SC&H Capital, a leading investment bank specializing in M&A advisory for middle-market companies, is pleased to announce that its client, Flipcause, Inc. (“Flipcause” or the “Company”), has been acquired by Software4Nonprofits (“S4NP”).
Flipcause provided cloud-based fundraising and donor management software, tailored for small to mid-size nonprofit organizations. After an impressive eight-year growth story, the Company began showing signs of distress, accumulating complaints regarding delayed funds and unresponsiveness. A federal class-action lawsuit was filed alleging fraud and unjust enrichment, followed by a cease-and-desist order from the California Attorney General, demanding an immediate halt of all operations and donation processing. This prompted a Mastercard warning to Flipcause’s payment processor, Stripe, whose internal investigation subsequently revealed that Flipcause was acting as an unauthorized payment aggregator, holding donor funds as a merchant counterparty rather than routing them directly to the charities. Stripe abruptly terminated services and froze millions in reserve funds, leaving Flipcause unable to process ongoing distributions, resulting in an unsustainable disruption for over 3,200 nonprofit subscribers.
To protect the core software platform and establish an orderly transition, Flipcause filed for chapter 11 bankruptcy protection. The Attorney General’s office later stepped into the bankruptcy process to successfully lobby for the appointment of a third-party trustee to strip control from Flipcause’s management.
SC&H was retained by the Chapter 11 Trustee and initiated an immediate sale process to preserve the platform’s underlying utility for the nonprofit ecosystem. Despite intense operational pressures and a complex creditor matrix, SC&H successfully managed the expedited marketing and sale process under the strict governance of the federal bankruptcy court and solicited interest from 172 groups that executed NDAs.
Ultimately, the bid from S4NP to acquire Flipcause’s proprietary software code and intellectual property was deemed the highest and best. Following the closing of the sale, S4NP began the integration and migration of the software framework into its own infrastructure under a redesigned, secure product line.
Read the full press release.
