A new fintech called Spiral aims to tap into Americans’ philanthropic side by allowing them to give to charity through their banking app.
The company announced Wednesday it secured $14 million in funding led by global venture group Team8 and with participation from Communitas Capital, Phoenix, Nidoco AB and MTVO.
The funding, Spiral’s CEO and co-founder Shawn Melamed said, will help the startup launch its "ethical banking" service that allows customers to support charitable causes while earning rewards and monthly cash bonuses on their deposits. Spiral will match customers’ donations up to $150 per year.
"There are 1.5 million nonprofits in the U.S. and they are led by amazing people who are trying to create an impact, help the homeless or cure cancer, and they're struggling with raising capital," Melamed said.
Spiral aims to remove some of the friction in donating by linking givers with nonprofits, which have been hurt by a dearth of in-person events that help generate funding, Melamed said.
"Most people would like to do good, but they don't get a lot of opportunities to do so easily," said Melamed, the former head of technology and business development at Morgan Stanley’s innovation office.
Nonprofits can use Spiral's app to share content with supporters and collect donations without fees.
The challenger bank is beta-testing its service with 200 customers and has a waitlist of 20,000, said Melamed, adding he expects the platform to fully launch at the end of May. Spiral’s FDIC-insured deposits are held at Overland Park, Kansas-based nbkc bank.
Melamed said the digital bank plans to offer a new product every year, starting with credit cards next year.
"We're aiming to become a full-service consumer bank, which means we can offer all kinds of loans, credit cards, personal loans, mortgages and auto loans, in addition to offering brokerage services and wealth-management services in the future," he said.
Spiral hopes to encourage customers to donate to charities through a reward system attached to its forthcoming credit card, as well as by offering competitive interest rates on loans.
Through a search engine feature in the app, customers can locate and donate to charities in their area. They also can give to any of Spiral’s nonprofit partners, including the David Ortiz Children’s Fund, Culture for One, HERHealthEQ, the Cerebral Palsy Alliance Research Foundation and the Boys and Girls Clubs of Metro Baltimore and others.
Spiral’s partner charities provide users with content such as images and videos that show where their donations are going.
"We believe that if you bring in front of the customer engaging content and quantify what their donation has done, they may convert from giving you a one-time donation to becoming a monthly supporter," Melamed said. "This really is the mechanism to level the playing field for all nonprofits, by giving them direct access to capital and direct access to engage with our donors."
Other challenger banks are marketing financial services with opportunities to support social and environmental causes.
Ando, which launched in January, promises to invest customers' dollars in carbon-reducing projects such as clean energy, sustainable infrastructure and regenerative agriculture.
Aspiration Bank allows its debit-card customers to round up purchases to the nearest dollar, and the leftover cents are used to plant trees.
Challengers such as Greenwood and Cheese are targeting racial wealth disparity by offering services that support Black, Brown and Asian communities and businesses.
"What motivates us, in addition to building a super profitable bank that is high-growth and hopefully going to go public one day, is really to make an impact," Melamed said. "Just like what Amazon did to consumption with the click of a button, that’s what we're trying to do to charitable giving."
