 Welcome back to the nonprofit show, you know, Julia, I've been catching myself, I say welcome back because I'm making a huge assumption that many of our viewers and listeners have been here before. But if you haven't, we welcome you also for your very first time. Today we have with us Daniel Grunstein joining us all the way from Miami. He is the co founder and the CEO at crowded. He's brought to us a conversation that I think you're going to like digital payment decisions and we're diving deep in particular about Venmo and your nonprofit so stay with us Daniel do a quick intro here just briefly but before we pass the microphone. We want to share who we are if we have not met you yet. So hello to you Julia Patrick CEO of the American nonprofit Academy and mastermind truly behind the nonprofit show. I get to, I get to play alongside day in and day out as a co host. So honored to do that. I'm Jared Ransom nonprofit nerd and CEO of the Raven group. We also want to say, thank you, thank you, thank you to our amazing partners that allow us to have these conversations like the one we're about to have with Daniel. So thank you to our friends over at Bloomerang American nonprofit Academy nonprofit thought leader staffing boutique, your part time controller, 180 management group fundraising Academy at National University. Also thank you to JMT consulting nonprofit nerd and nonprofit tech talk. Do us a favor do yourself a favor do the companies a favor check them out because they have helped us to produce over 950 episodes and here's where you can find them. Pull out your smartphone we know it's with you you're probably on it while you're listening to us. Scan QR download the app you can also find us on broadcast and podcast platform so a lot, a lot of opportunities to binge watch us which we shared yesterday there was a guest in fact Julia that was on with us before the holidays before December. And he says you know what I found myself binge watching the nonprofit show over holiday break so I love it. I love it. I'm sorry but I love it. Sorry, not sorry. But hey, we're excited to have you here with us Daniel so Daniel Grenstein for everyone watching and listening. He is the co founder and the CEO at crowded. You can check out his company at banking crowded.com. Welcome to you Daniel. Thanks for having me thanks for having me. Okay. Let us know and I told you this in the green room. What's the elevator speech when it comes to crowded, like what all are you doing in the great state of Florida. We're doing it for everyone across the US. Essentially, we help nonprofit treasures manage their finance so nonprofit treasures have to deal with quite a wide array of financial processes for what is typically a volunteer position, and often a position where you know someone has a little bit of financial training but but not not a tremendous amount they have to collect payments they have to bank those. They have to you know allocate spending and budgets they have to complete very specific tax filings at the end of the road that they're in good standing with state and federal and IRS bodies and for you know a lot of nonprofit treasures this is you know seeming like a completely endless task. We spend a lot of money on administration and consulting and things like that when you know we realize that this could be put into a neat user friendly digital experience and really just make it a lot easier for grassroots nonprofits. And we also work with national organizations and larger organizations to provide this resource to their local treasures in their local chapters so that's quite a large portion of our business. Amazing. Well, today we're going to talk about digital payments and and we really want to talk specifically about Venmo. And I think this is going to be one of those conversations that people are like oh man I need to know about this. We don't know about this. Start with us in talking about Venmo what it is and how it works with nonprofits, and then we'll dig in a little bit deeper about getting your thoughts and your opinions on it. For sure. So Venmo is what they call a peer to peer payment solution. It's designed for you know if we went out for lunch and you know I paid and you know Julia and Joe you just paid me back your share for lunch and it's. Okay, no we're not going to do that you're taking us out to lunch. But if we were hypothetical obviously I would take you out to lunch. So designed in that way that it's meant to be between individuals very casual expenses nothing that needs to be reported or tracked and it's all done in good. So I think some people are not sort of aware of what Venmo is grateful and it is excellent for that lunch use case, but it's probably not the best thing to run a nonprofit on. And you can sort of run into a lot of challenges and problems finds even which we can get into in sort of subsequent questions but at a high level that sort of what Venmo is and how it sort of has become used and misused over the years. I gotta say Daniel when I first heard of Venmo and you said five six I don't even know when it was established but you know I thought no not another platform like I don't want another login I don't want another password. I don't know another system that I have to connect to my bank account and then that's the personal side right and then it became nonprofits are using it there's donations being sent through that there's income maybe you know an earned revenue or merchandise, things like that so let's get as I say nerdy, let's get super nerdy about this. Talk to us about like how it works in particular with the nonprofits and the accounting considerations that we need to be aware of because you shared earlier, the nonprofit treasures. All I heard was a lot of eyes to dot and a lot of teased across. So essentially on Venmo, you know, you previously were allowed to collect sort of as much as you want and Venmo sort of said it's, you know, whatever problems you run into down the road. That's between you and the IRS or you between you and your and now Venmo's become sort of a bit more of the strict parent. For example, in 2023 that their first restriction which is if you collected over $20,000 or 200 plus transactions then you need to do a 1099 on Venmo and now in 2024 it's gone to $5,000 and in 2025 it's going to go to $600. Oh, my gosh, I had no idea about this. Yeah, so it's okay if you're doing you know $700 in lunch payments, but if you're doing $600 for an income stream that's obviously not money in money out that's like donations or dues or something like that. And then you have to do a 1099 and prescribe that to a nonprofit. So what previously has been happening is, you know, the mom or dad running the bake sale or the popcorn stand a boy. Is just Venmo Greg, he's the dad in charge today. And then he, you know, he, he figures out how to get that to the nonprofit. That's obviously not going to be sort of possible going forward. And in addition, you also have the just the issue of security. I mean the fact that is that if you are processing these large amounts. There's no FDIC insurance on the amount and that's not a proper bank account. It just, it just sits there and they have been a lot that have and will continue to be instances of fraud on Venmo. And, and finally, you know, it is under an individual's name. So, you know, we hope that everyone who's involved in nonprofit is of goodwill and is honest and everything, but we know that that's not always the case. And it's just always better for things to be under the nonprofit's name, which, you know, which isn't really possible. So no opportunity to have like, let's say the nonprofit account, right? Like, like I think PayPal has that option. Is that correct? Like a business account? PayPal and Venmo both have business accounts, but they're incredibly expensive. So it's like 3% or more transactions. Yeah, because, because you're a business. Now, Venmo has launched Venmo for charities, which is a different charity profile, but you're limited in what you can manage because you only allow like one user. So like you can't like have it on the same phone and then have two Venmo profiles. You'd have to like create another phone number or email and have it on another device. And also, you have to be a 5-1-C3. And we all know there's many other types of 5-1-C, social clubs, fraternities, sports teams. Memberships and associations, yeah. Everything else, educational institutions that are not 5-1-C3. So that, that does limit it. They're trying to do their best. But at the end of the day, it is a peer-to-peer payment platform. And that's what it's made for. And it's sort of like, you know, you can only, you can only change it so much without making it complicated. The beauty of it is how easy it is. And so, so yeah, that's really where it's at today. And you know, I first downloaded Venmo because of the Girl Scouts. They were standing in front of my local supermarket selling their cookies. And I said, oh, gosh, let me go in and I'll, because I don't have any cash. I'll, you know, get cash back from my transaction. And dad was there, which generally you don't see dads working the bus. It's usually the moms. And he said, oh, not a problem. I can do Venmo. And I was like, okay. So he's like, do you have it? And I said, no. And he said, well, show you how to install it, blah, blah, blah on your phone. And I said, now, how does this work? Because I noticed it went to his, it was his name. And he said, well, he said, I just bought all the cookies outright. And then I'm having my girls sell them. And I'm just, you know, come back, come ahead. I won't come ahead, but I'll be even with the transaction thing. And so I was like, wow, okay, I didn't think about it. Bought my cookies said, yay team. Good job, you know, and then went on my way. Now that I hear you describing this process. Wow. I see so many issues with it that it's shocking, but I maintain to this day. If that family hadn't done that, they wouldn't have sold as many cookies as quickly as they did. Right. Yeah. And that's why, you know, Girl Scouts are looking for alternative solutions. It's not like they can go, they can ignore the digital payments sort of trend. They need to have something compliant organizations name. But on the other hand, they can't be using these peer to peer apps. So that's sort of the educational battle we're fighting as well as trying to be a business is to just aren't people to understand the difference. And then, you know, there's, there's, you know, several ways you can build a solution out there. Amazing. So what about the risk associated with this? And I can only imagine there's several of them. And we really pride ourselves to think that we are such a benevolent sector, yet we know that, you know, something something can happen. There's bad apples everywhere. So what are the risks to nonprofits, as well as Daniel the donors that might be participating in this platform. I would say donors have, in a way, the most to lose because essentially, if you are venmoing all your donations to an individual, I mean, I'm sure that dad in in your example, Julia was, you know, an honest dad that did exactly what he said. And I'm sure in the 999 times out of a thousand they are, but that one thousand that's your hard earned, you know, going away. And essentially, once it's in an individual's name, they can do what they want with it. Like there's no, you know, nothing forcing them or nothing obliging them to, to be honest and trustworthy. I'm sure most people are but I think people want that added a sense of security, particularly when donating, because they're doing something that's, you know, out of the goodness of their heart. And then for the organizations, I mean, there's two risks. One is operational. You know, say you have in a troop, you know, different stands or in a council, you know, several moms and several dads going out and collecting, ensuring that the right amount comes from each individual venmo account back to the bank account or whatever the answer that's just a headache and annoying. And then there's risk that things can, when you have cumbersome processes risks that, you know, numbers can fall between the cracks. And then there's obviously the compliance risk, which is just that, you know, the dad can get hit with a tax bill because he collected $30,000 in cookie sales, and the IRS says, Oh, what's this income. And then the girls, through is forced with this awkward situation, do we help the dad out and do we not. And we've seen that a bunch of seen that in the Girl Scout sector definitely seen it in fraternities on campus where they are even, you know, less attuned to some of the stuff because they've never paid taxes before. And, and they suddenly like what is the IRS and we are welcome to college. That's right. That's right. Hey, Daniel, technically, and again, I'm not an accountant, but technically, that dad that I made that purchase to that was not a trackable donation because he's I didn't spend my money with the 501 C three. And so technically, if I were to record that as a donation, it wouldn't count. Yeah, you would not be able to to get tax reimbursement on that. But he does. Right. The dad could get, let's say he bought $20,000 worth of cookies, which I can't imagine. And I would like to know what kind of cookies you bought Julie, but that's my conversation. You know, like, like it really does kind of bring in some opportunities of, I don't know, it's just, it's just chaos back to that headache that you mentioned Daniel like it sounds like a migraine from hell. So not even with donations, but when you're trying to collect dues, so track payments or everyone needs to pay $100 for an event or a trip that you're going on, let's say, and you need to send out requests to everyone and then a way to track who's paid and who hasn't that's where it comes, like just not, it's almost too simplified Venmo, it needs one notch of sophistication just to tell me who's paid and who hasn't, and to be able to track it. And then the other thing is that is a great reason why a lot of people don't want to do move to a compliant solution is they have their own little, let's say, a questionably legal scheme going on. Obviously they're being honest and all the money does go to the nonprofit that, you know, for example, in that case, the dad can make it get taxed up we'll receive $20,000 no problem. No one's gonna ask questions about that. Even with expenses we see a lot of that so people like oh no I want to keep using my card because I put all the you know fraternity expenses on my card and I get frequent, you know, miles and I get cash back and all this stuff and like, that's not yours. Like and so people have these, these things going on that you know, but they're not really. They're not really. I asked about the donor side. And I've spent a lot of time in fundraising and I love capturing donor data. So does Venmo allow us to capture besides the name and probably a phone number possibly an email like any other donor data because I can't imagine. Yeah, or to Facebook donating. Right. It's like, we're missing so many of these data points. Yeah, so it doesn't really integrate with anything. So you'd have to be copying that manually or exporting it to your contacts on your phone and then every month sort of updating that back into your CRM. I doubt anyone does that. And if they do then good on them, but your life should be a lot easier than that. And you know, you probably need to find some other hobby. But yeah, yeah, that's the only way that you could do that. You need something that's particularly like for the nonprofit that's like, you know, able to integrate within whatever CRM you're using or donor management, management software you're using to collect those payments which Venmo doesn't really do. So share with us what some of those options might be. So we're, I'm learning I'll speak for myself. I'm learning Venmo is probably not the best option for nonprofits for all of the reasons that have been said here. So what are the better solutions, especially Daniel for the smaller organizations that maybe are still within, you know, three years of kind of like historical, you know, existence, or, and or a smaller operating budget. What are the solutions we should be looking at. The smaller the operating budget, the more you need an end to end solution because otherwise you're going to be left with like lots of fragmented systems you're going to have maybe several ways that you collect money. Say, you know, you are doing Venmo using PayPal using some other processing software cash like you can't keep track of all those. So having one like way to collect money is much easier. So you want to ideally find a place that you can collect the money and bank the money in the same place. And then you also need to spend the money. So, you know, you need to be able to get several cards for people and things like that. There are various solutions, but the unique thing about credit is we're made for the nonprofits so there's lots of digital banks for businesses and obviously, given that you know nonprofits have an EIN and they are, you know, a type of business they can use those solutions but they can't help them with some of the, you know, more profit specific things like a IRS 990 form at the end of the year that you have to file which is your tax return or gaining and retaining tax exempt status which which we do. So it's best to the smaller you take the more you need something that's really tailored to your use case and then again if you're a big nonprofit a very large nonprofit with lots of chapters, you fall into the same problem because you're tied up with lots of small local chapters and it becomes your headache at the top of I've got a treasure calling me every day they don't know what this form is that for me. They've lost money here lost money there so I say that those are the two types that need something, you know, like crowded, but then you do have very large established nonprofits who have the resources to set up a donor for an online payment processor, and they can probably afford to mix and match. But I think if you're a small nonprofit you just want to put the headache with someone else. Yeah, one of the things I think Daniel is a lot of nonprofits think wherever the money is, we want it to be accessible. If someone wants to give us PayPal will take it if someone wants to do Apple pay will take it Venmo will take it cash will take it credit card, like all of these avenues it's like, we'll take anything, however you want to give it to us but what I'm hearing is really are you seeing on that flip side Daniel where nonprofits are like, I don't know, like the because we're not doing but Venmo or any other, you know, financial platform, we're losing donations or other revenue. So you need, you don't have to give up on your payment methods but you need to have a place to centralize them and to record all that data. So, with a system like ours you can deposit cash in an ATM and then it comes in as a neat transaction line, you can record that as cash. You can collect on Venmo if you wish push it into the crowded account. And, you know, record that as as proper income for the nonprofit. You'd have to create a Venmo for business account which would cost you money but you could do it if you wanted. If you felt that their opportunity was great enough, which sometimes it is sometimes you know donors are very specific about the way they want to give money and that's fine. And you do want to, you know, give as many options as possible. Because that centralization is super important. So I think that like, if you're going to go on the multi method payment method route, I definitely understand it because you want to maximize donor convenience, but just make sure you have a place to centralize it so that you're remaining compliant. Do you see, and thank you for that because I think that puts it into perspective of how we manage and operate, you know, our nonprofits but do you see this as a certain type of behavior for a certain part of the nonprofit sector, meaning is it for things that are more event based or, you know, demographic or an age. Is there any kind of direction that you see this moving in? Well, 50% of Venmo is under the age of 34. So it will not surprise you that we see this a lot in, you know, younger demographics, you know, even like we can even see it in like PTAs for like, you know, elementary school, it's more common than PTAs in high schools and stuff like that. It's just a demographic divide. So that's definitely one is, you know, just, you know, age, it is more common with younger folk, but also then, even if you're, you know, not even if you're older than that but you are dealing with younger donors, you know, they want to donate via Venmo. So it's creeping up to everyone. But it is, it is still more common in the, you know, younger demographics. And the other thing I would add in terms of the types of things it is much more common in sort of ad hoc fundraising environments. So things like selling girls cookies, I'm having a big set, rather than like a, you know, a giving day at a university or college, which is very organized and very streamlined and has a lot of resources. So those are probably two sectors where you'll see it the most. I'm thinking raffle sales, like any time we've really, we're kind of canvassing, if you will, different areas, something like that. This just been phenomenal. Fascinating. Fascinating. For me, these are conversations that I don't often think about and just go about my day, go about my business, go about whatever. But really understanding the risks, the implications, the solutions that provided, you know, to our sector, we say this all the time and I'm sure our loyal viewers and listeners are tired. 1.8 million registered nonprofits in the US, right? 1.8 million. That's a lot. And we all have a lot of eyes to dot and teased across. So Daniel Grunstein, thank you for bringing your valuable expertise in this space to today's conversation. Thanks Sarah. Thanks Trula. Thanks for having me. Really interesting and cookie sales are going to ramp up. Pretty soon. And I do know that the Girl Scouts have created a new platform where each girl has her own web sheet or web page or landing page that allows sales to track through because of digital payments. Probably demanded by the parents that are out there with their kids trying to sell cookies, you know. So very interesting. I mean, I remember walking the neighborhood, knocking on doors with a big manila envelope, right? Where you open up the big centerfold of a calendar, open it up, you check the little box, right? You hope you can read their handwriting. And then you had to make change. Or you had to go collect it. You had to put in, yeah, it was a mess. We would have sold a lot more back in the day than we have. Well, this has been amazing and really a great conversation here again on the nonprofit show. Again, I'm Julia Patrick, CEO of the American Nonprofit Academy, been joined today by the nonprofit nerd herself. My nonprofit nerd personally, and she can be yours as well. That's right, sister, push up those glasses. I'm Jarrett Ransom, CEO of the Raven Group. Again, we have tremendous partners. Most of these folks who've been with us when we started three years ago at the onset of the pandemic, we're now moving into our fourth year. And we will be reaching that 1000th episode in the first week or so of March. And our amazing partners include Blue Moran American Nonprofit Academy, Nonprofit Thought Leaders, Staffing Boutique, York Part-Time Controller, 180 Management Group, Fundraising Academy at National University, JMT Consulting, Nonprofit Nerd, and Nonprofit Tech Talk. Again, amazing partners that help not only the nonprofit show, but our sector as well. And so we invite you to learn more about what they're doing. Before we came on air today, you said that one of our big, in one of our very first partners, Blue Moran has made a huge announcement today. And so we're going to have to delve into that when they're on next week. Yeah, it's really fun to see how our sector is changing. And I want to say collaborating. It's really cool. So there's a lot of good things happening. Daniel, thank you again for joining us from crowded. I love what you're up to. We need more of this and more conversation. So thank you. Thank you guys. Thank you. It's been a lot of fun. Hey, everybody, every day, each and every day, we leave you with this mantra of ours. And it means so many different things every time we say it. And it goes like this, to stay well, so you can do well. We'll see you back here tomorrow everyone. Thank you, Daniel. Thank you.