By Josh Cross, Senior Audit Manager
The landscape of nonprofits is changing and ironically it is looking a lot like the for-profit start-up world. These social entrepreneurs are using the same methods and ideas used by the most successful start-ups in the marketplace today and most of it is centered on harnessing the power of technology.
Technology has changed the way we think about giving. Crowdfunding has been around for decades but today most of us associate crowdfunding with the internet era of funding through sites such as IndieGoGo and Kickstarter. Historically crowdfunding has helped raise funds for a wide range of for-profit entrepreneurial ventures, but recently many social entrepreneurs have decided to take this concept in a different direction and use the power of technology to help connect millions around the world. The advancement of technology has allowed individuals all over the world to make a social impact with just the click of a button. Now a person in Norway can send as little as $5 from their PayPal account to a nonprofit organization based in San Francisco to fund a medical treatment for a needy individual in Uganda. How amazing is that! These great organizations and their founders have created a way to exponentially increase the traditional donor pool by making it easy for anyone with an internet connection to make a difference.
Although technology has provided greater funding opportunities, both non-profit organizations and donors must remain vigilant when exploring options for online donation platforms. Here are a couple critical points to keep in mind:
• Not all online platforms are created equal: For any donation to be tax deductible, it must be made to a registered tax-exempt organization. Individuals will find online platforms that will collect donations with the promise of forwarding the funds to a specified tax-exempt organization. However, the donation might not be tax deductible to the donor if the platform is not properly registered or if the platform is operating without the consent of the benefiting tax-exempt organization. It is also possible that the campaign is a complete fraud. Therefore, it is very important to find out who is actually operating the campaign. If you are not sure if the nonprofit you want to support has an online donation platform, contact the nonprofit organization directly to make the donation.
• Data security: These days, data security breaches happen with alarming regularity. To limit potential exposures, donors should try and find out if the online platform has all the proper security protocols in place. For example, if the platform transmits or stores any cardholder data, is it in compliance with the Payment Card Industry Data Security Standards (PCI DSS)? To take it a step further, donors should also find out what kind of information is being collected and who that information is being shared with.
As these nonprofit organizations continue to evolve in their lifecycle they have also started to take another concept from the for-profit world – big data analytics. Advertisers, health care companies, retailers and the government have all been using big data for years to better reach their intended market, but now nonprofits are using this data to better understand how to help people. Such data is being used to better understand the homeless population in urban areas by tracking movement and types of services being most utilized. Or by tracking medical needs of those in other countries and what types of treatments individuals need at various times of the years. This allows for these organizations to stay on top of the needs of those they are serving to provide them the help they need when they need it. Instead of being reactive to their needs, they can now be proactive.
By tapping into the tech world, these innovative nonprofits have also garnered the attention of some of the best and brightest in the industry that have made millions, if not billions, off of their ideas and are willing to support these endeavors. These large donations provide organizations the freedom to hire great engineers to build their platforms and expand their mission without having to take on large amounts of debt.
Technology is impacting all of our lives in one way or another and I am very glad to see more organizations harness its power for the benefit of people in need all over the world.