The past few years have seen a massive shift in the way that communities around the world engage in philanthropy. Direct giving initiatives and mutual aid funds have been on the rise, driven largely by millennials who are more distrustful of large charitable organizations than previous generations. This increase in smaller, grassroots community giving programs was only exacerbated by the COVID-19 pandemic, which exposed gaps in many public social support services. Communities came together like never before to redistribute wealth and mutual aid funds popped up in cities and countries across the globe.
A recent study from GivingTuesday surveyed over 5,000 Americans and asked if they agreed with the statement, “I prefer to give directly to individuals in need and not via non-profit organizations, platforms, or websites.” 76% of people aged 18 to 34 and 46% of those aged 50 and older agreed.
This striking transformation in the way that donors approach philanthropy has left many non-profits scrambling to adapt to the new landscape. But distributing crisis aid through cash transfers and gift cards can be an administrative nightmare, opening the door to a great deal of fraud and a lack of transparency. How can non-profits keep up with changing norms while still distributing community aid in a safe, effective way?
Prepaid donation cards are the answer. In this blog, we’re going to explore five key benefits that prepaid donation cards offer to everyone involved in the end-to-end community giving process, from donor to charity to recipient.
I. Prepaid cards promote human dignity
The number one priority of charities and non-profit organizations should always be to treat the individuals they serve with dignity and compassion. Community giving through prepaid donation cards is unique in its inherent ability to promote agency and independence in recipients. Although sending food or household goods directly to families in crisis is undoubtedly important, getting financial resources directly into the hands of those in crisis is incredibly powerful and has far-reaching benefits on the mental health of recipients.
Receiving funds on a card in their name promotes autonomy for disenfranchised and marginalized populations in the community. Families living in poverty can gain control of their lives and make their own decisions regarding how to budget their money, which is far more sustainable than having a caseworker make these decisions for them. The central focus must always be on empowerment, independence, and human dignity.
2. Donors and non-profit organizations gain visibility into the impact of their funds
Being able to report on the impact of your community giving efforts has never been more important. For non-profits distributing grant funding, there are often auditing requirements on how the grant is used, who received it, and what was it spent on. Trying to manage this type of visibility through chasing receipts on a small grant is perhaps achievable, but what about when that organization grows to distribute millions of dollars in grant funding? The safe distribution of grant funding in a way that protects against fraud, promotes dignity for the recipient, and allows easy management and auditing becomes a herculean task for administrators.
This need for traceability and auditing isn’t just important for grant funding but also of growing importance in private philanthropy. Younger donors are increasingly results-oriented when it comes to philanthropy, with many focused on the effectiveness of the charities they fund. 66% of millennials say they track results for the non-profits they support, compared to only 32% of baby boomers.
This is where the trouble lies with many of today’s cash transfer programs that distribute crisis aid through checks, gift cards, or direct transfers. Once the payment is made, organizations have little to no visibility into how that money is spent.
On the other hand, distributing funds through prepaid cards affords visibility into when and how the money is benefitting the recipient. Because cards are digitally monitored, non-profit organizations can access anonymized spend data and share key takeaways with their donor community. This transparency incentivizes donors and bolsters fundraising efforts for community giving programs.
3. Donation cards can protect against fraud
Fraud is a very serious challenge facing non-profit organizations trying to distribute relief aid and financial assistance to families in crisis. Funding can be stolen from a person’s bank account by an abusive partner and sometimes the populations being served are combating addiction and substance abuse. It’s absolutely critical that charities find ways to safeguard their funds and ensure they are protected for basic necessities.
Prepaid donation cards should offer built-in protective restrictions on high-risk purchases, like those offered by ESTHER’s prepaid card solution, to protect against fraud or misuse. Restricting high-risk merchant codes like liquor stores, online gambling, or even cash withdrawal can protect crisis aid for helpful household essentials, rent, utilities, and transport. These security measures are especially beneficial for community giving to people experiencing homelessness or domestic abuse. If their card is lost or stolen, it can immediately be deactivated and replaced.
4. Distributing crisis aid is simplified massively
Setting up and managing a direct cash transfer program can quickly become an administrative nightmare, especially if an organization supports a large population of recipients in the community. Getting money to families in crisis through checks or a gift card drive requires a lot of manual effort and coordination. Frankly, many organizations don’t have the time or resources to spend setting up such a program.
Prepaid donation cards simplify community giving programs, especially if non-profits work with a fintech partner that can help manage the process and provide support services to keep the program running smoothly. Fund allocation and card balances are tracked automatically. Furthermore, charities and foundations gain full control over the amount and frequency of payments. They can send money directly into the pockets of community members in need with a single click.
5. Your funding goes directly into the hands of people who need it
At the end of the day, charitable giving efforts are designed to transform the lives of people in crisis. With prepaid donation cards, donors and charity partners can rest assured that their crisis aid is securely and efficiently getting into the hands of those who need it most. Alongside the rise in mutual aid funds and guaranteed income programs, we all have a responsibility to make sure our charitable efforts are having the intended impact on the individuals we are trying to help. A lack of transparency and the occasional scandal in large charities have harbored distrust and scared many younger donors away from large, established organizations—direct community giving through prepaid cards is the solution.
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These five features outline the transformative impact that prepaid donation cards are having on philanthropic giving across the country and around the world. Not only do prepaid cards benefit the families receiving crisis aid, these direct and transparent programs also help charities by motivating donors and streamlining their community giving efforts.
If you’re interested in discovering how ESTHER can help your organization get crisis aid into the hands of recipients quickly and safely, learn more about our FinTech giving platform or schedule time with our team today!