https://mcdn.podbean.com/mf/web/99g282j975b4xevk/riverside_nick_george_jan_12_2026_008_nonprofit_news_feed8hnjm.mp3
https://mcdn.podbean.com/mf/web/99g282j975b4xevk/riverside_nick_george_jan_12_2026_008_nonprofit_news_feed8hnjm.mp3
https://mcdn.podbean.com/mf/web/99g282j975b4xevk/riverside_nick_george_jan_12_2026_008_nonprofit_news_feed8hnjm.mp3
All righty, this week on the Nonprofit Newsfeed, of course, brought to you by Whole Whale, a B Corp digital agency. My name is George Weiner. I’m the chief whaler of Whole Whale, and I have Nick Azulay, chief. No, you’re not a chief. You should be a chief, but you are a digital strategist at Whole Whale. Forgive me, Nick, because we haven’t talked, and I haven’t gotten to give your proper intro in a couple of weeks. I hope you had a good break. Nick Azulay Yeah, I did, George. Nice and relaxing. I worked very hard during the end of my graduate master’s program, so it’s been a lot of hard work for me, but I’m excited to get back into it. And George, I would posit that I am, in fact, chief podcast co-host, even though that title does not extend to any other aspects of my responsibilities at Whole Whale. But nevertheless, George, we have a story to kick us off, and we want to talk about a story that’s kind of been simmering in the background but I think is worth talking about. We also want to disaggregate it from some broader, potentially more toxic political narratives that have spun out of this story, and that is, George, the major social safety fraudulent schemes that have been transpiring in the state of Minnesota. So, federal prosecutors say that about 100 individuals, fewer than about 100 individuals, exploited high-trust pandemic and social service programs, such as funding for childhood day care programs, and stole more than $1 billion across food aid, housing assistance, and all sorts of other initiatives. So, think like pandemic-era fraud, but apply it to other social services. The programs were designed for speed and not scrutiny here, right? So, these funds were often front-loaded to organizations. Oversight came after payments were issued, and agencies struggled to respond to red flags during the early 2020s. George, it’s worth noting that we’ve actually talked about some of the fraud within this overall bucket in Minnesota as prosecutors began prosecuting criminally folks at certain food charity organizations, and we’ve been talking about some of those instances as long ago as 2022 and 2023, right? Yeah, Feeding Our Future is what you’re referring to. I think $250 million in COVID misappropriation, and they had since been called out and adjudicated. Exactly, exactly, George. So, this problem is kind of compounded by the fact that this is still kind of ongoing in a way, and perhaps hasn’t gotten the national attention it deserves, and George, certain conservative YouTubers and- Yeah, Nick Shirley, like a kid in like actually a sweatshirt. You’re wearing a sweatshirt. It’s like a kid in a sweatshirt in his like 20s who is, yeah, so conservative-leaning journalist, semi-quotes. I put a finer point on that later. This video now racking up millions of views, and on one level, I’d encourage you to watch it just to understand this style of shift in media of what’s happening. Like walks around like place to place to place where money was technically given, listed from the public Minnesota site, and said, I am here at this daycare center, and it says misspelled learning on the top of the thing and shows that they’re getting millions of dollars each year, and there’s just no children around. And his work has been fact-checked since, and in his like sort of cluster of daycare centers that he was focused on and some healthcare centers, it turned out that like about 10%, maybe less, were actually in operation. He just went during an off time because guess what? Daycare happens after school hours, but on the whole, he was frankly spot on in calling out these individual actions and situations of fraud that were pretty blatant if you just sort of like stood there, and you’re like a kid in a sweatshirt and a YouTube camera, and like an iPhone. Yeah, George, I think that’s a good point, and I just want to contextualize, right? This has been a major story on the right in particular, particularly on platforms like Twitter over the past week. I think Elon Musk has tweeted about it and so forth, right? But George, this is not necessarily new, right? This pattern is not unique to Minnesota. We’ve seen this before. We use the term asymmetric fraud. There’s a few bad actors who are able to exploit larger systems. We saw that with the PPP loans in general across the United States, massive amounts of fraud, very little of which ever was or ever will be prosecuted. The FTX scandal, the Bernie Madoff scandal, and you see a lot of this in emergency aid contexts, right? When you dump lots of money at a problem, maybe rightfully, right, there’s going to be inefficiencies and potentially dramatic inefficiencies and or misuse of funds in those situations. And George, in my coursework, write a lot about Haiti, right? And just the absolute kind of blatant mismanagement of funds in the various humanitarian contexts in Haiti, particularly after the 2020 earthquake, you had thousands of NGOs descended on the country. You had billions of dollars in official development assistance going to the country. And what is there to show for it? Not much, right? International aid is different from social services in Minnesota. Principled, though, George is the same. And the political fallout of this is going to be pretty immense. Governor Tim Walz announced that he’s not going to run for another term, which is a big deal. And George, federal agencies are now freezing funds to Minnesota. They’re suspending childhood daycare funding for the state. And George, you bring in to the conversation this concept of kind of understanding the blast radius of this. George, how do you think about how a small volume of actors, bad actors, can create ripple effects that have blast radiuses that are larger than they may be intended to be or should be? What are you thinking about here? Yeah. This is a sort of a soft fallacy, but the blast radius fallacy effectively is misjudging the scope of potential damage to blast radius from a single point of failure. What we, and you just mentioned, is asymmetric fraud. The actual blast, the actual grenade that went off is actually of less than 100 people so far. Those 100 bad actors have been sort of found and are being prosecuted, and the number will grow, but it’s not going to grow from 100 to 100,000. In terms of the way that this journalist quotes, Nick Shirley approached it was to really sort of paint it as Somali’s perpetrating this. He was in Somali communities. He did find that. But again, the number of actors is small, yet the penalty, the blast radius, the number of people that will be penalized for this is going to be closer to 100,000. That’s what happens when there is this sort of overreaction and attack on an entire culture for the actions of a few people, 100 people, 100,000 community strong Somalis-ish in Minnesota. I’m also looking at, to be honest, the failure of oversight, which is very, very real here, because the truth is if you leave a bank door open and you leave it open long enough, one person will not just take some, but all, or as much money as possible. We see this in financial crimes constantly. How much do they take? As much as they could. So to that end, compassion without controls is ruinous. Compassion without controls is ruinous. These policies that don’t have oversight end up hurting the community because it doesn’t direct funds to where they should go. And in the end, you end up with situations like this, which is this community now that is going to be descended upon by these other me-too shitty journalists with cameras running around. And by the way, this, Nick Shirley, the way that when you watch it, you actually have to subtly realize that he’s walking around with a security detail that looks a lot like ICE. And so he was also scaring the shit out of people. And so yes, I had mentioned when I’m looking at the CBS follow-up reports of how many of those were actually like actual, actual fraud. In that handful of cases, there are daycares and people that are now going to, are in unsafe situations because there’s so many of these follow-on wannabes that are going to be doing this type of thing to smaller communities and other communities like this and social service programs. And that’s especially not all right when children are involved and the safety of children at scale. So I think where he succeeded was actually bringing attention to fraud, money that wasn’t finding its way to helping children, helping this community. Where he fails is when he’s talking about the also judge, jury, and execution of things, also the fear tactics, present the facts. It would have been a stronger video in some senses and work if he had not brought the blatant agenda in there and the like, we should put elected officials in prison. Like, why aren’t we putting Tim Walz in prison? You’re like, that’s not for you, fella. That’s not the journalist’s job to decide. And also you should be doing a touch more research of like, hey, are we showing up at this place during hours when children are coming in and out? Are we like showing up with security detail that looks like ICE agents and then saying like, why did you do this fraud? As opposed to like, hey, we stake this place out. Like, nobody came. Here’s the numbers. We talked to him, couldn’t get it. Like, here are the facts. That’s more journalism. This is more rage baiting of something that like people saying like, why wasn’t the news covering this? Like the New York Times on November freaking 30th had a in-depth article about billions of fraud going on potentially through healthcare, through all of these other things. Like, issue is out there. Yeah. George, I think to take us out for a second and place this more within the macro environment, this is another risk factor for nonprofits. Last year, listeners will remember we saw executive orders targeting nonprofits and philanthropy associated with terrorism. You know, pretty much any organization that funds, you know, left leaning groups in America might count under that definition. We’ve seen the weaponization of the government and agency and investigations over nonprofits. And this opens up additional avenues for that. This is going to obviously invite a ton of scrutiny, right? It could potentially have a chilling effect. You know, I know for one, I wouldn’t, you know, be about to open a nonprofit in Minnesota, right? Like there’s downstream consequences of this when you place it within the larger environment. And I think we need to be kind of aware of the stakes when we talk about fraud. And George, I have to be honest with you. The IRS does not do a great job of investigating nonprofit fraud. There are a lot of shitty nonprofits that are doing shitty things with, you know, staff of like one or two. And it turns out it’s like a conglomeration of kind of like shell nonprofits that lead back to some marketing company that like, you know, telefund raises millions of dollars from there’s there’s a lot of deception that just goes completely unregulated by the IRS. And that is a problem. However, we’re talking about it in terms of social securities fraud, social program fraud, the risk factor for the sector as a whole is immense. So let’s be vigilant. And hopefully, we have good lawyers on our side. As we move into this new year, which George, Happy New Year. I don’t think I said that. So I’ll just say it then. You really buried that Happy New Year. Yes. Happy New Year to you, Nick. What else? What else do we have? Yeah, George. So we have the story from Engadget. And this story is about the Chan Zuckerberg Initiative, CZI. And just a quick story, George, but the organization has completely severed financial and governance ties with an immigration nonprofit that they were intimately involved with for many years. So in 2025, CZI provided for the first time since 2013, zero funding to the organization forward.us, immigration advocacy and placement organization. Senior leadership also resigned from the group’s board. CZI cites a strategic focus saying it’s winding down social advocacy programs, funding to concentrate on science, education and other investments. But George, I think this is yet example number 47 of certain aspects of philanthropy pulling back from potentially divisive social justice oriented programs. Of course, this is hardly surprising for the leader of one of America’s largest tech companies, but the writing’s on the wall, right? And just kind of another example worth shouting out. Yeah, you wonder as the political wind changes that, you know, this should essentially be called the meta foundation. It is much more about the perception, I feel like, of what the company needs it to be to fall in line with the administration rather than what a focused philanthropy that holds and maintains a steady goal over a long period of time because hard things take a long time of steady focus rather than like, sticking your finger up in the air being like, Oh, I guess the wind is going southwest today. Cool. Let’s do that. That’s not how you do, you know, longitudinal impact. Yeah, I agree, George. All right, George, this is a follow up, quick follow up, and a major one, I suppose. I’m reading this from KGNU.org, local news, but George, at least 74 Colorado based nonprofits have been affected by collapse in fundraising by the company Flip Cause. We have talked about Flip Cause before. Essentially, they accepted donations on behalf of nonprofits, even though apparently now they’re completely insolvent because they just filed for bankruptcy, George. So we knew about these nonprofits that had organized this kind of lawsuit. They had a cease and desist from the Attorney General of California. But George, we have new numbers now. And apparently, the company owes more than 3,000 nonprofits a sum of over $29 million. And because the organization has collapsed, it’s very likely none of that money will make its way to organizations. Or if they do, you know, what if they’re ever just scrape up? I don’t know. But George, Flip Cause, completely insolvent, they have no more cash, completely bankrupt. I imagine, George, that the severity of this means that we’re not looking just at bankruptcy, we’re looking at potentially more legal, potentially criminal ramifications here. But this is just devastating, George. And this is the kind of BS that I think you and I have a laser eye focus on in a sector that kind of gets away with too much Wild West when it comes to fundraising. Yeah. And, you know, I’ve been posting this and seeing people be like, well, how are we supposed to decide when there’s so many of these platforms out here being like, oh, we don’t take any fees or use this like, and like everyone is sort of jockeying for that, like, hey, use us. And then the lock-in is pretty tremendous. But the thing that kills me here is that in some of the filings, and I’m looking at the State of California Department, Oakland Voice is reporting as well that this $29 million owed to over 3,200 nonprofits, you know, in standard bankruptcies, they’ll do a liquidation of assets, right? And then they’ll pay out the debtor, the people that are owed money, right? The filing details coming from this chapter 11 essentially lists approximately 30 million in liabilities against 20 million in assets, right? So you’re like, oh, well, maybe it’s not everything. However, in those assets, they assume that 15 million of those assets value is the company’s website and web platform. Okay, so there goes 15. And then the company reportedly only had $70,000 in a bank account at the time of filing. I just like, let it sit in that like, this isn’t a, ah, well, we know we can’t make ends meet. This is something if you have $70,000 in your bank account, and you’re, oh, you’re owing people $29 million. You think about what happened quarter after quarter after quarter of like, well, wait a minute. How, you know, how can we be processing this and not paying it out? And I will say a different way, like this is called pass-through accounting, right? And so when, when Whole Whale, right? Like we manage millions of dollars in ads, and sometimes it’s pass-through. We have a separate freaking account. That money goes into that account. We don’t run payroll off of it. We don’t pay bills against it. It sits there. And every quarter we adjust and we put it in there and like, hey, here’s the account. Here’s our asset liabilities. This is the money we can’t freaking touch because if I touch it, right? And I can’t pay it back. That’s called fraud. This is called standard accounting. What do you, what do you take away from this? Right? What do you take away is, is one thing that I’ve seen. And I, regardless of the platform that you push for, we are friends with many, we watch many, we call out some. And one thing that I seem to really find is that the smartest thing for whatever platform you’re doing is to own your own Stripe portal and login. Such that the money actually, you’re paying the company for right. The fundraising company for the technology, the, the AB testing, the cool whiz bang database, fine, all that great. But you, at the end of the day, that credit card payment and that credit card connection is in an account you own inside of Stripe or Braintree or whatever solution. And that goes to your account. Like you don’t need them to hold that money for you. You should be routing it to something that you own. Here’s the other reason why, because last year we also talked about the way that if you have reoccurring donors in a system like that, they all go away because you don’t have that credit card ID, that transfer, that, that whatever crypt, cryptographic connection to the ability to process those all get lost. All of those reoccurring donors get lost if you switch and you don’t on your Stripe. So this is a painful lesson of make sure you own your payment portal. Yeah. And George, one thing quickly before we wrap up for today is that they had 70K cash on hand. That means they were barely able to make payroll, let alone operate. They’ve been running this thing into the ground for a while. If you see something, say something. If you think that your, your, your donation platform is about to go under, get out of there. You know, I think the writing was probably on the wall for a while here. And you know, it sucks for those organizations, but yeah, just be vigilant. Yeah. And one of the, the alarm bells should be if, if there, if there are so much as a minute late and the processing of payments and transferring a minute late, you must, you switch that to urgent. You switch that to urgent. And even if you are hearing this and you’re like, wait a minute, do we own our own straight portal? Like you’re listening, like that’s a good task. That’s a good, this is a good time of year to do a little housekeeping. And be like, Hmm, that’s an interesting question. Yeah, no, 100% George. All right. Welcome back. Right. George, I got a joke for you. Oh, that’s nice. I can use one of those. It’s, it’s, it’s among the worst ones ever. It’s neither funny nor clever, but here we go. George, why did the nonprofit print its annual report on see-through paper? I think I know the answer is because they wanted it to be transparent. They did. Transparency, baby. Transparency. There you go. Oh man. All right, Nick. Till next time. All right. See you out there. Thanks George.
