How an early snafu nearly sank a nonprofit startup that went on to enable $51M in charitable gifts

TisBest shoppers can customize their charitable gift card, whether they choose the digital version or biodegradable hard copy. (TisBest Image)

“If this was an ordinary tech startup being done just for the money,” Erik Marks said, “this would have been put in the grave in ‘08.”

But TisBest isn’t, so it wasn’t. Fourteen years later, the nonprofit Seattle startup is doing great. TisBest, which issues gift cards for making philanthropic donations to the charity of the recipient’s choice, has now facilitated donations totaling $51 million.

TisBest sells biodegradable gift cards for amounts between $10 to $5,000. Shoppers can customize their gift cards for free and send them by email or mail. The recipient goes to the TisBest website to donate the gift card’s value to up to three charities of their choice. They can then send a personalized thank you to the gift card giver in a message that also names the selected charities.

“We’re here because of the mission, and what we believe in.”

The past two holiday seasons, TisBest has partnered with billionaire hedge fund manager Ray Dalio to give away $4 million worth of $50 and $100 charity gift cards for donating. The nonprofit has scored endorsements from celebrities including Ellen DeGeneres, Ashton Kutcher, Jewel and Gayle King.

Because co-founders Marks and Simeon Cathey launched TisBest for the love of the cause, and not to maximize profits, they were willing to stick with the startup despite the challenges they’ve faced.

“We’re here because of the mission,” Cathey said, “and what we believe in, and what it’s doing for the environment and for charities, and the experience that people get to have through this kind of gift.”

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The gift cards are a way to reduce wasteful consumption, to avoid giving presents that wind up trashed, regifted or sent to Goodwill. They give people a chance to support causes they believe in. In a small way, they also help democratize philanthropy, by helping more people experience the satisfaction of donating, and potentially fostering more giving in the process.

The co-founders recently paused to reflect on the past year’s success, and the challenges they’ve overcome to get to this point.

TisBest co-founders Simeon Cathey (left) and Erik Marks. (TisBest Photos)

The idea for TisBest came to Marks while he was in law school in 2001. He was searching for an alternative to giving unwanted stuff to an affluent uncle who was downsizing. However, the technology for selling and creating online, charitable gift cards wasn’t yet up to the task.

Marks had his hands full as a corporate real estate attorney and entrepreneur who worked on deals for Amazon, Microsoft and others. But he came back to the idea in 2007 and in a stroke of lucky timing was introduced to Cathey, who had done product work for Microsoft and then started a small tech firm.

Working at Cathey’s living room table, the two created TisBest, hustling to launch their nonprofit before the holidays. They landed coverage in national print media, but it was a pre-Christmas spot on NPR’s Morning Edition, with a little girl recounting her joy in giving TisBest gift cards, that made sales skyrocket.

“That thing resonated,” Marks said. “Our sales started doubling overnight.”

Fueled by the publicity, they were on their way to $80,000 in daily sales.

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And then the bottom fell out. Their credit card processor suddenly shut down their transactions.

It turned out that the salesperson who sold them the processing platform had defrauded them, they said, illegally eliminating language from their contract stating that they were actually prohibited from selling gift cards. Through a heroic effort, Cathey found a new processor and the site was running again in three days.

But the original credit card processor withheld $250,000 of their transactions, handing over only $100,000. It took Marks months to recover the full sum, and TisBest nearly sunk in the meantime.

They soldiered on. In the early years, daily sales dwindled to almost nothing outside of the holidays. TisBest eventually got its footing and began growing, but faltered again. Cathey, who had shifted to other endeavors, returned to get the nonprofit’s technology platform back on track.

Then the COVID-19 pandemic gave a surprising boost to the operation. People were isolated and lacked a way to give back and connect with community. They started finding TisBest and making gifts. Corporate giving of the gift cards was also taking off, totaling more than half of the sales.

TisBest pays for its operations by asking shoppers to donate to the nonprofit when buying the cards. The entire amount of the gift card itself goes to charity. The gift card amount is tax deductible for shoppers. And if people receive a gift card but don’t allocate the money to charity, TisBest, because it’s a nonprofit, can reclaim that amount to cover its own costs.

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TisBest has seven employees, including Marks, who volunteers his time. Cathey, who now lives on Maui, currently has the role of managing director.

With their hard-earned success, the nonprofit could arguably coast for a bit. But the co-founders don’t see it that way. They’re exploring ideas for gamification and social media engagement while keeping an eye on cryptocurrency and non-fungible tokens (NFTs).

“We’re always looking and innovating and making the gift experience a better experience,” Cathey said. “There are a lot of ideas on the whiteboard.”

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