Can Fintech solve the nonprofit liquidity problem?

The value of the global public interest market is about $ 1.5 trillion. In the United States, 1.7 million nonprofits are receiving about $ 471 billion, which means Americans are paying $ 1 billion a day. The question is why most nonprofits still struggle to raise money?

Dominic Kalms is an entrepreneur-supported fintech entrepreneur and aware of the gaps and years of experience working with nonprofits. “It’s actually a liquidity problem because 40% of nonprofit grants come in October, November, December. So, for the first three quarters of the year, there are a lot of nonprofits that are trying to run capital increase campaigns that they shouldn’t have had as much success.”

This is a situation that needs to be addressed. According to GuideStar, a leading nonprofit charity rating agency, four out of 10 nonprofits will go out of business in the next three years if nothing is done to address the current liquidity crisis in nonprofits.

In addition, fewer Americans are donating, and fewer. However, according to the poll, 75% of Americans want to pay more but are financially limited.

Historically, whenever Americans received money, charitable giving increased in the following weeks. Since the last round of stimulus checks, Charity Navigator has reported a 237% increase in charitable donations and an average 30% increase in donations.

In the face of liquidity problems for both nonprofits and small donors, Kalms has come up with a solution: create a public interest credit product under Kalms’ initiative-backed fintech company B Generous. The product allows people to donate to the Now After Payment (DNPL), such as the Buy Now, Pay After program, also known as point-of-sale (POS) loans. Through DNPL, nonprofits receive grants in advance and donors pay in installments.

The solution is elegant but simple. POS loans are widely accepted and very popular. “About 66% of millennials and Gen Zers have a loan or have used such a product before. Nonprofits simply include a DNPL button on their site and our research shows that 90% plus people click that button because they are curious.” Says Kalms.

Giving to donors, a way to keep their budgets in check, encourages them to donate throughout the year and give more. They do not have to wait until the direct stimulus check or bonus to practice their social conscience. Instead, nonprofits benefit from consistent liquidity, which helps make their operations more efficient.

“The dynamics of this model are such that when you allow people to pay over time, people are willing to spend a lot more. That’s why America has trillions of dollars in credit card debt. That’s the reason to buy it. “It simply came to our notice then.

In one survey, Columbus found that 83% of donors indicated a willingness to double their donations if they could repay them over time, and that this did not cost them. “The reason we think we’re in a position to succeed in the marketplace is because we are consumers – in this case, we don’t charge any interest to the donor. . “

But Colmus acknowledges that developing the platform was incredibly challenging when it came to nonprofits and huge interest on financing loans from banks. “The regulatory structure is very tight, and we had to go from state to state. It was also notoriously difficult to get VCs interested in this place.”

B Generous is currently in alpha testing for two products: a direct B2B product for approved nonprofits and a direct consumer product for non-affiliates. Colmus expects to be fully operational within three months.

Patricia Glaser, a longtime nonprofit CEO from Shia Nashville, believes that “fintech has disrupted banking and trading platforms and disrupted the nonprofit sector. Nonprofits can use these free tools to reach new and younger audiences who live on mobile devices and are accustomed to platforms that provide the experience created for them. ”

Fintech is clearly pushing for change in the public interest and non-profit sectors, with the goal of providing people with easier access to charitable work. Let’s hope this helps us deal with some of the persistent social problems.