For many nonprofits, adhering to change can feel like you are attempting to cross a river on lily pads. It is not stable and it feels like there is a high likelihood of failure. Learn why embracing innovation, strategic technology investments and modern payment processors can help your nonprofit stay in front of donors.
The Why?
For many not-for-profits, the cost-benefit of implementing change has been the focal point for many of today’s decisions at the board level. Every other month there is an entrance of new payment platforms, increasing browser privacy regulations, and the increasing demand for an online presence of social media networks. The downside of this change is that it can be challenging; and the upside…well, it can boost conversion rates and online user involvement which will have a huge impact. Online giving is popular among all generations, but most popular for next-gen donors.And the truth is, the giving platforms of today may not be the platforms of tomorrow. So it is paramount not only to invest in new technology but also to consider the strategy you implement for change management regardless of the technology itself.
The Facts?
Challenging times create the opportunity to innovate and change for the future. In a recent annual report administered by Giving USA, the 2023 trends show individual giving is down approximately 7% compared to that of last year for donor giving. Giving USA: The Annual Report on Philanthropy is a seminal publication reporting on the sources and uses of charitable giving in the United States.
After reviewing studies from the Blackbaud Charitable Giving reports and Giving USA Annual reports,since 2020 the average online giving has increased approximately 40% over the last three years. This tells us that not innovating and adapting could be more costly than the dollar amount of the actual implementation itself and this is only the beginning of the challenge because next-generation technology could include digital currency and more digital technology which is going to present an adapt or fail model over the long term.
The Options?
We believe one of the most crucial areas that has the potential to have the most impact is investing in technology to make the donation process simple and user-friendly. This stems from the ease of use of the donation process especially in a world where we are so mobile (phone) dependent. In Giving USA’s publication, the average conversion rate, which is the percentage of your nonprofit website visitors who make a donation after visiting your donation page was between 15-20% for gifts in 2022 according to the Giving USA 2023 Annual Report, which in turn means that 80-85% of donation forms were populated but not completed. By just turning that conversion rate by a few points at an average gift of $100, one can increase in a substantial way the number of dollars received without really changing much other than the initial technology investment.
Another common trend is adding modern payment processors to the donation process. PayPal, Venmo, Google Wallet, and Apple Pay create a more straightforward donation process for mobile users which drives the most traffic in today’s online giving data.
Other common themes in the not-for-profit sector include adjusting the ask levels or even implementing texting services that reach new audiences that you normally would not reach.
The theme, though, is innovation.Each generation changes donation patterns, but the original theme never changes: people give to organizations that they feel connected to and value.Therefore, it’s important to not lose sight of “why” people give, but also, sometimes, you have to connect the mechanism of “how” they give and meet them where they are to maximize your donation base.
Execution!
The options summarized above are only some of the many ways to improve your presence in the digital space. Deciding where to start might feel overwhelming, but by addressing areas your organization currently lacks or falls short and obtaining an understanding from a data analytics perspective of giving trends at your organization is a good start. Setting up a subcommittee on development/fundraising to consistently evaluate current state and future states based on these trends goes a long way in implementing change.The worst thing to do is to change for change’s sake… you need a strategy on several levels and what you decide to do should follow suit with that strategy and have plan A, B, C, etc. that aligns to the strategy.Additionally, there are plenty of resources, such as Giving USA’s annual reports, that can provide helpful insight into the ever-changing landscape that not-for-profits have the obstacle of adapting to.
The digital world we live in today changes by the hour and your not-for-profit needs to innovate to stay in front of donors, rather than chasing the donor, while engaging and inspiring them.
Rethinking Internal Controls
And this wouldn’t be a valuable CPA firm article without comments on internal controls. Based on the above, for technologies added and for new processes incurred, we recommend the following considerations from an internal control perspective:
- Implementation of reconciliation controls between third-party systems and your accounting system
- Identify proper segregation of duties in the recording/reconciliation function
- Obtain Service Organization Control Reports (SOC) from the technology provider and summarize/document proper user control considerations and how your organization addresses those user control points documented in the SOC reports
- Evaluate the ability to automate vs. manually inputting transaction details from third-party systems and be cautious of duplicate entries
- Perform substantive analytics (expectation versus actual) to detect fraud and reasonableness of the campaign and benchmark against others you view as comparable organizations
Author: Tom Gasparano, CPA | [email protected]
Contact Us
For more information on this topic, please contact a member of Withum’s Not-for-Profit and Education Services Team.
