A sector giving back: fintech meets philanthropy

A guest editorial by Jeremy Baber, chief executive officer of Lanistar

Navigating the UK’s shifting economic landscape has presented challenges for many charitable organisations that depend on fundraising, particularly as disposable income fell by 2.2% in the 2022/23 financial year. Reliant on volunteers and overcome with various regulations, once successful fundraising methods have proved inefficient in recent years. To address this issue, charities are modifying their business models to encompass a more consumer-centric approach to modern fundraising and operations by adopting a cashless framework.

From convoluted cash to cashless 

In the past, charitable organisations have depended heavily on volunteers to collect physical cash, using buckets, as one of their main sources of income as part of broader fundraising campaigns. This method, however, in recent years has become outdated and proved particularly challenging for charities to establish a reliable income, especially when large scale events such as gala dinners are taken into consideration. 

The onboarding process of volunteers has proved a time-consuming task for charitable organisations, who must consult specific codes and follow protocols involving registration and identification procedures, as well as obtaining licences. However, the practicalities involved in the physical collection of cash extend beyond volunteer coordination. Depending on the desired locations of collections, charities must also obtain permission from the landowner or local authority, which often involves a lengthy approval process.

In addition to this, regulatory stipulations exist for the containers used for donation collection. These involve the condition of which the containers are in, the way they are opened and how the money is collected. Any fundraising materials handed out to the public must also be printed to include specific details such as the charity’s name, number and contact details. With such strict regulatory pressures in mind, charities are overcome with barriers, convoluting their fundraising efforts and influencing their income.

Digitisation-driven donations

As digital transitions and online banking continue to dominate the exchange of funds, cash payments have subsequently diminished in popularity. This can be attributed to the flexibility offered by online banking services that remain uninfluenced by factors such as geographic location. Fintechs are capitalising on this change in consumer demand, leveraging technologies to drive donations through online platforms, QR codes and text-to-give schemes. As an increasing number of people across the globe embrace the adoption of these technologies, donations are no longer restricted by time and place, facilitating a more predictable and sustainable source of income for charities.  

In response to this shift online, there has been an uptick in organisations implementing and operating on blockchain-run platforms. Providing an advanced database system, by storing data in interconnected blocks, the secure network allows for the transparent recording of transactions. Not only does this improve financial visibility, but also introduces a new income stream, cryptocurrency, through the purchase, transfer and processing of Non-Fungible Tokens (NFTs). 

With an increase in income streams comes a heightened responsibility for charitable organisations to closely monitor transactions and fulfil reporting formalities. Accessible online banking, combined with cloud-based accounting software, has proven successful in streamlining asset and cash flow management in real-time. Whilst online banking allows for seamless payment of bills and payslips, cloud-based accounting offers supreme accessibility to accounts, operating with only an internet connection. By streamlining these processes, more time can be allocated to building donor relations and fine-tuning business models.

A new era of philanthropy

Volunteers, collectors and donors have provided consistent income for charity initiatives for centuries, however in recent years, fintechs have made significant progress in bolstering the influx of donations through digitisation. The reduced reliance on physical cash donations has enabled charitable organisations to benefit from the immediacy of online transactions across the globe. Subsequently, the pressure to onboard and manage volunteers has subsided, lifting regulatory pressure and freeing up time for more rewarding activities. 

To incorporate a well-rounded approach to all aspects of fundraising and cash flow management, the implementation of advanced cloud-based software and online banking services to record and manage transactions within charitable organisations is essential. Combined with blockchain technologies, charities will benefit from supplementary income streams using alternative currencies, ultimately optimising inflow within the safety of a secure and protected network.

Related: Jeremy Baber: Labour’s fintech pledges promise necessary industry boost

Image: Katt Yukawa on Unsplash

Guest Editorial This article was produced specially for Fintech Intel by an expert guest contributor.