This August at The Fintech Times, we’re looking to highlight some of the amazing things fintechs are doing around the world. We are always hearing about the “latest groundbreaking innovation doing good for the community”, but are these innovations doing good for those in an already advantageous position, or are they helping make the financial world more accessible? To us at The Fintech Times, fintech for good means companies looking to help people who desperately need it, prioritising financial inclusion and sustainability.
Having learnt about what the industry believes separates a ‘fintech for good’ company from the rest, this week our focus turns to where the money goes. The obvious place to look is charities, so in this article, we will be looking at how fintechs are helping charities and people around the world.
Countless apps are helping charities
Roy Ng, co-founder and CEO of embedded finance platform Bond, thinks apps have helped charities. He says: “The number one way that charities have been able to benefit from fintechs is through the countless apps that have been created to help make it easier for consumers to donate to charities, whether through an app like Cheerful, that rounds up every purchase a consumer makes, donating the extra pennies to the charity of their choice, or through something like Daffy, where people can set up tax-free accounts that help them save money specifically for charitable donations they want to make.
“Another example is from a personal experience. I sit on the national board of Junior Achievement, a nonprofit organisation dedicated to financial literacy for young people, reaching over 3 million students per year. Junior Achievement partnered with the team at Acorns to offer students with the ‘Learn & Earn’ app that teaches young people how to invest and start building wealth for the future.”
Fintechs need a personalised model that benefits both them and charities
James Lynn, co-founder of travel debit card firm Currensea, looked at his own company as an example of how fintechs can work with charities, saying: “At Currensea, as part of our mission to create ‘payments for good’, we launched our ‘powered by’ programme to provide charities with the opportunity to offer branded cards to their supporters. This helps boost donations and allows travellers to give back to communities and support some of the causes close to their hearts.
“Some of the charities we partner include long-standing household names such as Royal Trinity Hospice and St Martin-in-the-Fields as well as Rafiki Thabo, which supports education projects across Africa, and Cameron Bespolka Trust, a charity that encourages young people to connect with nature and animals.
“However, there are various types of partnerships that fintechs can forge with charities – it’s not a case of there being a correct approach, fintechs must ensure they create a personalised model that benefits both them and charities.
“When it comes to driving donations, a targeted approach aimed at specific groups of supporters is likely to be more effective. For example, over the last quarter, one of our charities has raised four times as much via donations from Currensea users compared to donations via Amazon Smile.”
Working with the council helps fintechs aid those who need it
Listing the ways in which B2B payments and digital banking platform provider Paynetics has helped a variety of different groups, CEO Mike Peplow said: “At Paynetics we have worked with Refugee Action and Buckinghamshire Council who offer support to vulnerable people arriving in the UK with secure and real-time payments.
“We’ve worked with charities and the authorities to create a programme whereby they’re able to issue a card which is then given to the asylum seeker that same day. The cards can be restricted so that they can only be used for necessities and money can be transferred safely across.
“We also work with councils to help children in care receive pocket money each month. Again, the council can restrict how it’s used and can be accessed via an app that they use to spend with.
“Sibstar are also a great example of this. Their app and card are designed to help you manage your money day to day. The extra support provided enables those living with dementia to maintain their financial independence, whilst giving those around them peace of mind. Not only is this a financial service but also supports an underserved community who needs help with their money.”
Helping credit unions
Teddy Flo is general counsel at Zest AI, which works with dozens of credit unions.
He says: “While not charities, credit unions are nonprofit financial institutions. So, all of their net income is put to work to make more loans available to creditworthy borrowers instead of being paid out to shareholders. Zest AI helps credit unions by creating custom machine learning models that credit unions use to assess credit risk during the loan underwriting process.
“On average, the models let credit unions increase loan approval rates by 25 per cent while holding risk constant. It creates a virtuous cycle. Fintechs help more consumers get access to low-cost credit products from credit unions. As consumers repay their loans, the credit unions take the income and make more credit available, which in turn benefits more consumers. A win-win-win.”
Making DeFi accessible
Brendan Playford, founder of decentralised financial data platform Masa Finance, comments: “A non profit organisation that Masa works closely with is DeFi for the People, which is a global initiative helping to make decentralised financial apps and services accessible to anyone with a mobile phone and an internet connection. Non profits, open source platforms that work closely alongside fintechs are able to expand their resources and not only give back what they construct, but they are able to lend an extensive range of technologies to the underserved.
“DeFi for the People also provides partner-funded grants and other support to builders using mobile-first technology to create the conditions of prosperity, which pairs with Masa’s ultimate fintech vision as well. We want those who are excluded from financial services to have all of the tools they need beyond our protocol–which DeFi for the People can provide.”
Collection pots
One of the most familiar ways charities traditionally raised funds is the ‘humble collection pot’, suggests Helen Child, founder of Open Banking Excellence (OBE).
She says: “One of the key reasons for the success of this rather rudimentary form of payment technology is its convenience. When people see a worker shaking a pot full of change or encountered one at a shop checkout, they can simply pop a pound in and make a donation.
“Fintechs are now helping the charity sector by offering new payment options which are just as convenient as the old-fashioned collections pot, but much more efficient and secure. OBE collaborated with the open data leader Moneyhub to launch a charity QR code which enables people to pledge money in less than 60 seconds. Scan the QR code and an Open Banking payment is made to a charity. It’s just as fast as taking out your purse and finding a coin to put in the pot – and, of course, there is no container full of cash for thieves to steal.
“The launch of variable recurring payments (VRP) also points to the future of donations. The CMA9 – Britain’s nine biggest banks – have been mandated to introduce VRP for sweeping by the end of July. It is a non-sweeping VRP that represent an opportunity for charities. VRPs enable users to set up automated payments to third parties which are governed by strict rules.
“So, for instance, a donor could automatically send money to charity each month and set rules which mean that they pay more up to a certain limit if they have spare money in their accounts. VRP will allow charities and donors to interact in new ways and encourage people to pledge money automatically, conveniently and without friction. Our community believes that VRPs will be a game-changer for many industries.”
Increasing trend toward non-cash donations
STX Next, a company that provides software services to fintech clients, says it has a great experience dealing with a number of challenges lending services providers face.
Maciej Dziergwa, CEO at STX Next, said: “Fintech companies have had a significant impact on financial services as a whole, altering standards and expectations with innovations like speedier payments and increased transaction security. These are not the only industries that fintech has affected, though. The method that people give to charities has also radically altered, and it’s now simpler than ever to get involved with and support social causes that are located hundreds of miles away thanks to advances that made transactions more efficient. It goes without saying that the advancements achieved by fintech businesses also give charity more leverage because they can now access cutting-edge funding tools for volunteer engagement, database administration, and community outreach.
“Fintech products offer a lot of advantages for small and medium-sized businesses and also for charities. Charities may not be low-hanging fruit that are the most important targets for a huge segment of fintech solutions, but in philanthropic giving, there is an increasing trend toward non-cash donations. According to Forbes, 13 per cent of transactions take place in nations like Sweden where payments are made in cash. This can impact traditional fundraising strategies, including in-person collection baskets.
“Some notable fintechs that have made a major breakthrough in the process of charitable giving and gave back are:
Crowdrise + GoFundMe:
CrowdRise was co-founded by the actor Edward Norton, producer Shauna Robertson, and Robert and Jeffrey Wolfe in 2009 while trying to raise money for the Maasai Wilderness Conservation Trust. They created a bespoke platform to do so, and realised that it could be used by others, too. It allows users to create their own fundraising websites, and the money goes directly to charity regardless of whether the campaign’s initiator met their goal requirements. CrowdRise has worked with well-known organisations such as the Red Cross, UNICEF, and the Boston Marathon.
Chuffed:
Chuffed is an online crowdfunding platform designed specifically for organisations and charities that has amassed astounding stats in the short time since it has been operating: €15million raised, 7,900 social campaigns, and more than 220,000 donors. Anyone can start and run a social cause campaign on this website, whether it’s for education, animal rights, the LGBTQ+ community, or social welfare.
Cleo:
Cleo is an AI-based monetary assistant that takes the form of an app and chatbot helping users with their finances. The app includes a donation feature: users can simply say “donate” in the Cleo chat and a percentage of their savings will be donated to charity.”
