Client Alert: With End-Of-Year Giving in Full Swing, Actions Against Fundraising Platform Flipcause Highlight Need for Continued Due Diligence by Donors and Nonprofits
Date: December 3, 2025
By:
Heidi K. Abegg
On November 11, 2025, the Latino Medical Student Association-Northeast filed an amended complaint in a federal class action lawsuit on behalf of itself and 28 other nonprofit organizations alleging that Flipcause is unlawfully withholding hundreds of thousands of dollars in charitable funds, causing the nonprofits to suspend operations, lay off staff, and default on obligations.
On November 12, 2025, California Attorney General Bonta ordered Flipcause to immediately cease and desist from solicitation of charitable contributions in California. In his order, Attorney General Bonta notes that Flipcause failed to register as a fundraising platform, despite the issuance of a notice on October 21, 2019 requiring registration as a professional fundraiser in California. (After the passage of the charitable fundraising platform law, Flipcause is now considered a charitable fundraising platform and not a professional fundraiser.)
Under California law, fundraising platforms are required to remit donations to charitable organizations within five business days of receipt. Charitable fundraising platforms are also required to hold the funds received through the platform in a separate account and ensure that the donations are sent to the recipient charitable organization along with an accounting of any fees imposed. Both the class action lawsuit and Attorney General Bonta’s order allege that Flipcause has failed to remit over $600,000, despite repeated requests from the charities over a period of more than 60 days.
Getting Relief and Proactive Protective Steps
Organizations that have not received funds from Flipcause (or another charitable fundraising platform) can file complaints with Attorney General Bonta, as well as with attorneys general in other states where fundraising is occurring.
Nonprofits considering engaging a third-party fundraising platform can proactively undertake the following steps:
- Understand the issues created by third-party fundraising platforms, including fees, registration requirements on the nonprofit, and remittance timeframes.
- Conduct due diligence, including checking to see if the platform is registered and in compliance, and careful review of the terms and limitations of third-party fundraising.
The Associations, Nonprofits and Political Organizations practice group at Whiteford has extensive experience and expertise in advising clients on all aspects of fundraising. Please contact Heidi Abegg or another member of the practice group if you have any questions or concerns regarding your fundraising compliance obligations or obtaining funds owed.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.