Featured Guest: Dominic Kalms
Dominic Kalms is a 3X venture backed entrepreneur and philanthropist with an expertise in FinTech, nonprofits, and online charitable fundraising. He has raised over $120M in venture and philanthropic capital during his career and has been featured extensively in the press (e.g. NBC, Forbes, CBS, Axios, TechCrunch, Entrepreneur, BBC, Yahoo, TheStreet, Seeking Alpha, American Banker, Nonprofit Times, etc) where he discusses philanthropy & tech. He was recently profiled on the front page of Entrepreneur.com and he recently guest lectured a class on Philanthropy at MIT. His latest piece on corporate giving can be found on Forbes.com
Dominic is also a well known public speaker and has spoken at many global forums on Philanthropy & FinTech (e.g. United Nations Summit, Nexus Summit, Global Citizen Forum, Money2020, Social Enterprise Summit, TechCrunch’s Ventures Summit, Capital One Impact, TEDx, Paradigm Talks, NIO Summit etc).
Today, Dominic is CEO of a venture backed FinTech company B Generous, which is revolutionizing how people donate to nonprofits through the advent of the first ever philanthropic credit product. B Generous is backed by some of the top VCs, Banks, & institutional investors in the US and was just accepted into the highly selective Blackbaud Social Good Partnership Program.
Previously Dominic was CEO of GVNG which Forbes called “One of the most revolutionary platforms in the social impact space.” GVNG is a venture backed tech company that facilitates the creation of digital charitable giving accounts. Many of the world’s leading public figures & corporations use GVNG to run their philanthropic projects.
Before GVNG, Dominic managed Foundations at Global Philanthropy Group, a private strategy consultancy which advises high net worth individuals, celebrities, & corporations on impact work. At GPG Dominic advised foundations for many of the world’s top philanthropists. GPG was acquired by Charity Network in 2017.
Dominic is also on the Fundraising Board of Forest Whitaker’s Foundation & Val Kilmer’s Foundation. Dominic is also member of the Forbes Nonprofit Council, NEXUS, SUMMIT Impact, and is an Ambassador for the Global Citizen Forum. He is also a contributing writer for Forbes.com and a Mentor at the Global Good Fund.
In 2020 Dominic started EndCovid-19 which has donated hundreds of thousands of masks/faceshields to hospitals, schools, & Native American reservations across the US.
Dominic was born in Hong Kong, raised in London and now lives in LA/NYC. He holds a BA from NYU + MA from Columbia University.
As a marketing, public relations and corporate communications leader, Becca (only her mom calls her Rebecca) started her career in consulting and has been involved with six startups ranging from film, fashion, technology and food, with her first startup being a social enterprise importing leather fashion accessories made by single mothers in Nairobi, Kenya. Speaking across the country, she is known for leading award-winning teams and has received recognition from the Cannes Film Festival for Best Media Campaign, Hermes, MSPBJ Women in Business, and most recently, the Top Women in Communications awards. When the day is done, you’ll find Becca behind a good travel book planning her next adventure, plunking a tune on the piano or laughing with her blended family.
Bryan Toft is Sunrise Banks’ Chief Revenue Officer. In this position, Bryan oversees commercial banking/lending, treasury management, mortgage and fintech partnerships. He has been with Sunrise Banks for more than a decade. From 2014-2017, he served as president and CEO of Community Bank Owatonna.
Bryan has held a variety of roles at Sunrise Banks including credit analyst, commercial loan officer and EVP regional manager of commercial lending in Minneapolis.
Bryan received a B.S. in Computer Science from Buena Vista University and an MBA from the University of St. Thomas. He is a board member of the Minneapolis Chamber of Commerce, Twin Cities Metro CDC and Charter School Property, Inc.
0:00 – Dominic Kalms
The management of companies have been focused on maximizing shareholder value. That’s been the predominant goal of the CEO. Now, I think the goal of a CEO is shifting. It’s how do we maximize shareholder value while also producing a positive externality or a positive effect on society.
0:18 – Becca Hoeft
Welcome to the NextGen Banker podcast where we explore what’s next in banking and talk with the innovators responsible for creating positive change in the financial sector. I’m your host, Becca Hoeft, and I’m joined by my Sunrise colleague and friend Bryan Toft. And I’m excited to welcome Dominic Kalms.
0:38 – Becca Hoeft
Dominic, thank you for being on the NextGen Banker podcast. But before we get started, it’s just a reminder to stick around to hear our musical feature at the end of the episode. Each NextGen Banker episode showcases one new artist from somewhere around the globe, representing a wide range of different genres, so be sure to check it out.
0:59 – Bryan Toft
So, let’s hear a little bit about Dominic’s background. He is the founder and CEO of B Generous, a fintech we’ll be hearing about shortly. Dominic is also the founder and now president at GVNG, a fintech allowing anyone to launch a digital nonprofit in five minutes or less. And he’s an expert in the world of startups– fintechs, philanthropy, and nonprofits– so I think we’ll learn a lot today.
1:21 – Becca Hoeft
Well, welcome, Dominic.
1:22 – Dominic Kalms
Yes, thank you so much for having me today. I really appreciate it.
1:25 – Becca Hoeft
Yes, so I wanted to start out with something a little bit different. Instead of jumping into exactly what you’re doing today, I wanted to go in the wayback machine, and I wanted to think about what has Dominic– what did you want to do when you were eight years old? Was it working in financial services? Was it something else? I’d love to hear about when you were young and then about your journey into the financial industry.
1:59 – Dominic Kalms
Sure. Well, I definitely did not want to work in financial services–
2:02 – [BECCA LAUGHS]
2:02 – Dominic Kalms
–when I was eight years old. That would’ve been a very strange–
2:04 – Becca Hoeft
Well, what did you want to do?
2:05 – Dominic Kalms
If I ran to my parents and said I want to be a banker. [LAUGHS]
2:08 – [BECCA LAUGHS]
2:10 – Dominic Kalms
So, I was actually born in Asia. I was born in Hong Kong and then grew up in London, England. And as a very young kid, you don’t really know much other than what your parents tell you about the world, how the world is, and what’s normal, what not normal. So, the first original thought I ever had in my life was, wow, the world is a very unequal place. That was probably the first original thought I ever had about the age of eight or nine years old.
2:35 – Dominic Kalms
Because growing up in Asia, I saw a lot of poverty when I traveled around Asia in the 1980s. And then living in Europe in my later years, it was very opulent, particularly in Central London where I lived. And so, I remember thinking, wow, the world is a very unequal place. And I thought it might be interesting if I could ever do something to improve that. I didn’t know what that could be– of course, I was eight years old. But I always wanted to do something that could improve the world.
3:00 – Dominic Kalms
So that was the first passion I ever had in my life. And then when I moved to LA years later, of course, I wanted to be an actor, like every young kid in LA, which is totally different, and I thought that sounded interesting. But eventually I came back to my original roots. And when I was in college and graduate school in New York City, I came back to, what can I do to help make the world somewhat of a better place. And so that really came full circle from that standpoint.
3:25 – Bryan Toft
That’s really cool. And you have obviously put that into practice with B Generous, so I want to ask you a little bit about that now. So can you just explain what B Generous is and how you came up with the idea or thought. We hear a lot about “buy now pay later.” This is “donate now pay later.” So, talk to us a little bit about that and how you came up with the idea and how it works.
3:52 – Dominic Kalms
Yes. So that’s exactly right. So, I’m sure your listeners have heard of buy-now-pay-later products, like Affirm, Klarna, Afterpay, PayPal. Some of the biggest fintech companies in the world offer these products. And effectively, what they allow you to do is exactly what the name says– you can buy a product now and pay for it later.
4:07 – Dominic Kalms
And so, these companies allow you to buy mostly online e-commerce products– televisions, computers, clothes, and so forth. You can buy them and pay for them later. And the innovation that we’ve adopted is we said, well, why can’t we take this type of infrastructure and apply it to the largest, underserved sector of finance in the world, which is the US philanthropic market?
4:27 – Dominic Kalms
So, most people don’t know this but total donations to US nonprofits are about half a trillion dollars a year. It’s the same size as the e-commerce sector if you look at the total size of both of these markets. Continuing that comparison, there are 2.2 million e-commerce stores in the United States; there are 1.7 million nonprofits; approximately 210 million Americans purchase goods and services online; about $230 million Americans make donations every year; and the average donation is much larger than the average online purchase.
4:55 – Dominic Kalms
So, you see, these two industries, they’re very similar, except one of them, the e-commerce space, is saturated with credit and lending products, like some of the companies I mentioned a moment ago. We said, hey, let’s take that infrastructure, strip out the bad parts of it– like late fees and interest payments, for example– and let’s adopt it to do something good in the world.
5:13 – Dominic Kalms
And so, to your point, we’ve created the first ever philanthropic credit product which, instead of allowing somebody to buy now pay later, allows somebody to donate now and pay later. So, using our product, a donor can go to a nonprofit’s website. You can think of some of our clients– for example, like PETA, the National Down Syndrome Society, some of the Jewish federations– these are all of our clients. And you can go to their websites, make a donation as you would ordinarily do, except the nonprofit will receive the donation up front right away today.
5:43 – Dominic Kalms
You as the donor will receive your full tax deduction up front right away, but you pay no money out of pocket today. So, no money actually leaves your bank account, and you simply pay that donation later at no additional cost to you. There’s no interest payments. There’s no transaction fees. There’s no late fees, and there’s no hidden fees. And not only do you pay it later, but you actually get to split up those payments over time.
6:02 – Dominic Kalms
So, an example would be let’s say you went to the National Down Syndrome Society’s website, and you want to give them $100. So, you make $100 donation. They’re going to receive $100 today. You’re going to receive $100 tax deduction. You pay no money today. And in 30 days from now, your first payment is due, and you can pay that over three months, six months, or nine months in general.
6:23 – Dominic Kalms
So, in this example, it’s $100. Let’s say you choose, OK, I’m going to pay this in three months. So, you pay nothing today. In 30 days from now, your first payment will be due of essentially $33, and then you’ll pay it a second month then third month and then it’s out. So, the nonprofit gets all the benefit of the capital up front, and the donor gets the benefit of being able to make a larger donation.
6:42 – Dominic Kalms
And I’ll talk about that later in the episode. You’ll see in the data donors are giving a lot more money with this type of product because they can obviously split up their payments over time, much less a liquidity hit for them, and, of course, they get the full tax deduction and the full tax benefits up front without spending any money.
6:57 – Dominic Kalms
So, it’s a very unique product. It works extremely well. And the way I came up with it is I’m actually good friends with the founding COO of a firm. So, a firm is one of the largest buy-now-pay-later companies in the world. And I was spending some time with her almost a decade ago now. And we were in her office, and I was listening to what she was saying about a firm, and it had this idea of, wow, why couldn’t we apply this type of infrastructure to the philanthropic space where my background has predominantly been in?
7:27 – Dominic Kalms
So, I’ve been in philanthropy tech for almost 10 years now building companies, like you mentioned, giving, and others in the tech space in the philanthropic world. So, I thought this is a great use case with a product like this. The technology already exists. The business model is sound. Let’s adopted it to do some good in the world. And that’s really ultimately how it came about.
7:47 – Becca Hoeft
First, Dominic, when did B Generous start?
7:50 – Dominic Kalms
7:51 – Becca Hoeft
2021, OK. And when I was doing the research, I read that you got off to a really quick start. So, in the first three months, you had over more than a million in interest rate credit for donors in those three months. So, since 2021, what kind of impact are you seeing now for those donating and those nonprofits?
8:18 – Dominic Kalms
Yes, so I started the company at the beginning of 2021, but it took almost two years to build the product, secure the lending, raise the capital, all that. So, we’ve only been alive for several months. So, we launched– the actual product went live in the market at the end of 2022. And, yes, you’re exactly right. In the first quarter, quarter and a half live, we approved almost $1.5 million of credit to donors.
8:41 – Dominic Kalms
And the really interesting story has to do with the average donation size. So, the average online donation in the United States in 2022 was about $128. That was the average online donation in the United States. The average online donation using donate now pay later, today, using our product, is $460. So, what that means is that donors who use our product give, on average, donations which are 260% bigger than the national average or, to put it another way, give donations that are almost four times the size of the national average.
9:13 – Dominic Kalms
And we always believe that there would be an increase in the donation size because, of course, you’re allowing people to pay a donation over time. You can split up that cost so people will give more. But we do not think it would be anywhere near this sizable. So, this has been a huge surprise.
9:29 – Dominic Kalms
And this is what’s been driving a lot of the adoption of our product because nonprofits see this and they say, well, that’s a good deal. You’re going to get donations that are almost four times the size of what we normally get. They’re insulated against any losses. So, think of like when people are paying monthly or people are making pledges, a lot of people that make pledges and a lot of people that pay monthly, they back out of those commitments at some point.
9:49 – Dominic Kalms
Using our product, if a donor uses our product and then stops paying at some point, there’s no recourse to the nonprofit. They’re insulated against any losses because they already have the money up front, and they keep all the money. So not only are they getting the money up front, not only are they getting much, much larger donations, but they’re also keeping all that money no matter what. No one can decide to cancel whenever a pledge, for example. They don’t deal with those issues anymore. So, there’s tremendous value to the nonprofits from a product like this.
10:18 – Becca Hoeft
So let me ask you a follow-up question to that, Dominic. So, you have the nonprofits, and you have the donators. What kind of challenges have you been faced with as you launched this product?
10:31 – Dominic Kalms
Pretty much everyone imaginable.
10:32 – [CHUCKLE]
10:34 – Dominic Kalms
A better question would be, what haven’t we run into? When I first conceived of this idea and I told people that, hey, I want to– so we signed, I should say, probably to give a little bit of context, but we signed a lending agreement with a bank that allows us to lend, in theory, up to hundreds of millions of dollars to power these loans over the next three years.
10:54 – Dominic Kalms
But when I first originally told people this idea, I said, listen, I want to lend hundreds of millions and ultimately billions of dollars to donors on an interest-free basis to give away money to nonprofits. They were like, are you insane? What are you talking about? That’s obviously not possible. Who’s going to give you billions of dollars to loan on an interest-free basis to donors so that they can give it to nonprofits?
11:13 – Dominic Kalms
So, the whole idea from the beginning was fraught with these incredible skepticism, I would say. And it wasn’t until we really solidified the business model that people started to say, oh, this actually makes a lot of sense. And then we’ve got a deluge of banks just trying to lend to us, actually, where we were inundated with people saying the business model is great, the cause is great, the brand is great. We want to be your partners and this and that.
11:36 – Dominic Kalms
So, we went through so many ups and downs, and, of course, then there was the regulatory environment, which is not insignificant. We’re a loan broker and a loan servicer in all 50 states. That’s 50 sets of laws, regulations. We need to comply with those. We’re effectively regulated like a bank by proxy of our partnership with our bank lender.
11:53 – Dominic Kalms
And then, of course, the SVB issue, with what just happened with SVB, that didn’t help anything. We had money at SVB, by the way. I will mention that too. Thankfully, we got it out. But, I mean, startups are fraught with incredible ups and downs.
12:07 – Dominic Kalms
And this is a complex product. This is not like a dating app that you can get up and running in six weeks. There’s a lot of complexity with something like this, where a lender or a servicer or a broker, customer service, collections, the technology, the third-party partnerships with Ekata, so few are proven here– I mean, and on and on. So, yes, there’s a lot of ups and downs in a business like this.
12:28 – Bryan Toft
Well, you mentioned that it is basically a credit product. You’ve been up for several months. How has it gone in terms of that credit side of things? Has it been as you expected, better than you expected, worse? Tell us a little bit about that.
12:44 – Dominic Kalms
Significantly, significantly better. So, I’ll give you some stats. The average applicant of our product, so not everybody– as you mentioned, we’re a credit product, so we assess the credit worthiness of people who apply to use our product. It does not affect the donor’s credit score to apply to use this product, and you get a decision in two seconds– and literally two seconds. That’s how long it takes. But you still have to effectively apply because not everybody has the credit to use a product like this.
13:14 – Dominic Kalms
The average applicant credit score of our product is 756. It’s extremely, extremely high– higher than we thought, [CHUCKLES] to be honest with you. So, what that’s translated into is currently today, with all of the loans we’ve given out, we have 0% delinquencies and 0% defaults. So, we’ve had no losses. Zero. Not one since the start of the program.
13:38 – Dominic Kalms
And with an average applicant score of 756, you can understand why that might be. Now, interestingly, the average applicant scores of a user of our product, so now we’re talking about people that get approved to use the product, is 771. It’s even higher. So, you’re talking about people with excellent, excellent, excellent credit.
13:55 – Dominic Kalms
And the reason that that’s the case, which is significantly better than buy now pay later, by the way, where the average credit score is like in the low 600s, high 500s, in some cases, is because the use case for buy now pay later typically is, hey, I cannot afford to buy this product right now. I don’t have the, whatever it is, $1,000 on hand, so I’m going to finance it and I’m going to pay it over time. It’s going to be easier for me to do that.
14:17 – Dominic Kalms
So, you’re dealing with consumers that might not have that liquidity on hand at any given time– might not have that much money at any given time– and so there’s going to be a correlation with credit score from that standpoint. When you’re dealing with donors, what’s the one thing you know about a donor? There’s only one thing you know about a donor just immediately by hearing they donate to nonprofits. They have to have some money because they’re giving away money. You have to have some money to give away money.
14:39 – Dominic Kalms
And, generally, there’s a positive correlation obviously between income and credit scores. So, what we find with our users is that they’re generally more creditworthy. They’re generally wealthier. I mean, the average income of one of our users is over $120,000. So, you’re just generally dealing with people that are more creditworthy or more financially stable.
14:59 – Dominic Kalms
And also you’re dealing with people who are looking to make a larger contribution to their nonprofit, and this is a product that helps them do that, which is why, as I mentioned to you earlier, the data shows that the average donation is almost four times the size of the national average. So, because of these interesting nuances, the credit story here has been really quite exceptional.
15:19 – Bryan Toft
That’s great to hear. And looking at it from the nonprofit side then, tell us a little bit about the interest that you’ve generated from nonprofits and where you see this going from a nonprofit standpoint.
15:32 – Dominic Kalms
Yes. So, in our first several months live, we signed almost a hundred nonprofit clients. So, we signed up a lot of merchants– or nonprofits, if you will– including some of the nation’s largest nonprofits. I mentioned some of them earlier to you today. We signed up Heifer International– they’re a very big organization– PETA, the National Down Syndrome Society, a couple of chapters of the Jewish Federation, chapters of the Boy Scouts, chapters of the Humane Society– I mean, and on and on.
15:57 – Dominic Kalms
So, we work with some of the nation’s largest and most notable organizations, and their response has been incredible because they see the data. At the end of the day, there’s only so much selling you can do. Eventually, at some point, the data has to speak for itself. And when nonprofits are seeing their average donations double, quadruple, triple– double, triple, and quadruple in some cases, they get very excited by that.
16:20 – Dominic Kalms
And again, this is a free product for nonprofits to integrate. We do not charge an integration fee. We do not charge a subscription fee. There’s no fixed cost for the nonprofit to use this.
16:30 – Dominic Kalms
So, the worst-case scenario is that a nonprofit says, hey, it’s not really working for us. OK, so no harm, no foul. They didn’t pay anything. They didn’t pay us any money. There’s no real downside to giving this a shot. So, we’ve seen pretty substantial traction with nonprofits since launch, and we expect by the end of this year to be on the close to 2,000, 2,500 nonprofit websites.
16:51 – Becca Hoeft
Wow. All right, Dominic, you started out thinking that you were going to be an actor at some point.
16:58 – Dominic Kalms
16:58 – Becca Hoeft
And then you became this mission-driven, focused founder of a fintech that does good. So, my last question for you today is, what do you think the NextGen banker looks like?
17:18 – Dominic Kalms
The NextGen banker, I think the NextGen banker has to have a really solid understanding of the impact side of things. If there’s anything, I’m a millennial. I’m 34. And Gen Z-ers are obviously the next generation under me. And what’s very clear about my generation and the Gen Z generation is that they’re very focused and concerned about the effects on society beyond making profit.
17:43 – Dominic Kalms
So, traditionally, shareholders and companies have been focused on maximizing shareholder– or, sorry, not shareholders, management of companies have been focused on maximizing shareholder value. That’s been the predominant goal of a CEO. Now, I think the goal of a CEO is shifting. It’s how do we maximize shareholder value while also producing a positive externality or a positive effect on society.
18:04 – Dominic Kalms
And I think that’s by virtue of the fact that the people that are inheriting the trillions and trillions of dollars of wealth in this country– notably, millennials and Gen Z-ers– care. They have different types of considerations. They care about these types of things more than perhaps past generations have. And that’s again as a result of the fact that the world is getting a little bit more chaotic. Obviously, we’re dealing with massive climate change and global warming and so forth.
18:25 – Dominic Kalms
So, I think the NextGen banker has to take that into consideration and be very, very aware that the future of banking, the future of capitalism, in my opinion, is not going to be profit at all costs. I very much do not think that will be the case. I think it will be profit and purpose. So how do we maximize shareholder value? How do we help these companies have liquidity? How do we help these companies grow, make a profit, and so forth?
18:47 – Dominic Kalms
But also, how do we make sure that they’re having some positive effect on society, whether it’s civil society, whether it’s the environment, whether it’s supporting certain causes? And I think that’s going to be critically important for the NextGen banker to understand. So that would be– what they look like and how they operate is not for me to say, but I think that’s a consideration that is going to be really important for the NextGen banker.
19:09 – Becca Hoeft
Well, Dominic, I love what you said. As Bryan and I work for a mission-focused brand, that’s what we live and do every day. I really appreciate you joining us today and sharing about all the amazing work you’re doing about B Generous. Thank you for listening to the NextGen Banker podcast, and we’ll see you next time.
19:29 – Dominic Kalms
Thanks so much for having me. I appreciate it.
19:31 – [MUSIC PLAYING]
19:33 – Becca Hoeft
For this episode’s musical feature, we’re showcasing Alsever Lake. Alsever Lake is a project by Adrian Walther, described as an acoustic, combing soundscape that surrounds you in the tranquil, peaceful environment found only in nature. Here is “Somewhere, Heaven Is On Earth” by Alsever Lake, featuring Joel Porter.
19:54 – [MUSIC PLAYING – ALSEVER LAKE, “SOMEWHERE, HEAVEN IS ON EARTH”]
21:02 – Becca Hoeft
That was “Somewhere, Heaven Is On Earth” by Alsever Lake, featuring Joel Porter. You can find more of Alsever Lake’s music on Spotify. If you would like your music featured on the NextGen Banker podcast, email firstname.lastname@example.org with a link to your music and website. Thanks for listening to the NextGen Banker podcast. We’ll see you soon.