The term “cashless society” is bandied around a lot. While there’s little chance of physical currency becoming obsolete any time soon, there’s no doubt that the rapid adoption of digital payment methods has opened some exciting opportunities for businesses.
However, what about charities and other non-profit organisations? How are they handling the ongoing migration from cash to digital payment solutions? For many, it’s proving to be a huge challenge.
What’s different for financial professionals in voluntary organisations?
Budgetary constraints and harnessing the benefits of new technology:
Costs are the most obvious and most pressing concern for those chief financial officers (CFOs) employed by charities.
Persuading senior figures to invest in new systems can be difficult enough within a business, but it’s arguably even more challenging for non-profits, particularly smaller, less established ones. Budgetary constraints and short-term thinking appear to be holding many charities back.
A global report published in early 2016 by global information specialist Nielsen showed that over a period of six months in 2015 around four in 10 people worldwide used a digital payment system of some description. This way of completing financial transactions has become second nature to many, and it’s imperative that charities keep up with this demand if they are to maximise the value of donations they receive.
In the UK, for example, the annual UK Giving Report produced by the Charities Aid Foundation (CAF) showed that in 2015 almost one in three (31%) Britons donated money to charity via direct debit. This was the second most popular method of giving – cash was still top on 55% – underlining the point that the demand for quick and convenient donation processes is increasing. Unfortunately, too many charities still don’t offer such services.
It will be interesting to see when the tipping point is reached whereby direct debits overtake cash as the favoured form of giving to charity. We can assume that it won’t be too far away.
Maintaining a regular stream of donations:
Customer retention is a big issue for CFOs in for-profit organisations. They have a clear advantage over their peers in the third sector, though.
When paying for a product or service, a consumer is clearly getting something for their money. Aside from a warm sense of wellbeing, this isn’t the case when giving money to charity. As such, it’s usually the first expense to be reined in when times get a little tight.
This unpredictability can make life extremely difficult for financial professionals when it comes to setting budgets and earmarking how much money is available to invest into new processes. Heading into 2017, charities simply must review their services to ensure they’re doing everything possible to make it easy for people to give them money!
Charities have come under fire of late for deploying over-zealous tactics in their efforts to get people to make regular donations. This means it’s even more important that those who have expressed a desire to make a monthly payment are looked after and valued properly.
Dealing with close public scrutiny:
Consumers want to deal with companies that have strong ethics, and there’s no doubt that businesses are under growing pressure to demonstrate robust corporate social responsibility (CSR) policies.
This trend is one that CFOs at charitable organisations have had to handle for a long time. Every single penny, euro or cent invested into making the charity more efficient is scrutinised extremely closely. There’s less room for error when making big financial decisions.
Handling burdensome admin:
The greater a treasury department’s reliance on old-fashioned solutions, the more admin that it must cope with – it’s a vicious circle. Handling cash and processing cheques is not only time consuming, it can be costly too; especially if there are no automated reporting systems.
It makes the case for investing in new systems that streamline the giving process more compelling.
How do charity-based financial professionals overcome these problems?
As generating a regular stream of income is always a challenge, it becomes even more important that charities interact with their supporters. This, yet again, is where technology and an element of creative thinking come into focus.
Social media plays a crucial role in achieving greater brand awareness and levels of engagement. Moreover, it’s been something of a leveller for smaller non-profits that don’t have the financial muscle of their more established counterparts. Most platforms are free to use and have a wide reach.
Of course, enlisting a specialist agency to deliver a professional social media engagement strategy on your charity’s behalf can carry a hefty cost. Combine a degree of know-how with the ability to be responsive and you can instead use social media to grow your community. In 2015, a total of US$116m was raised across 70 countries as part of the #GivingTuesday campaign, which this year will take place on Tuesday November 29. The campaign employs social media to prompt people to give to a good cause in the aftermath of Black Friday and Cyber Monday; two of the most lucrative shopping days of the year.
While ramping up communications with donors is a crucial step for charities to take, it’s only the first rung on the ladder. For most non-profit organisations, the hardest thing is turning online interactions into consistent donations. Encouragingly, help is at hand.
A number of banks are making a concerted effort to assist charities by making giving simpler, and by ensuring that their financial resources are working to their fullest potential. That includes enabling people to donate on the spot at automated teller machines (ATMs) and providing tailored support to charities, such as regular expert reviews to help them to streamline their processes and deliver new cost efficiencies.
Charities are also teaming up with other voluntary groups or private companies – such as payment bureaus – to help cut costs and make their work more effective.
Over the year ahead, it’s imperative that this collaborative approach is nurtured further. With so much economic uncertainty across the globe, the third sector could be in for a turbulent 12 months. Financial professionals need to be adequately prepared.