No, Zeffy itself is not FDIC insured. While Zeffy provides a platform for processing donations and payments, its operational funds or the funds directly managed by Zeffy are not covered by Federal Deposit Insurance Corporation (FDIC) insurance.
Understanding FDIC Insurance
The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects depositors in FDIC-insured banks against the loss of their deposits if an FDIC-insured bank fails. This protection is typically up to $250,000 per depositor, per insured bank, for each account ownership category.
- Purpose: The primary goal of FDIC insurance is to maintain stability and public confidence in the nation's financial system.
- Coverage: It covers deposit accounts, such as checking accounts, savings accounts, money market deposit accounts, and certificates of deposit (CDs).
- Exclusions: It generally does not cover investment products like mutual funds, stocks, bonds, annuities, or the accounts of non-bank entities like payment processors or fundraising platforms themselves. For more details, you can visit the official FDIC website.
How FDIC Protection Relates to Zeffy Users
Although Zeffy as a platform does not carry FDIC insurance, certain payment methods integrated with or used in conjunction with Zeffy might offer FDIC protection. Specifically, for users leveraging Cash Cards for transactions or holding funds, those funds can be covered by FDIC insurance up to $250,000.
This coverage applies because the funds associated with a Cash Card are typically held at an FDIC-insured bank, which is a partner institution, not Zeffy directly. Therefore, the insurance protects the user's funds held at that partner bank, not Zeffy's general operations or any funds temporarily transiting through Zeffy's processing pipeline before being disbursed to an organization's bank account.
What This Means for Donors and Organizations
For donors and organizations using Zeffy, understanding this distinction is crucial:
- For Donors: When you make a donation through Zeffy, your funds are processed and then transferred to the recipient organization. Your personal bank account, which is typically FDIC insured, remains protected. Any specific FDIC protection for the donation itself would depend on the payment method you use (e.g., if you are using a Cash Card that holds your funds at an FDIC-insured bank).
- For Organizations: Organizations receiving donations via Zeffy will have these funds deposited into their own bank accounts. It is these organizational bank accounts, held at FDIC-insured banks, that provide the FDIC protection for the funds once they are settled.
FDIC Coverage Overview
To summarize how FDIC insurance applies in the context of using Zeffy:
| Aspect | FDIC Insured? | Details |
|---|---|---|
| Zeffy Platform | No | Zeffy, as a fundraising platform, does not directly hold user deposits or act as a bank. |
| Cash Cards | Yes (up to $250,000) | Funds held via Cash Cards are typically deposited with FDIC-insured partner banks, providing coverage for those specific balances. |
| Donor Bank Account | Yes (up to $250,000) | Your personal checking or savings account used to make a donation is FDIC insured by your bank. |
| Organization's Bank Account | Yes (up to $250,000) | Funds received by an organization through Zeffy are deposited into the organization's own FDIC-insured bank account, where they are then protected. |
Ultimately, while Zeffy itself isn't FDIC insured, the underlying banking infrastructure that supports payment methods like Cash Cards and the final destination bank accounts for donations generally provide FDIC protection.
