By Darren Savage, CSO, Tribal Worldwide

 

We’ve all heard how significant the impact of Coronavirus has had on almost every industry. And how the charity sector as a whole has been disproportionately impacted given its ultimate aims and fundraising models.

During the first lockdown, C.A.L.M. decided to shift its London 10k event online, setting up virtual cheer points and arranging a pre-run warm up and post-run chat. Fundraising Director, Anna Jones admitted during a webinar last year that it wasn’t possible to replicate the in-person event and its atmosphere online.

And while many charities have long relied on corporate partnerships in various forms, the onset of the pandemic squeezed budgets for many businesses, putting charity donations at risk. It also made for a challenging environment for charities to take the often-necessary action of asking for funding from new and existing partners.

But as the pandemic has progressed, and charities have successfully adapted, we have largely moved out of crisis mode. And there’s now an opportunity for the industry to once again start looking forward and being future-proofing, by adapting further – building resilience around themselves and their models.

Why open banking?

Amongst the devastation coronavirus has wrought, open banking could offer a way for the industry to restabilise and return to the pre-pandemic levels of income needed to sustain charities. Open banking’s value proposition lies around the shift to more customer-centric banking, focusing on the ease and overall experience of consumers. When open banking first started, it was a blank canvas. It’s now a rich ecosystem of services, companies and technology, meaning it can be used by organisations like charities to derive insights on consumer spending.  In doing so, open banking provides much-needed opportunities for charities who saw their fundraising models turned upside down in 2020.

In light of the additional challenges the coronavirus pandemic has raised for charities, Tribal Worldwide undertook research on behalf of Great Ormond Street Hospital Children’s Charity. The research focused on the diversification of fundraising, and in particular how the charity sector can tap into the opportunities open banking provides for organisations reliant on charitable giving.

While the research was specifically focused on GOSH Children’s Charity, the benefits of open banking offer significant opportunities for the charity sector to streamline their digital fundraising efforts and make the most of every penny in donations. In particular, there are three key benefits all charities can realise by embracing the open banking revolution, notably:

1. The cost of receiving donations

The most obvious benefits of open banking for charities lie in the use of borrowed infrastructure and increased ease of administration the technology provides, which help reduce overall costs and fees meaning more of the donations can go into the organisation and its work. Charities don’t need to spend a lot of money on new tech as the ecosystem now already exists facilitate micro / top up payments. When we look a little deeper, open banking has also driven a number of new payment platforms and providers, increasing competition in the finance industry, helping to drive down the costs of banking when compared to a decade ago.

Even better, some finance companies have even removed fees or have offered free-of-charge payments for charities since the Covid outbreak, something that would have been unlikely without the open banking revolution. Given the additional volumes of card payments as a result of online donations and event, the cost of transactions could otherwise be a significant pool of funding for charities. All of this has a tangible knock-on effect on the bottom line for charities, helping them to do more with the same level of donations.

2. Visibility into spending

Aside from just offering reduced costs to charities, open banking can provide greater insight into where charities are spending their money. Not only can this be used to reduce the costs of receiving donations and making payments themselves, but it can also help charities to reassure donors their money is being used in the best possible way.

Charities can also use open banking to connect their campaign activities. Due to the integration of different platforms using open banking, the platforms using open banking have permission to share data. Joining up this data can help target communications for a specific type of donor in future, based on their donation history.

This can help increase transparency for donors. When combined with the right external messaging, it helps donors to understand the significance of their individual donation. Integrating open banking with other existing technologies and digital ecosystems – including social media can help charities learn how donors like to donate, and what external factors might have led to that donation, like a specific social media post.

3. Convenient charitable giving

Convenient payments for both donors and charities are something that has become increasingly vital throughout numerous lockdowns. With limited access to banks, and many retailers requesting card payments, the pandemic has accelerated the shift to a cashless society for consumers, meaning less change for the charity ‘buckets’ still around. Open banking has significantly improved the ‘experience’ of payments for consumers, streamlining the process and making giving simpler. Removing these potential barriers for donors can have a knock-on effect on the volumes received through fundraising efforts.

For charities, open banking has additionally opened up new, even more convenient donation options – including rounding up day-to-day payments made by consumers and donating the ‘pennies’ to charities. While this has long been an option when it comes to payroll at bigger organisations, new providers have created this new opportunity to give small, regular amounts to charity without consumers even having to think about it. Another example would be consumers going into their local shop which could provide a QR code at the counter for people in the local area who are running a marathon. Consumers can just scan the code and the charity can receive the micro payment with minimal effort.

Future-proofing for charities

While the tide has begun to turn against coronavirus, as a country we still have a way to go before we return to a level of normality where the charity sector can once again reap the rewards of in-person fundraising and events.

As we continue to move towards recovery, now is the perfect time for charities to take stock and time to revaluate their strategy. But they must be open to opportunities in order to reap the benefits – of new technology generally, and of open banking specifically. Some charities may need more of a focus on plugging some of the gaps Covid has created, other may be shoring themselves up against any other dramatic challenges in future. Embracing open baking is one of the quickest, easiest and cost-effective ways for charities to embrace new donation methods, reduce their costs and be able to do more with the money they already receive from donors.

The charities that fail to act now are the ones who will be at risk of playing catch up in the months and years to come – and with purse strings often tightening, that’s a place I doubt many charities would want to be in.