwinds that have challenged other fintechs. Venture capitalists in financial services interested in the company’s focus “see lots of synergies on the product side as well as the investment side,” he said.
Still, Leaphart wouldn’t specify an amount the company is aiming for, noting the process is market-driven and “the market is changing dramatically.”
Philanthropi got its start working with employers to offer philanthropic giving as an employee benefit, allowing workers to set up donor-advised funds (DAF) they contribute to through a payroll integration, with the option for employers to match contributions. “Instead of being top-down philanthropy in the corporate space, it’s more like bottoms up,” Leaphart said.
The startup currently has about 25 employers as customers, and it’s distributed about $3 million to 700 charitable organizations across the U.S., said Leaphart, who’s also a physician.
Now, Philanthropi is focused on adding more financial services and bank partners, and scaling with them to expand. Its partners, in turn, have the option to offer the integrated fund services to their customers, he said. “We want to serve as the plumbing for our financial service partners, to allow them to either leverage our platform or build a front-end experience” for their customers, Leaphart said.
That might include Philanthropi’s partners offering their customers a personal foundation as a product feature with a checking or savings account, or allowing customers to leverage credit card rewards to make contributions to philanthropic funds, he said.
Advancements in technology, which have made it easier to create a personal foundation, allow Philanthropi’s customers to use its application programming interfaces “to set up these accounts, allow their customers to move money into these accounts and, ultimately, get dollars out to charity,” Leaphart said.
Philanthropi counts core banking software firm Finxact – acquired by payments giant Fiserv earlier this year – as a technology partner, Leaphart said. Finxact CEO Frank Sanchez is an investor in Philanthropi, as is the venture arm of card company American Express. Sanchez’s brother, Michael Sanchez, who is CEO of digital banking technology company Savana, is also an investor.
The giving data that’s gleaned can be valuable for Philanthropi’s customers because the startup informs companies “this is part of your ESG profile, this is part of your impact that you’re having in the community,” Leaphart said.
Charitable giving surged during the COVID-19 pandemic, underscoring the need for nonprofits to receive contributions more efficiently, Leaphart said. Philanthropy was a $484 billion business in 2021, and digital payments is “a game changer for both donors as well as nonprofits,” he said.
With its approach, Philanthropi wants to help employers and banks target millennial and Gen Z age groups, who Leaphart said are the most active givers by generation and offer a long philanthropic runway as they inherit wealth.
Leaphart wouldn’t share revenue figures for Philanthropi, which currently has about 25 employees. The startup makes money through gateway fees – about 3% on average – imposed on charities receiving funds, and Philanthropi’s customers pay set-up and recurring fees that vary based on data shared and employee count.
Philanthropi also plans to open up its giving platform this month to allow anyone to open an account and start their own DAF. The startup is focused on “frictionless funding,” Leaphart said, noting the company enables contributions to be made via ACH or credit card payment as well.