The fintech industry continues to experience significant growth and innovation remains at the forefront. However, some areas remain largely untouched, leaving a potential space for significant growth.
Robin Yan is the CEO and co-founder of Fana, a fintech for good card and wallet solution provider. Yan boasts over a decade of experience in private equity, structured finance and venture capital and established Fana with a vision to unite people, businesses and charities to make a collective impact while providing each group with something of value and an improved experience in the process.
Here, he explains how the charitable giving industry remains ‘largely untouched’ by digital innovation: presenting a significant opportunity for the fintech industry to drive growth and inclusion.
‘Redefining the act of giving’
Once the investment darling of the VC world, the fintech industry sits at an interesting crossroads.
Rapid innovation over the past 10 years has created significant advancements in areas such as digital payments, wealth management, digital neobanks, crowdfunding, insurtech and regtech, transforming how people and businesses manage finances and opening up new opportunities for growth, investment, and financial inclusion.
In line with much of the rest of the technology, valuations and investments peaked in 2021 and have dropped precipitously since (example, example). Whether a correction or a crash, it remains to be seen whether the expected rate cuts of 2024 and beyond will bring excitement and capital back into the industry.
We present a space that remains largely ‘analogue’, fragmented, and untouched by innovation: the $500billion charitable giving industry. This intersection of fintech and philanthropy presents a promising frontier, redefining the act of giving.
This is an opportunity to deepen the significance of charitable giving, making philanthropy more meaningful for donors and accessible to a broader audience. As we navigate its potential, a central thesis emerges: leveraging technology in philanthropy should not simply make giving easier, but also elevate the ‘why’ of giving, enriching the donor experience and democratising the act of generosity.
Traditional philanthropy
Traditional charity fundraising techniques generally fall into (a) direct individual solicitation (such as mailing campaigns, telemarketing, door-to-door or ‘street’ fundraising, legacy giving & bequests), (b) corporate sponsorship often with merchandise-linked sales, and (c) grants from government or other foundations. However, as the digital landscape evolves and donor expectations shift, these methods face increasing scrutiny for their efficiency and effectiveness.
Direct individual fundraising methods require significant upfront investment and are labour-intensive. – resulting in low, if not negative return on investments for nonprofits. Add in the additional factors of limited reach (i.e. events are generally localised), data and privacy concerns, and changing preferences of younger potential donors, and you get donor fatigue across the board.
For these reasons, charities spend significant portions of their time and resources pitching for corporate and Government donations, not yet unlocking the potential of a desirable and influential swathe of the population – Gen Z and millennials who value the convenience and speed of digital interactions and demand transparency and accountability to see how their contributions are making a difference.
These challenges highlight the need for innovation. and philanthropy becomes a space that is prime for fintech disruption.
The challenge of transient giving
The most significant innovation around charitable giving in recent years has been the proliferation of micro-donations and streamlined checkout contributions. While a significant shift towards modernisation (embedding charitable giving into our everyday financial transactions), this model, while convenient, often overlooks the donor’s need for engagement and acknowledgement.
Donations become fleeting gestures, lacking a tangible connection to the cause or recognition of the donor’s altruism. This oversight underscores a critical component: effective philanthropy requires more than ease – it demands recognition (being told I did a good thing) and content (showing me what my contribution did).
Crafting a meaningful philanthropic experience
‘Charity-tech’ until today has focused on solving problems for charities and the corporations that sponsor them, but a significant opportunity exists to innovate and build something that benefits consumers.
The essence of philanthropy extends beyond transactional interactions, looking to foster a profound connection between donors and their chosen causes. This vision for philanthropy necessitates innovations that not only facilitate giving but also enrich it, making every contribution a deliberate and informed act of kindness.
Leveraging existing innovations in content (creators can produce far better charity content than charities themselves), community (localised and peer-to-peer causes), and AI (utilising data to better understand the consumer-donor), fintechs can offer unique and personalised giving experiences, matching donors with causes that resonate with their values and interests, and amplifying the impact of their contributions for both the individual and the collective.
Towards a more collaborative future
One of the more compelling aspects of integrating fintech into charitable giving is the potential for increased transparency and donor engagement. By providing clear insights into how contributions are utilised and the tangible impact they achieve, fintech platforms can build trust and encourage sustained philanthropic activity amongst individuals.
Integrating giving into the financial landscape involves navigating complex challenges, including regulatory hurdles and ensuring the privacy and security of donor information. Yet, the collective benefits—enhanced accessibility to philanthropy, improved donor satisfaction, and a greater overall impact—underscore the value of this endeavour. Collaboration across fintech startups, traditional financial institutions, corporate sponsors, Government organisations, and nonprofits is crucial in developing solutions that respect the nuances of individual causes while embracing technological innovation.
The importance of the ‘why’
At its heart, the fusion of fintech and philanthropy is as much about the ‘why’ of giving as it is about the “how.” It’s about leveraging technology to make giving more than just convenient; it’s about making it a reflection of our values and a meaningful part of our lives. This approach promises to not only broaden the scope of potential donors but also to deepen the engagement and satisfaction of those who give. By emphasising the significance of each donation, fintech has the potential to transform charitable giving into a richer, more impactful, and more inclusive practice.
As we stand at the cusp of a potential new era in philanthropy, the integration of fintech into charitable giving offers more than just a technological upgrade; it offers an opportunity to reimagine giving in a way that aligns with the digital age.
This transition to a more accessible, engaging, and meaningful model of philanthropy holds the promise of creating a more compassionate and altruistic society. The potential of technology to democratise charitable giving lies not only in making donations easier but in making them more significant, ensuring that every act of giving contributes to a larger narrative of change and impact. In this way, fintech not only reshapes our financial transactions but also redefines the essence of generosity for the better.
