This is a guest post written by Shannon Flynn, managing editor at ReHack.com.
Financial tech and nonprofits have an opportunity to build partnerships and make the world a better place. If fintech companies want to work with nonprofits, they must establish trust and clearly outline the benefits of collaborating for the greater good.
Households in the United States are generous. According to National Philanthropic Trust, Americans gave $449.64 billion to various charities in 2019. However, people are increasingly demanding that the giving be easy and intuitive, which brings fintech into play. Even the way nonprofits manage the funds donated to them is changing.
Examples of fintech companies include Lending Club, Kabbage and Stripe. Meshing fintech and charity isn’t always an obvious choice. However, nonprofit technology is on the rise, and organizations benefit greatly from some of the advantages these brands bring to the table. Here are some of the benefits of fintech charity partnerships.
How Fintech and Charity Work Together
There is a growing move toward non-cash payments in charitable giving. Forbes reports in countries such as Sweden, cash-based payments make up 13% of transactions. This can impact traditional fundraising efforts, such as in-person collection baskets.
Fintech advances in the last decade have made it much easier for people to participate in charitable giving. There are numerous ways nonprofit technology helps organizations raise money. Rather than an in-person fundraising push, organizations raise money via social media and email campaigns. Not to mention philanthropies saw an increase in virtual fundraising campaigns in 2020, boosting the need for online financial services and resources at an unprecedented rate.
Nonprofits can only thrive because of the generosity of patrons and local businesses. A fintech business can team up with a charity, and both can develop stronger community relationships as a result. Individuals who support the organization will look to partner companies for their own fintech solutions. The charity benefits from gaining access to the business’s software for easier donations and tracking funds.
Nonprofit Technology Advances
The M + R Online Giving Benchmark Study found that online revenue grew about 10% in 2019. Facebook alone made up around 3.5% of online giving, with much of it occurring on Giving Tuesday.
In addition to ramping up the ways people give to nonprofits, financial management has gone into the cloud. Rather than keeping a paper book, nearly every organization uses some type of accounting software and big data to track giving and donors and figure out ways to increase revenue from year to year.
Benefits of Teaming Up
There are numerous benefits to fintech and charity partnerships. While some are quite obvious, others are more subtle.
When two companies team up, they both gain access to one another’s customer lists. For example, if a business offers an online payment gateway and it teams up with a local charity, it might send out a press release. Simply gaining exposure may bring in more donations for the nonprofit.
They also will let their members know they are using a partner’s payment system. If the software is donated, the nonprofit will offer a thank you. Some of its patrons are likely business owners who may need services. By working together, the charity and company both expand their reach.
In a study by Omnicom Group’s Cone Communications, researchers found 83% of millennials felt loyal to companies helping them contribute to causes. A partnership helps both the fintech firm and the non-profit organization.
Some fintech companies throw their financial support behind an organization. They offer technology advantages and also come alongside them to raise money for the cause. Businesses should care about the purpose of the charity it supports. It should tie into the company’s philosophy and help advance its own goals. Any donations can likely be written off on taxes while helping a local group.
Offering software at no cost allows businesses to try out new features and work through bugs. Part of the agreement can be that it provides the nonprofit with updates first, and they’ll report issues so the company can fix them. They get the program for free, and the business receives instant feedback on what works and what needs tweaking.
Most fintech companies offer better tracking features for all types of businesses. Charities will be on top of where donor funds go and if they’re being used wisely. When people give to an organization, they expect them to be good stewards of that generosity. With the right programs, the nonprofit can run reports and know in an instant how money gets spent and if they are actually making the difference they promised.
Fintech Charity Partnerships Can Improve Performance
When it comes to making a difference in the world, improved performance enhances productivity and allows volunteers to do more than they ever thought possible. Technology allows people to stay on top of tasks and ensure cash flow is never an issue. By working together, fintech and nonprofits can make a huge difference in the lives of those they serve.
Shannon Flynn is a technology and culture writer with two plus years of experience writing about consumer trends and tech news.