How FinTech is transforming the charity sector

How FinTech is transforming the charity sector
Written by
Little Phil

Fintech is a diverse, fast-changing industry. Over the past few years, it’s been more and more focused on bringing the charity sector up to speed with the rest of the financial world. 

Little Phil seeks to change the not-for-profit sector by applying FinTech based technology applications. The micro philanthropy platform is a social enterprise founded in 2017 to bring transparency to the charitable sector by enabling donors to track their donations from start to finish and prevent third-party fundraisers from taking a large share of the funds raised. 

The purpose of this is to revitalise the sector by providing access to funds to fuel social enterprise and to aid millennial philanthropic leaders and entrepreneurs who step up to tackle societal problems. 

Little Phil is aiming to achieve this by creating a total giving ecosystem that connects donors, businesses, and brands more directly with charities and beneficiaries. The aim is to provide donors full transparency around where their donations go and charities the ability to showcase the difference every dollar makes in real-time. 

Below, we’ve provided some quick points on what FinTech is and illustrate how it is transforming the not-for-profit sector in Australia and globally. 

What exactly is 'FinTech'?

FinTech is short for "financial technology." It's the term given to the industry that covers all the new technologies being used to make financial services more efficient. This can include anything from mobile payments to online banking to peer-to-peer lending.

FinTech is important because it's making financial services more accessible and efficient for everyone. For example, mobile payments make it easier for people to pay for things without having to carry around cash or a credit card. And online banking makes it easier for people to manage their finances from anywhere in the world.

FinTech is changing the way we bank by making it easier and more convenient to do everything from checking our account balances to transferring money between accounts. It's making finance more accessible for all and is yielding many great opportunities in the process.

How the application of this technology is transforming the not-for-profit sector

The not-for-profit sector is one area where FinTech is making a big impact. Traditionally, not-for-profits have relied on donations and grants to fund their work. But now, they're starting to use FinTech to fundraise and manage their finances more efficiently. 

From the donor perspective, terms like philanthropy and charity conjure images of wealthy donors or sometimes pushy workers trying to get money from people on the street to support their causes. 

On the nonprofit administration side, people are drowning in a sea of paperwork. This paperwork is integral to supporting their causes but impacts their ability to provide the actual aid they are raising the money for due to the administrative burden. 

Fortunately, FinTech products make charitable donations easier for donors and nonprofits alike and empower the millennial generation to be involved like never before.

Facilitated means of accepting donations

One of the ways FinTech is benefiting not-for-profit organisations is by making it easier for them to accept donations. Online donation platforms make it easy for people to donate money to a not-for-profit, no matter where they are in the world. And mobile donation platforms allow people to donate money using their phones, which is especially useful in appealing to select markets where device usage may be focused around one type of device (e.g., mobile donations for charities appealing to millennials).

Efficient means of managing finances

FinTech is also helping not-for-profits manage their finances more efficiently. Online banking and accounting software allow not-for-profits to keep track of their income and expenses in real-time, which helps them stay on top of their finances. An example of this is the use of cloud-based accounting software, which allows not-for-profits to access their accounts from any device with an internet connection. Online payment platforms also allow not-for-profits to pay their bills and employees quickly and easily and streamline their financial flows as a whole.   This helps not-for-profits save time and money, which they can then use to focus on their core mission.

New ways to fundraise

FinTech is helping not-for-profits raise money in new and innovative ways. "Non Fungible Tokens" (NFTs) are digital assets that use blockchain technology to facilitate transactions. This means they can be used to raise money for not-for-profits securely and transparently.

NFTs are being used to fundraise for not-for-profits through the use of "crypto collectables." They are digital assets that are unique and non-fungible. They're often used as a way to raise money for non-profits, as people can purchase them with cryptocurrency.

A cashless approach to philanthropy

FinTech is ushering in a new era of cashless philanthropy, where people donate money to non-profits using digital methods such as text-to-give, QR codes, and online donation platforms. It also helps to reduce the amount of time and money spent on processing donations.

Charities powered by the blockchain

FinTech is benefiting not-for-profits organisations by providing them with new platforms to operate on. There are now a number of charities powered by the blockchain. The blockchain is a distributed database that allows for secure and transparent recording of transactions. This makes it an ideal platform for not-for-profit organisations, as it allows them to keep track of their donations in a secure way.

A forward and consumer-facing approach to operations

The world is rapidly changing, and along with it, society's preferences and expectations when it comes to engaging with and donating to organisations.  To stay competitive and meet the needs of donors and potential donors, not-for-profit organisations are increasingly turning to FinTech for solutions. This has led to a more forward and consumer-facing approach to operations. Not-for-profits are using things like cryptocurrency and digital donation platforms to make it easier and more appealing for people to donate money and assets.

Overall, FinTech is having a big impact on the not-for-profit sector by making it easier to accept donations, manage finances, and fundraise in new and innovative ways. This is helping charities become more efficient and sustainable, as well as allowing them to reach more people with their message. New and improved means of conducting operations in this way ultimately benefit charitable causes and make it easier for members of society to get involved in what matters most. 

This is great news for charities and the people they serve in numerous ways and holds a lot of promise for the outlook and growth of the sector.

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