Donating to charity typically involves digging up a credit card number or mailing a check. Spiral, a challenger bank that announced $14 million in seed funding on Wednesday, wants to make that process easier by promoting charitable giving and enabling donations directly through its app.
Some Spiral features are typical of a challenger bank: checking and savings accounts with no monthly fees or minimum balance requirements. But a third account, called Giving, lets users direct a percentage of incoming deposits to charities of their choice.
“We bring everything to where you naturally make your financial decisions, which is your bank,” said Shawn Melamed, CEO and co-founder of the New York-based company and the former managing director of Morgan Stanley’s technology business development and innovation offices.
His co-founder and the president of Spiral, Dan Blumenfeld, is the former head of product and growth at Skype.
A scrollable feed on the app cycles through the account holder's financial information, colorful cards depicting a donation’s impact, and links to post on social media. “Usually your bank is where you get a paycheck, but it’s becoming a place where you feel like your money is doing good,” said Melamed.
Users can look up any tax-exempt organization in the app’s search bar, or parse through a list of featured charities. Featured organizations partner with Spiral directly, providing images and videos about how a donor’s generosity has made a difference. (Melamed said the company is adding new partners every day, and there are currently 25 to 30 participants.) Behind the scenes, Spiral will immediately transfer donations to its partnered nonprofits, or send a check to non-partnered groups that the user chooses.
Users can donate as little as a quarter of a percent to charity. They can opt for a monthly donation or one-time gift, as well as pause their donations through Spiral’s app. To further encourage generosity, Spiral will match up to $150 of the customer’s donations per year. And users will get automatic reports for their tax returns.
Melamed got the idea for Spiral while he was working at Morgan Stanley and participated in firm-led volunteer initiatives that inspired him to give back generously in his own life. Years later, he spent time researching challenger banks as part of his role.
Eventually, “I saw this image of a spiral, where if all of us could reward people who are doing good and make it easy to donate, more good is going to spread,” he said.
He characterizes Spiral as an ethical bank, a reference to not only the matching charitable contributions but also the company's plan to return some revenue to customers in the form of rewards. The rewards program, which will feature points that can be converted into cash back or donations, has yet to launch.
The company is initially generating revenue from interchange fees, but its eventual goal is to become a full-service bank. It plans to launch a credit card next year and then progress to other types of loans.
Spiral is currently in beta testing with 200 customers and has 20,000 users on its waitlist. It will go live at the end of the second quarter. Nbkc Bank, a $1.1 billion-asset institution in Overland Park, Kan., holds Spiral’s deposit accounts.
